Housing Benefit

Opposition Day — [5th Allotted Day] – in the House of Commons at 3:40 pm on 9th November 2010.

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Votes in this debate

  • Division number 113
    A majority of MPs voted in support of government plans to reduce housing benefit for those who have been on Jobseekers Allowance for over a year.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions 3:40 pm, 9th November 2010

I beg to move,

That this House
believes that, whilst housing benefit is in need of reform, the Government's proposals will mean significant losses for hundreds of thousands of working families and pensioners and risk spending an additional £120 million on the cost of providing temporary accommodation;
and calls on the Government to bring forward revised proposals for the reform of housing benefit which do not penalise those who have been unable to secure employment within 12 months, and which ensure that any proposals are implemented on a revised timetable which allows councils, tenants and landlords to adjust, allows the impact on rents to be observed and understood, and avoids additional spending on temporary accommodation.

It is common ground across the House that the deficit needs to be cut and that, as the motion states, housing benefit needs to be reformed. The shadow Secretary of State for Communities and Local Government, my right hon. Friend Caroline Flint, will speak later and I am sure she will reflect the views of many in this House in recognising that the issue of housing benefit cannot, and should not, be detached from broader issues of housing provision. However, it is important to start the debate by setting out some of the facts that explain the real and rising concerns that have been expressed from both sides of the House about the impact of the Government's proposed housing benefit changes. I will address first the reach of the changes, then the reason for them, and finally their potential impact.

If we were to believe everything we read in the newspapers, we would have thought in recent weeks that housing benefit reform is solely a London issue and that it matters only to people who have large houses and should be, but are not, working. Broadcasts and newspapers have suggested that the key issues are workshy families in Mayfair mansions, so let us start with some truths, however inconvenient they are for the Opposition Front Bench. Some 4.7 million people in the United Kingdom currently receive housing benefit, 2 million of whom are pensioners on pension credit guarantee of just about £132 a week, while 500,000 are people on jobseeker's allowance and 700,000 are people in work in low-paying jobs. From just one measure of the Government's proposed changes alone-the cut in local housing allowance from the 50th to the 30th percentile-700,000 of these, many of the poorest people in our country in and out of work, stand to lose on average £9 per week.

Photo of Rob Flello Rob Flello Shadow Minister (Justice)

I am looking forward to hearing the rest of what I know will be a very passionate and important speech. Does my right hon. Friend agree that many people-not only in my constituency, but throughout the country-who have disabilities or who are carers for people with disabilities are terrified that these proposals might affect them?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

To illustrate my hon. Friend's point, one of the depressing aspects of the changes is that we have not yet had a comprehensive impact assessment; I will discuss that during the course of my remarks. We have had figures about the proposed changes from the Department for Work and Pensions, which confirm that they will hit every part of Britain, and from the smallest flat upwards. A poor pensioner living in a single-bedroom flat in Glasgow will lose £7 a week, and a family in a two-bedroom flat in Liverpool will lose £10 a week. Housing benefit recipients in Yorkshire and Humberside are most likely to lose out from this 30th percentile measure, with 90% of local housing allowance recipients seeing a reduction in their housing benefit.

Little wonder that Shelter's chief executive, Campbell Robb, explained only yesterday:

"The focus of debate so far has been the cap to housing benefit and the impact on London, but this analysis shows that these cuts will affect hundreds of thousands of people across the country."

That is why the Church of Scotland, a body with a long and distinguished tradition of work and witness in deprived communities across Scotland, on Friday wrote to every Scottish Member of Parliament, raising concerns and questions in advance of today's debate about the impact of the proposed measures on the communities it serves. Today, Shelter in Cornwall raised concerns about the Government's proposals, saying:

"The reality is that we are going to be facing much more homelessness and more evictions because of this. Cornwall's low incomes mean that lots of hard working people do have to claim housing benefit."

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South

Does my right hon. Friend realise that many people not affected by the cuts are appalled that this Government sought out the poor and needy and attacked them with these cuts?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I am grateful to my hon. Friend for that question. I hope that the Secretary of State will take the opportunity to explain to the House and indeed to the country why, in the package of measures contained in the spending review, the Government decided to take more money from the nation's families than the nation's banks.

Calls for a rethink on these proposals have also come from Andrew George, whose constituency covers the Isles of Scilly. I hope that he will vote in support of the motion, as he has said:

"The impact on Cornwall is likely to be very severe indeed."

He also said that the proposals

"will put a lot of families in extreme stress and ministers should think again."

Concern is rising among those on both sides of the House and across the country, from Cornwall in the south to Shetland in the north. We have to recognise that when we talk about these rushed and ill-considered changes, we are talking about changes that will affect our constituents, no matter what part of the country we represent. The changes will affect many of our constituents, those in and out of work, as well as many of our poorest pensioners. This debate should be informed by that state of mind, rather than by the lurid headlines that Ministers have worked so hard and so shamefully to create in recent days.

Photo of David Ruffley David Ruffley Conservative, Bury St Edmunds

I agree with the following statement:

"Housing Benefit will be reformed to ensure that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford."

It came from this year's Labour manifesto. Does the right hon. Gentleman agree with it?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I do, which is why I wish those on the Government Benches would spend less time reading our manifesto and more time changing their proposals.

Let me deal with the substantive points. [Interruption.] Hon. Members should have just a little patience-one of the virtues that I wish the Secretary of State had learned in relation to these changes. Two arguments are being advanced in favour of the changes, the first being that the housing benefit bill is out of control and the second being that reform will lower the rent levels paid by the state for private sector accommodation available through housing benefit.

Let us start by examining the facts and the merits of those arguments. First, as the Building and Social Housing Foundation points out:

"Housing benefit has remained remarkably consistent at around 14% of the benefits bill for many years and most of the increase over the last 18 months has been down to an increase in the number of claimants, which is exactly what we would expect to happen in response to a recession."

J

More detail on this can be found in the Building and Social Housing Foundation's recent report, Support with Housing Costs: Developing a simplified and sustainable system, especially pp16-18.

http://www.bshf.org/published-information/publication.cfm?la...

Submitted by Jim Vine

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I will give way in a moment or two. Next, it is stated that in the past five years housing benefit has risen by £5 billion and it has been suggested that the cuts are necessary to stop a soaring housing benefit bill. Housing benefit did rise by about 21% during the recession-that is undisputed-but that was driven by a case load that increased by 18%, including a 26% increase in respect of those of working age; it was not driven by a few rents.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

Perhaps the right hon. Gentleman would like to explain how the figures show that the real-terms increase over the past five years was 50%, not 18%. That was fuelled hugely by the Labour Government's reform to local housing allowance. The figures show that today's rates of LHA are 10% higher than those that they inherited, and that is due to their change. Perhaps he would like to explain that.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I am happy to come on to deal with exactly those points, which echo some that we have heard.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I shall seek to let the hon. Gentleman in as soon as I can. Housing benefit bills-

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I am just about to explain it, if the right hon. Gentleman would just exercise a little patience. If he had done his homework, he would know that his Department's own statistics show that since 2000 more than half the increase in the housing benefit bill-54%-did not come from the few high claims. It came from poorer private tenants-those in low-paid work, and disabled or elderly people-claiming housing benefit. More than half the increase is coming from more people claiming, not from significantly increased rents. What Ministers seem to fail to understand is the number of households on local housing allowance who are in work. Over the past two years, there have been 250,000 new cases in work claiming LHA. During the recession, as wages and the hours that people were able to work fell, people turned to housing benefit and to LHA to stop themselves being made homeless. In recent years, during the recession, housing benefit has been vital in keeping people in their homes.

Photo of Bob Russell Bob Russell Liberal Democrat, Colchester

The right hon. Gentleman was a Minister in the last Government. He started his speech with a brief mention of "housing provision", but he has not said anything about it since. Will he inform the House how many council houses were built and how many were sold by the last Labour Government?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

The hon. Gentleman made that point in the debate in Westminster Hall. I will not pretend that our priority was council housing as distinct from social housing, because for Governments over many years there has been a move away from direct provision by local councils to broader social housing, principally provided by housing associations. We will happily stand comparison between the number of social houses that we built during our time in office and the number being trumpeted by those on the Government Front Bench. Incidentally, almost half of the 150,000 in the figure that is now being used by the Conservatives are houses that were initiated by the Labour party when it was still in office. Notwithstanding the fact that I do not think that that was a point worthy of the hon. Gentleman's genuine concern, I hope that he will back up the words of the early-day motion with his actions this evening and join the Labour party in the Division Lobby.

Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

Does the right hon. Gentleman not agree, as all commentators have said, that since the introduction of the LHA the transparency of it has led to landlords putting up rent? Does he not think that there is a duty on Government in these difficult times to do something about it?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I have great respect for the hon. Gentleman, but there is a difference between having a duty to act-and we support the case for reform in housing benefit-[Hon. Members: "Ah!"] I know that that might be an uncomfortable truth for those on the Government Benches, but there is a difference between a duty to act and acting in such a precipitate and reckless fashion that it ultimately ends up costing the taxpayer more. I think the hon. Gentleman is just old enough to recollect that under the Conservatives in the '80s and '90s the impact of higher homelessness was a greater cost to the taxpayer; it did not lower bills for the taxpayer.

The core of the Government's policy is their belief that by cutting or capping housing benefit-this has been the substance of a couple of interventions-they will reduce the level of rents in the private sector and thus reduce the deficit. In seeking to find a rationale for the scale and speed of the cuts, the Government seem to be getting themselves in some difficulty. The Daily Telegraph today sets out that LHA rents are rising faster than non-LHA rents in the private sector. The Government's regulations require that the LHA rates are set at the median of the private rental sector rent, excluding those let to housing benefit claimants, so rent officers collect data on non-housing benefit rents in each broad rental area market and use that data to set the local housing allowance.

In passing, incidentally, if the Secretary of State is so concerned about rent levels in the private sector, will he explain why he decided to scrap our proposals for a national register of landlords or indeed for the regulation of letting and management agents, designed to give more protection to tenants? The sound of silence is deafening. Why did he bin the recommendations of the Rugg review?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I do not think that protecting tenants from bad landlords is bureaucratic nonsense. If the Secretary of State did more than visit Easterhouse, he might share that point of view.

Not only does the Government's core belief that rents will fall risk failing to reflect how LHA works, at a much deeper level it risks ignoring what is happening in the housing market at the moment. Rents in the sector will probably rise, according to the National Landlords Association, which has published results of a poll showing that 50% of landlords would not reduce their rents at all and that nine out of 10 would not rent to housing benefit recipients- [ Interruption. ] From a sedentary position, the Minister of State, Department for Work and Pensions, Steve Webb, says, "They would say that, wouldn't they?" Would that be the claim that he would make against Shelter, the indisputably well-recognised housing charity? "Yes," I hear from Conservative Back-Benchers. Well, their interventions are perhaps more telling than they realise.

Photo of Christopher Pincher Christopher Pincher Conservative, Tamworth

The right hon. Gentleman is keen to use statistics. I wonder whether he is comfortable with the statistic that more than 50% of Labour supporters believe that housing benefit should be reformed. They support us. Is it not ironic that he is proposing such a motion today when his supporters support this Government?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

First, I respectfully suggest that the hon. Gentleman reads the motion. Secondly, I suggest that he recognises that we introduced the LHA, which has already been the subject of an exchange across the Floor of the House. He might also want to go back and read the statement of the former Chancellor at the March Budget, when we suggested further measures for reform of housing benefit.

That is commonplace. There is a difference between the right reforms that will save the public money, and the wrong reforms that will potentially cost the public money and lead to higher homelessness, as we have seen so often in the past.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I am keen to make a little progress.

According to a study commissioned by Shelter from the Cambridge Centre for Housing and Planning Research-I wonder if the Government will dispute the integrity of that body-more than four in 10, or 42%, of landlords currently letting to LHA claimants planned to scale back. Shelter estimates that that will equate to 100,000 landlords. Liz Peace, the chief executive of the British Property Federation, said:

"Landlords might decide to abandon the social sector."

The Conservative Mayor of London-I wonder what the Government will say in relation to this evidence-says that the Government's proposals will lead to

"the loss of the private rented sector as a major safety net for London boroughs".

He continued:

"We expect landlords to leave the housing benefit market due to the perceived instability of housing benefit in the short and medium term."

Those are the words not of the Labour Front Bench, but of Boris Johnson.

Photo of Michael McCann Michael McCann Labour, East Kilbride, Strathaven and Lesmahagow

Has my right hon. Friend seen the Daily Mail today? Under the headline "Archbishop is wrong about...welfare...says Iain Duncan Smith", the opening paragraph states:

"Iain Duncan Smith has attacked the Archbishop of Canterbury's claims that housing benefit cuts will lead to a cycle of despair that will socially cleanse the poor from Britain's cities."

The article goes on to quote the Secretary of State as saying of the Opposition and special interest groups:

"'They have even tried to suggest that our real purpose is not just to cut the budget deficit but to remove poor people from the heart of our cities.'"

If that is not the purpose of the Government's intentions, surely that will be the net effect.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I can understand the embarrassment of those on the Government Front Bench, but whether it is the Deputy Prime Minister attacking the Institute for Fiscal Studies or the Secretary of State for Work and Pensions attacking the Archbishop of Canterbury, they diminish the case that they are trying to make.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I would like an answer from the right hon. Gentleman now. He was asked an interesting question. Does he agree with Opposition Members, such as Mr McCann, who think that our measures will socially cleanse London? Will he please answer that question?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I have a clear view that if these proposals pass unamended, London will look very different in the years ahead. [Interruption.] I noted that the Secretary of State did not dispute the fact that he had attacked the Archbishop of Canterbury. Perhaps he will choose to do that next time.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I just want a straight answer. Does the right hon. Gentleman agree with his right hon. and hon. Friends, including the hon. Member for East Kilbride, Strathaven and Lesmahagow, who for the past two weeks have said that what we are doing will remove every social tenant from London and socially cleanse it? Is that correct?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I have said that I think London will look very different in the years ahead if the Government's proposals are passed. We can have a contest across the Floor of the House in which I ask the right hon. Gentleman how he feels about Boris, and he can ask me how I feel about some Labour Back Benchers. I know it is uncomfortable for the Secretary of State, but this is a debate about the Government's policies, not about my words.

Photo of Dennis Skinner Dennis Skinner Labour, Bolsover

Will my right hon. Friend compare the current position to the days when Lady Porter decided to take measures in this part of London to shift people out of certain areas for political reasons? Is not the Government's current idea one that Lady Porter could only have dreamed of, because it is 10, 20, 30 times worse?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

The cumulative impact of Lady Porter's measures was in the hundreds or the few thousands. The impact on people being removed from their homes if the current proposals pass unchecked will extend significantly beyond that.

Photo of Emily Thornberry Emily Thornberry Shadow Minister (Health)

Has my right hon. Friend discovered which Conservative Minister described the measures as having such a high social impact in terms of moving people out of London that it would be greater than the highland clearances?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

Alas, I cannot answer that question, but I hope the Secretary of State for Work and Pensions will do so.

Several hon. Members:

rose -

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

No, I have been generous and I will make a little progress, although I will be happy to take further interventions. Given that the subject has moved on to the highland clearances, let us move from London to Edinburgh and take the example of Edinburgh to prove that the issue is not exclusively a London one.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I will give way in a few moments, because I am interested to hear what the hon. Gentleman intends to do later this evening.

Let us take the example of Edinburgh. About 20% of all households live in the private rented sector, and about 18% of housing in the private rented sector is occupied by people who receive some housing benefit. If landlords no longer wish to have tenants on housing benefit because of the lower local housing allowance, they will have ample scope to find other tenants in that city.

Perhaps we should move on from Edinburgh to the east midlands. In the other place, the Bishop of Leicester said:

"The present belief that cutting housing benefit will depress the market and reduce private sector rents might just work if there were more houses to meet the demand. As it is, all the risk is being born by the vulnerable, not the comfortable."-[ Hansard, House of Lords, 1 November 2010; Vol. 721, c. 1446.]

Photo of Simon Hughes Simon Hughes Deputy Leader, Liberal Democrats

The right hon. Gentleman and his colleagues are perfectly right to raise this important issue, which is of concern across the House, but will he be his usual self and use careful language? There is no evidence to suggest that the implication of the policy is what his hon. Friend Chris Bryant and his hon. Friend Mr Skinner have suggested-or, indeed, what the Mayor of London has implied. Yes, there are issues, but the idea that people will be moved forcibly from where they are to somewhere else is neither necessarily the case nor evidentially the case.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I can assure the hon. Gentleman that I will be characteristically careful in my language. I hope that he will be characteristically careful in aligning his words with his actions. We will be watching carefully this evening to see whether this is another instance of the Liberals either being able to prove that they are willing to match their words with actions or, alas, not.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I am going to make a little more progress.

There is a substantive question, and that is: on what evidential basis do the Government assert that rents will fall? In the debate involving the Bishop of Leicester last week in the other place, the Under-Secretary of State for Communities and Local Government, Baroness Hanham, in response to being challenged directly on the evidence that the Government could adduce for a fall in rents as a result of the changes, said that it was a "suggestion".

Photo of Steve Webb Steve Webb The Minister of State, Department for Work and Pensions

I think that the shadow Secretary of State is a measured and reasonable man who will not want to be hysterical but will want to look at the facts. Since November 2008 private rents have fallen by 5% and local housing allowance rents have risen by 3%. LHA is pushing rents up. Does he accept that?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I have already covered the point that LHA is calculated in relation to rent in the private rented sector. The Minister generously characterises me as a reasonable fellow, but the fact is that this is the second time in as many days that a coalition Minister has accused the Government's critics of being hysterical. I think that it was the Secretary of State for Communities and Local Government who yesterday told London councils, when perfectly reasonable questions were being asked, to "grow up". I hope that when the Secretary of State for Work and Pensions speaks in this debate we will have a more measured and reasonable account of why the policies have been decided on and of whether the Government are willing to reflect on the points being raised, and in turn change their mind.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

Does my right hon. Friend recall the answer that the Minister of State, Department for Work and Pensions, Steve Webb gave less than one month ago, when he indicated that at the last count 48% of local housing allowance recipients received a sum less than the rent that they were due to pay? The idea that half of all local housing allowance recipients are forcing up rents, when they are not actually getting enough housing allowance to pay the rent, is an extraordinary proposition.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

My right hon. Friend's expertise is well revealed in his question. I have been told to avoid hysteria and be careful and measured, but any of us who recollect the impact of the community charge, when a number of poor people started with a small but rapidly accumulating debt and ended up owing significant arrears to local authorities-which ultimately had to write off those debts-have reason to be very cautious before endorsing these proposals.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

No. I am keen to make a little progress, by looking at the individual measures that the Government are advancing.

When the Secretary of State speaks, will he explain why the Department for Work and Pensions is not producing an impact assessment on the whole package of changes to housing benefit before the House? An assessment has been made of the introduction of the LHA measures during 2011-12, as the Social Security Advisory Commission requires, but that is partial, and of course does not take account of the effect of the consumer prices index cap on LHA rates from 2013.

We would also expect a separate impact assessment of the jobseeker's allowance measure and social sector size limits to follow once the secondary legislation is published. At this stage, however, it is unclear whether an assessment will be made of the CPI changes. The fact that no comprehensive impact assessment has been completed before the announcement does nothing to reduce the widespread anxiety about this package of reforms. I therefore hope that the Secretary of State will now accept the concerns of his colleagues and undertake to publish an assessment of the whole package.

Photo of David Lammy David Lammy Labour, Tottenham

Will my right hon. Friend confirm that it is a statutory duty of the Secretary of State to undertake to give an impact assessment, on the basis that this greatly affects London's ethnic minorities-and if there is a disproportionate effect, to do something to alleviate it? It is extraordinary that that impact assessment has not yet been published.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

That is an outstanding point made by a tireless fighter for the people of Tottenham. I know that my right hon. Friend has already taken the opportunity to raise this matter directly with the Secretary of State, who I hope will be able to find an opportunity to respond to it.

Photo of Andrew Slaughter Andrew Slaughter Shadow Minister (Justice)

My right hon. Friend is right to analyse and dismantle the individual points made, but there is also a cumulative effect. The cumulative effect on my borough after these changes are introduced, if they are, is that 6% of neighbourhoods-seven out of 111-will be affordable to people in receipt of housing benefit. Mine is by no means the worst affected borough in London: all the central London boroughs are affected. If that is not forcing people out of London and making it impossible for people on low incomes to live in London, I do not know what is.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

My hon. Friend speaks with force and knowledge about the impact of these changes in his own constituency. I hope that when Government Front Benchers reflect on the range of points that have been made about the impact on our communities and constituencies across London, they will take the opportunity to think again.

Photo of Rob Wilson Rob Wilson Conservative, Reading East

It takes the entire income tax paid by seven average earners in my constituency, and by nine average earners in the right hon. Gentleman's constituency, to pay one family's housing benefit bill. Does he think that is fair?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I will come to the issue of the cap. The hon. Gentleman does a disservice to the importance and seriousness of this debate by simply reading out the questions the Whips have given him. In terms of the cumulative effect, which is what we were talking about, this package involves £1.8 billion-worth of cuts. The measure that he identifies accounts for £65 million of that £1.8 billion. One of the many attributes missing on the Government Benches is a sense of proportion.

Let us look at some of the individual measures. Labour Members do not have any objection in principle to asking younger single adults to live in a shared house or flat-after all, that is what has happened a great deal in the private sector. Yet it is revealing that the Chancellor, in his spending review statement to the House, described this as a chance to limit the ability to live on housing benefit as a lifestyle choice. So why have the Government not produced an impact assessment for these proposals? How can we be reassured that there will be sufficient supply to accommodate additional people and that the specific needs of young people in special circumstances, such as the disabled, will be addressed before this measure is introduced?

On the social sector, even the Government themselves seem to be struggling to understand some of the proposals. The June Budget promised to change housing entitlements for people of working age in the social sector. Can the Secretary of State explain what that means, and whether it will mean forcing people to move out of their council homes when their children turn 18? The Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate, who has already contributed to the debate, recently said in an answer to a written question:

"The detailed policy design of this change is still being developed."-[ Hansard, 1 November 2010; Vol. 517, c. 565W.]

In that case, why are the Government are so confident that it will save £490 million?

Let us move on to the issue of the CPI. The shadow Chancellor has made it clear that we would support changing the uprating of benefits for a time-limited period, but this is not what the Government propose in relation to housing benefit. Index-linking of local housing allowance to the CPI, which does not in any way reflect housing costs, means that the LHA's value will drop substantially against rising rent levels, and households will increasingly find themselves priced out of all but the poorest-quality accommodation.

The impact is clear if we view the decade from 1997 to 2007 and then project forward. During those 10 years rents increased by 70%, while the CPI-the new inflation index that the Government have chosen-increased by only 20%. On that projection, by 2020 housing benefit based on CPI will have fallen so far behind private rents that it may cover only 10% of the available property. In Manchester it would cover only 5% of available two-bedroom flats, and in parts of Winchester, within 10 to 12 years not a single two-bedroom home would be affordable on housing benefit.

I ask Ministers in all seriousness whether it is coincidental that in evidence to the Select Committee on Work and Pensions last week, Lord Freud suggested that the coalition Government now saw it as

"quite valuable to rewrite the homelessness legislation?"

Can the Secretary of State confirm whether that is indeed the case, and can he further assure the House that the Government are not simply seeking to rewrite the rules for those threatened by homelessness as they rewrote the rules for the unemployed in the 1980s and '90s, parking a generation of people in the unemployment figures?

Photo of Matthew Hancock Matthew Hancock Conservative, West Suffolk

The right hon. Gentleman is being careful not to set out the Labour party's position on the cap. Does he agree with his leader, Edward Miliband, or does he agree with the shadow Health Secretary, who said nine days ago:

"Those top level benefits do need to be capped"?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I will answer the hon. Gentleman's question directly. The former Chancellor of the Exchequer, my right hon. Friend Mr Darling, introduced an option for dealing with extreme cases in the March budget-excluding a proportion of the highest rents from the calculation of the median. I am sure that given his past employment, Matthew Hancock will be aware of that change. As I have previously stated, I have no objection in principle to a cap, if it is introduced on a staged timetable. I commend to him the speech that I gave at the Institute for Public Policy Research as recently as Friday. However, we have to ask whether a national cap is the most appropriate plan, or whether a regional cap would target the very highest claims in all regions.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I am keen to make a little progress.

I rather fear and suspect that the focus on the cap in some interventions owes more to Andy Coulson than to the Secretary of State. As I have already made clear, despite the fact that it will yield £65 million, it is only one part of a package of more than £1.8 billion-worth of proposed housing benefit changes resulting from the cumulative impact of the June Budget and the spending review.

Perhaps the Secretary of State will be able to answer some specific questions. Why is it necessary to introduce a cap on rent levels from April next year, and the change in the maximum rate to the 30th percentile in October? Is there not a real risk that some households will be displaced twice within a short period, with all the costs and individual traumas that that would entail?

Let us look at the reality of the matter for a moment. Many households will be making their housing arrangements now without full knowledge of what the proposals will mean. They may be arranging for their children to go to a local school, to sign up for child care support or to buy a season ticket for travel to work. It must be right to give individuals enough notice and clarity about what the first tranche of measures will mean for them to be able to ascertain whether they will be able to avail themselves of the discretionary housing payments that the Government claim will be available.

What estimate has the Department made of the impact of the changes on homelessness? Does the Secretary of State accept the figures provided by London Councils, which expects that 82,000 households will be forced from their homes? What estimate has he made of the cost of the changes to local government? Shelter has said that the costs of introducing all the rushed changes will be as much as £120 million. Does he have an alternative figure that he would like to share with the House?

The Mayor of London's own director of housing has stated that the introduction of the cap in London alone will lead to a 48% rise in homelessness acceptances, which will mean £78 million being spent in London on temporary accommodation. Yet the Budget Red Book estimates savings of only £65 million a year. Given those figures, why would the Government introduce a policy that could end up costing the taxpayer more than it is intended to save?

I now move from the cap, about which people have been so keen to talk in the newspapers for so many days, to the change to the 30th percentile, which is perhaps more deserving of that level of publicity. Liz Phelps of Citizens Advice UK has remarked that the change

"will potentially affect people across the country. It will mean lower rates...It is very crude, short-term thinking. It will cut the DWP budget but it will explode the homelessness budget. We will see a lot more rent arrears, a lot more debt and acute poverty, and then more homelessness."

Photo of Gordon Marsden Gordon Marsden Shadow Minister (Business, Innovation and Skills)

I wish to put on record that however important the change is in London and the south-east, it is not simply an issue for that area. Does my right hon. Friend agree that the Department's own figures, which show that some 5,500 local housing allowance recipients in Blackpool will lose up to £25 a month, are not acceptable in such areas, which have some of the highest rates of deprivation in the country?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

My hon. Friend speaks with authority about not just Blackpool but a number of seaside towns where there are real communities that are suffering and afflicted by deprivation. That is why it is incumbent on the Secretary of State and the Minister, who is winding up this debate, to offer a clear and unequivocal answer to my hon. Friend. Why is it acceptable that people in Blackpool who are in work but low-paid, and who bear no responsibility for the global financial crisis, are now being asked to bear the burden?

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee

That is precisely the issue that affects cities such as Sheffield as well. The Deputy Prime Minister has objected to the word "cleansing" and other Members have objected to the word "clearance". In a disparate housing market such as Sheffield, the effect will be to disperse families from the affluent part, the Sheffield, Hallam constituency-the Deputy Prime Minister's constituency-to the rest of the city. That will lead to a more segregated city, and it is that sort of effect that the Government should address.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I shall resist the temptation of suggesting that the one person who should be dispatched from Sheffield is the Deputy Prime Minister. I acknowledge the fact that in communities such as Sheffield, and in cities across the whole of Britain, there is deep anxiety and concern about the impact of these changes. That is why the Local Government Group agreed that the move to the 30th percentile is

" likely to increase homelessness costs," since it will diminish

"the willingness of private rented sector landlords to let to housing benefit customers. This will have hugely variable and disproportionate effects on different parts of the country."

The Government's impact assessment of the 30th percentile change goes into great detail to demonstrate that at least 30% of the market is available in every area. However, is it not the case that the inevitable consequence of the LHA cap and the CPI cap is that, over time, the proportion of the available market will shrink below 30%?

Finally, let me come to one measure that has absolutely nothing to do with welfare reform and everything to do with a welfare cut. The Government propose that someone who is doing everything that we would ask of a person on benefits-applying for jobs, going to interviews, and even getting on the Secretary of State's famous bus from Merthyr Tydfil-will still lose 10% of their housing benefit if they cannot find a job within a year.

Let me unpick the statistics in two communities. Wolverhampton has six claimants for every job. If they were to be sanctioned tomorrow on housing benefit, 1,116 families would lose 10% of their benefit. To take Norfolk, a very different community from Wolverhampton, the figures say that there are 5,000 jobs, mainly casual, and 15,600 claimants-and that under these rules, 1,254 families would be sanctioned tomorrow. How can such an approach be fair when there are five claimants chasing every vacancy in the British labour market?

On Sunday, the Secretary of State's colleague, the Chief Secretary to the Treasury, stated:

"Sanctions in the welfare system only apply when people don't take advantage of the help and support that is on offer."

Such a statement is irreconcilable with the policy that the Treasury has now imposed on the Department for Work and Pensions. I have to say to the Secretary of State, for whom I feel great respect, that he is losing even old and dear friends as he tries to defend the measures that he has signed his Department up to. Indeed, when Bob Holman, the man who brought the right hon. Gentleman to Easterhouse in 2002, was asked why the Secretary of State had changed track, he said:

"It is hard to say. I think he has come very much under the influence of George Osborne, who is very much more aggressive, who is much more anti-working class and I think that Iain probably is looking at it-if I am to get my big reform through, the universal credit system, I've got to go along some way with the attitude of Osborne."

Indeed, how does the right hon. Gentleman want the unemployed to answer the question originally asked by Norman Tebbit? The truth is that homes are cheaper where there are fewer jobs. Should the jobless from Middlesbrough move to London where there may be jobs but fewer homes, or should the homeless from London move to Middlesbrough where there are homes but fewer jobs? I hope that the Secretary of State will take the opportunity to answer that question in the course of his remarks.

The right hon. Gentleman once styled himself as "the quiet man". I simply cannot believe why, given all the work he has done over recent years, he stayed silent in his conversations with the Chancellor when the latter told him that this was a progressive move to help people into work. It is the very opposite of a progressive move. The party that once said that unemployment was a price worth paying now wants to fine the unemployed if they cannot find a job. We were guaranteeing work for the long-term unemployed, but the Conservative party seems to be threatening them with homelessness.

Photo of Steve Webb Steve Webb The Minister of State, Department for Work and Pensions

My eyes may deceive me, but I sense that the shadow Secretary of State is on the final page of his speech. He must have dropped a very long section in which he was to set out Labour's alternative. Perhaps he will do that now.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

It might help the hon. Gentleman if he recognised that as he has chosen to align himself with the Conservative party in government, it is now his responsibility to answer the questions. I know that, as a former professor of social policy at the university of Bath, he is a man of great erudition and deep thinking. May I commend to him the speech I made on Friday in which I went through each of the measures and set out our thinking, as I have done on a range of them today?

We disagree fundamentally about the balance between the cuts that have to be borne by the poor and the vulnerable relative to the contribution that should be made by the banks. So we disagree about the deficit. We also disagree with measures such as the 10% cut in housing benefit relative to jobseeker's allowance- [Interruption.] What do we support? In the March Budget we made it clear that we wanted to take the top rental-forgive me, Mr Speaker. I should not get into a debate with someone who is sitting down. I shall address you, Mr Speaker. We have made it clear that we could support a phased approach to caps, and that we want to look into regional caps. We have made it clear that we are willing to consider the proposal-once we receive an impact assessment-on the deductions available for non-dependent individuals living in households that receive housing benefit. We have also made it clear that we regard the 10% cut in housing benefit for those who have been unemployed for a year as completely unacceptable-and in his previous persona, I fear, the Minister would have found them unacceptable as well.

I need to draw my remarks to a conclusion, as was kindly anticipated by the Minister. Let us be honest: this package of rushed, ill-considered and potentially devastating cuts has raised concerns beyond the debates in this Chamber in communities across the country. In the 1980s, the previous Conservative Government showed that higher homelessness, like longer dole queues, ends up costing the taxpayer more, not less. These ill-thought-through proposals have already led a number of MPs of conscience and concern, on both sides of the House, to register their disquiet. I do not claim a monopoly of concern about the proposals for any one party. Perhaps that is why the Government have run scared of putting an amendment to the House today endorsing explicitly each of the present proposals on housing benefit that they continue to advocate. Fortunately, however, there is still time for the Government to think again about these proposals. I urge Members on both sides of the House to take the opportunity this evening to reflect on these changes, and I commend the motion to the House.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions 4:22 pm, 9th November 2010

I rise to oppose for a number of reasons the motion moved by the Opposition. I will deal with it quickly, and then move on to the rest of the rationale behind the speech by Mr Alexander.

In the past two weeks-particularly, in the past two or three days-the right hon. Gentleman has started trying to reset the tone in the motion. None the less, the facts are exaggerated. For example, there is the ridiculous fact that we might have to spend an additional £120 million to provide temporary accommodation. That is ludicrous. There is no policy in this motion at all. Despite the major deficit that we have inherited, and despite the fact that housing benefit is running out of control, he did not say a thing about what he is planning to do. Opposition comes with responsibilities, and one of them is to have some policies before criticising, but the Labour party has none.

The right hon. Gentleman is basically a reasonable man, and I look forward to dealing with him- [Interruption.] That is very kind. Thank you. So we are all reasonable across the Dispatch Box. But what is not reasonable is what has gone on over the past two weeks. I am pleased that in the past few days he has suddenly entered the fray, because he was suspiciously silent when a lot of his colleagues were running up and down the place trying to frighten the public about the changes. In many senses that was quite disreputable. Two weeks ago, Chris Bryant-the right hon. Gentleman's hon. Friend-accused us of deliberately trying to "socially cleanse" London, and that is in Hansard. Furthermore, in the other place, one of the right hon. Gentleman's great friends, Baroness Hollis, talked of

"Weeping children, desperate mothers, defeated fathers ...carnage".-[ Hansard, House of Lords, 4 November 2010; Vol. 721, c. 1743.]

This has gone too far. I should also say that, encouraged by a nod and a wink from his Front-Bench colleagues, one of their great supporters in one of the national papers-a columnist-talked about our "final solution" for the poor. What they have actually managed to do-

Photo of David Lammy David Lammy Labour, Tottenham

Will the right hon. Gentleman give way?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I will give way in a minute, but not right now, because I want the Opposition to chew on this for a little. The way in which they have behaved over the past two weeks has been atrocious and outrageous. They knowingly used terminology used to describe events such as the holocaust, making shrill allegations of bitter intent that they knew would frighten rather than inform. I say "rather than inform", because until Saturday, when the right hon. Member for Paisley and Renfrewshire South gave his interview to The Guardian, the Opposition's manic rabble-rousing had failed to tell the public a rather interesting point: that had Labour Members been re-elected, they knew that they would have had to take strong measures. I will read a few quotations that should explain to his Back-Bench colleagues just exactly what Labour was planning to do.

The first quotation that I want to give them is from somebody whom I hope they will identify: their right hon. Friend, the Leader of the Opposition. He said:

"Housing Benefit will be reformed to ensure that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford."

In the run-up to the election, the then Chancellor, Mr Darling, said that Labour's LHA-he was describing his own party's reform-had discouraged employment and was unfair. He made it clear that the policy was set for a major change and that Labour was to blame.

Photo of David Lammy David Lammy Labour, Tottenham

Will the right hon. Gentleman give way?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

Before I do, I want to finish this one off. My predecessor, Yvette Cooper, went even further before the previous election, hinting strongly at a much bigger change. She said that

"it isn't fair for the taxpayer to fund a very small minority of people to live in expensive houses which hardworking families could never afford."

I wonder who was in power for those 10 years, but none the less. While acknowledging that Labour's flagship LHA reform was in an expensive mess, she went on:

"We will publish further plans...to make the system fairer, and to make sure housing benefit encourages people into jobs."

Of course, as with everything else that Labour Front Benchers did before the last election, they cynically refused explicitly to tell their own Back Benchers or the public-the electorate-what they were actually planning. So now we learn that, according to the hon. Member for Rhondda, all those Back Benchers apparently stood on a secret manifesto to socially cleanse London. Knowing the hon. Gentleman as I do, I am sure that had Labour Members been in government and raised such matters, he would have been the first to jump to their defence, like he always was. The answer to that is: shame on them for scaring all those people in London.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

Let me invite the right hon. Gentleman to get off his high horse for a moment. He seems to be claiming that there is a conspiracy on the part of the Labour Front-Bench team against the Labour Back Benchers not to tell them what was in the manifesto on which they were elected. If he has established that there is a consistent approach between me and my predecessors in my current role, would he like to share with the House his thinking about the comments that were offered by the Conservative Mayor of London about the proposals, Boris Johnson?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I agree with Boris Johnson. What he said is that there will be no "Kosovo-style cleansing" of London. Quite right. He was responding to the scare stories and the scaremongering of all those on the Opposition Benches, because that is exactly the phraseology that they were using.

Photo of Emily Thornberry Emily Thornberry Shadow Minister (Health)

Will the right hon. Gentleman help us now? Which Front Bencher has been scaring my constituents by saying that the policy will be worse than the highland clearances? Which shameful Front Bencher has been telling the press that?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I think that that is the case on the Opposition side. The reality is that they have been scaring the public, and they know it. I detect just a little dog whistle blowing from those on the Labour Benches, freezing and frightening everybody out there in the socially rented sector.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I want to deal with some of the allegations. Opposition Members made the allegations, so let us get the record straight. The first was that London will somehow end up like Paris-socially cleansed so that people live only on the outer circle.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

Oh, it is true? Okay. Let me remind the House about one simple point. The proposed changes to the local housing allowance concern the private rented sector. London has nearly 800,000 social homes-by the way, the Labour Government built far too few in their time-and the changes do not affect them. London has social housing embedded in its heart, and that will not change. So Labour Members must have known that they were scaring people with a complete pack of lies and nonsense. [ Interruption. ]

Photo of John Bercow John Bercow Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Speaker of the House of Commons

Order. I apologise to the Secretary of State. I accept that there are strong views on this matter, and that the atmosphere is highly charged, but there are many subscribers to this debate, and for the benefit of Back-Bench Members, the Chair would like to accommodate as many as possible. The more noise there is, the greater the delay, and the more difficult it will be to accommodate them. Perhaps we can calm down a little.

Photo of Glenda Jackson Glenda Jackson Labour, Hampstead and Kilburn

Is it not also part of the right hon. Gentleman's housing policy to ensure that rents in the social housing sector will rise to 90% of the median, and that the Government are considering abolishing secure tenancies?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

The answer is no for existing tenants. Our policy will apply to new tenants and new build, so the hon. Lady should check her facts.

Let us not forget that the private rental market is dynamic. That is the point that the Opposition fail to mention.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I will give way in a moment.

Around 40% of private rental tenancies are less than a year old, and 70% are less than three years old. What effectively happens in the marketplace is that there is a huge amount of movement. Another nonsense that Opposition Members have peddled over the past two weeks is that the sector is made up of a static group of people who have mostly lived in the same place all their lives and that we are about to uproot people who have a reasonable and rational reason to live where they are. In the past year, more than 100,000 people in the sector moved naturally. The idea that we will go in and raid all those homes is utter nonsense and scaremongering.

Photo of Andrew Slaughter Andrew Slaughter Shadow Minister (Justice)

The report referred to earlier says that independent research shows that 134,000 households will be evicted or forced to move when the cuts come in next year, and those are just the first set of cuts. It is the Government's policy to get rid of new social tenancies and to raise rents for new tenants to 80%. Over a period, the exact effect of that combination of measures will mean that no one on a low income can live in the inner city. Will the right hon. Gentleman have the courage to admit that that is his Government's policy?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

The impact assessment does not say that, and it is typical of the Opposition to take a figure for those who will be affected and assume automatically that they will be driven out of their homes. That is shameful.

Photo of Angie Bray Angie Bray Conservative, Ealing Central and Acton

The scaremongering is a disgrace, and I am sure that many of us have had scared constituents coming to us having been worried unnecessarily by stories that they have heard from Labour Members. I have been looking online at some of the properties on offer in the private rented sector in Ealing and Central Acton. There are some remarkably good offers around that are well within the proposed caps-for example, a four-bedroom house with a garden at under £400 a week, and a flat for about £250 a week with access to a swimming pool. The situation is really not as dire as the Opposition are suggesting.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

My hon. Friend is right. We believe, and our calculations show that one third of all properties are available and will be ready for those who have to move. I say "have to move" because that assumes a static marketplace, and this marketplace is not static. I will return to that point in a second.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I will give way in a moment.

I want to deal with another point that is being trumpeted by Labour Members, and some others who have risen to the worst extent of some of the figures. Families with children over 10 who must share a bedroom are classed as homeless and that led to the strange suggestion during an exchange in the Select Committee that tens of thousands of people will be homeless. That definition of homelessness is not one that I recognise. In fact, I looked at the report of that Select Committee and I note that my hon. Friend Sajid Javid asked Roger Harding of Shelter whether he, my hon. Friend, having shared a bedroom as a child, had been homeless according to Shelter's definition. Shelter's response was yes, he had been. We are none of us served by this kind of nonsense. By all means let us have a rational debate about the reality of what we are trying to do.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I will give way to the right hon. Gentleman in a moment. I am quite happy to engage with him on this point, but, in answer to my original question, will he now disown all those who have been running around the houses telling everybody that there will be social cleansing and that all these people will be made homeless? Will he now say that that is not true, and will he apologise for what they were doing?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I do not think that the best interests of the country are served by the kind of exchange that the right hon. Gentleman is engaging in. I accept his offer of a rational conversation, however, and he has just raised the issue of the definition of homelessness. Only last week, his colleague Minister, the noble Lord Freud, said that it was desirable that the legislation be changed in relation to the category of homelessness. Will the Secretary of State please clarify the Government's position on this? Is he supportive of changing homelessness legislation, or is he now going to cut his own Minister adrift?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

We have absolutely no plans to do that. Furthermore, if the right hon. Gentleman wants to engage in a sensible, constructive discussion on how we define homelessness, I am happy to do that. The point I am making about what has been going on is that Opposition Members should know better-he has an ex-housing Minister sitting next to him-and that they know full well that those definitions of "homeless" are simply not true. He should have disowned them early on, before we started this debate.

Photo of Simon Hughes Simon Hughes Deputy Leader, Liberal Democrats

The Secretary of State is rightly trying to lower the temperature and to ensure that we deal in facts and not in hyperbole. Will he take this opportunity to deal with one other myth that has become common? Will he confirm that, if anyone in the private rented sector has to move because their property has become too expensive, it is not the Government's policy that they should move to a far-off community with which they have no links, and that the intention will always be that they should ideally stay in the community or council area where they come from and where they have lived?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

That is exactly what we want and what we intend. That is what we believe, for the most part, will actually happen-and in smaller numbers than people think. In some cases, there will be short moves even within boroughs.

I was asked about impact assessments, and we are going to publish them. We are bound to do so by the legislation. I am not trying to hide from that. We published an impact assessment after the Budget, and we are going to publish them when the legislation is due. I have already said that we will do that.

Photo of Sajid Javid Sajid Javid Conservative, Bromsgrove

My right hon. Friend was right to point out that I was shocked to learn in the Select Committee that I had been homeless as a child. I believe, however, that the question is not so much one of the definition of homelessness as one of whether people living on housing benefit should be forced to make the same choices that other low-income working families are forced to make. Those low-income working families typically pay rent to the 30th percentile and their children are forced to share bedrooms, as they would be in any ordinary family. It should be no different for anyone on housing benefit.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

My hon. Friend's exchange was the most interesting one to come out of that Committee sitting, and he is right about this. I do not think that the previous Government intended these consequences; they simply failed to recognise that their change was going to fuel this growth. If they are honest with themselves, they would say that they know that. The ex-Chancellor actually said that he thought that this was out of control. These are the sort of choices that ordinary people have to make when they cut their budgets in accordance with what housing they can afford, and that is what we are trying to do here. It is not about punishing people; it is about trying to get the rents in the social area of private renting back into line with what people are paying who are working and earning marginal incomes and are therefore unable to make ends meet.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

The right hon. Gentleman has just made a statement saying that this is not about punishing people. Can he reconcile that statement with his policy of cutting 10% of somebody's housing benefit, when that person has done everything right, turned up for interviews, filled in applications and sought to secure jobs but alas, in a job market where five claimants chase every vacancy, has been unable to secure a job after 12 months?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

The realities of what we are bringing in around that will make the change happen. [Hon. Members: "What?"] Wait a minute-here is the real point. About 90% of all those who are unemployed are back into work within the year. That leaves us with a target of 10%. Remember that we are now bringing in the Work programme, which will work extensively with all the people in that category and return them to work. As I said to the right hon. Gentleman earlier, the changes we are making to the benefit system will make it much easier for those people to go back to work. My point is simply this: they will be achievable; they get rid of a disincentive to go to work, and we believe that they will actually work.

Several hon. Members:

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Photo of Bob Russell Bob Russell Liberal Democrat, Colchester

Will my right hon. Friend clarify a point? Is he saying that rents are too high in the private sector? If that is the case-I am sure that is what he said-should there not be, in the interests of fairness, other measures to deal with landlords whose rents are too high?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

Let me deal with that question. My Department pays for 40% of all rental housing in Britain-we pay 40% of the total bills-and is the biggest purchaser. What we do therefore has a massive effect on the marketplace. This is the point that Labour Members missed out on when they were in government. Any change they made had a direct effect on the marketplace. My simple point to the right hon. Member for Paisley and Renfrewshire South is that the change in local housing allowance, as we can see from the graphs, fuelled an immediate increase-it was not just down to the recession, but down to two particular factors. In getting the calculations wrong about the median line and the capping, they ended up allowing LHA to rocket to provide landlords with excess amounts of money for providing housing that would have cost less. How do we know that? [Interruption.] I am going to answer this really important question.

We know that for two good reasons. First, if we compare those who remained on what was there before-it did not change for them because it was new people who came on to LHA-we find that the differential between where they are now and where the LHA rate is amounts to 10%. LHA growth is thus 10% above where we might have been had the change not been made. That is the first thing. [Interruption.] Hold on a second. That was one factor that fuelled the problem because it allowed landlords to push up to the 50% point, which is exactly what they did.

The second point is that there are many things we can do. We now know that, according to the Office for National Statistics, the private marketplace in housing-Labour Members are completely wrong about this-fell by around 5% last year. At the same time, LHA rates, which the previous Government had set and left to us, had risen by 3%. There is thus a 7% gap with what is going on in the marketplace. What we want to do, by working with councils, is to drive those rents back down. The purpose of these changes is to give a real impetus to getting the rents down to make affordable housing more available in some areas.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

I have an excellent researcher who earns £22,000 a year. Just before I came to attend this debate, he pointed out that he has to commute into London because he cannot afford a room in central London. He remarked that his best chance of getting a flat in central London was to resign from his job and make himself homeless.

Several hon. Members:

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Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

May I answer my hon. Friend's point first before I give way? My hon. Friend's real point is that there is no fairness in this particular system when people who have to make decisions about their housing have to commute distances to get to work. That is the reality for them. The idea that people can live exactly where there is work is simply not the case. That is the choice that people have to make.

Several hon. Members:

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Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

Many of the colleagues of the right hon. Member for Paisley and Renfrewshire South want me to give way to them. Does he really want to take their place? Okay-

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. Members should not be constantly standing on their feet. The Secretary of State is indicating to whom he intends to give way. I would be grateful if Members resumed their seats.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I would not wish the Secretary of State, however inadvertently, to leave the House with a misapprehension in relation to the impact of the 10% cut in housing benefit on those receiving jobseeker's allowance who find themselves unemployed after a year. If I heard him correctly, he came close to saying that people would not lose out because of other changes to the benefits system, such as the introduction of the Work programme. Will he therefore explain why, in the Red Book, it is scored as a saving of £110 million? Either people will lose money and be punished because they find themselves unemployed after 12 months, or they will be better off, in which case there should not be that saving score in the Red Book.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

We do not believe that they will reach that point. If the right hon. Gentleman looks at the figures-

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I will come back to the right hon. Gentleman in a second. In the current static state, we will save money through the reforms that we have made.

Photo of Gordon Marsden Gordon Marsden Shadow Minister (Business, Innovation and Skills)

The right hon. Gentleman is setting the cap and justifying the 10% cut for the long-term unemployed on the basis that people will be moved from welfare into work. Does he not realise that part of that process involves retraining and reskilling? If he does realise that, why has there been so little discussion between him and Ministers from the Department for Business, Innovation and Skills?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I do not quite understand why the hon. Gentleman asks that question. I have been talking about the issue endlessly to Ministers from the Department for Business, Innovation and Skills. [Interruption.] The hon. Gentleman can take my word for it that I have spent a great deal of time talking to them, but if he would like to attend the next meeting, I should be more than happy to invite him.

Several hon. Members:

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Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I will give way, but I want to make some progress first.

The fact is that we have heard a lot of this nonsense. We have put aside a large amount of money-some £140 million, and we have been keeping the position under review-so that we can deal with the hardest cases when we believe that it is necessary for anyone to be affected or moved. The Department for Communities and Local Government is assisting us with that.

Among the Opposition's other charges was the charge that our changes were somehow not fair. The maximum rent following a cap-and the Opposition still have not said whether they agree with it-is £400, the weekly equivalent of more than £20,000 a year. Let me remind the House what someone who was out there earning would have to earn to pay that £20,000. That person would have to earn £80,000. The Government left us an LHA rate of £104,000 a year. Someone would have to earn £250,000 a year to pay that in rent. [Interruption.] I fully accept that we are dealing with the top end of the cases, who constitute by no means the largest number. The point is, however, that the previous Government were so slack with the system that they allowed abuses and excesses. Before the last election, even people on their own side were saying that they would have to change it. That is the reality.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I will, but then I must make some more progress.

Photo of Toby Perkins Toby Perkins Shadow Minister (Education)

I think that the Secretary of State is focusing excessively on the cap. My right hon. Friend Mr Alexander has already made it clear that that is not the main focus of our objections to the Government's proposals. The Secretary of State dealt with myths earlier. Will he now deal with the myth that housing benefit recipients are out of work? Many of them are working, but they are low-paid. More than 350 of them in Chesterfield will be badly affected, when they are trying to work their way towards a better life. Why are they the people whom the Secretary of State is attacking with his policy?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

There are people in work who receive housing benefit, but the worst aspect of the changes with which the previous Government left us is that many of them are now trapped in short working hours. They dare not work for more hours, because they would lose too much of their housing benefit and would lose their homes as a consequence. Setting housing benefit at the levels at which the previous Government set it was no kindness to people who really do want to get on and work longer hours, because they are faced with the invidious choice of whether to move. That is one of the reasons more than 100,000 people moved in the rental market last year. Many people have to move to find a house that is suitable so that they can go and find better work. That is the reality. The hon. Gentleman's party left us with that situation, and it is his party that he should now blame for the mess and chaos.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I must make a bit of progress. I will give way in a second.

Although that was not the largest number, the fact is that the top 5,000 of those cases of housing benefit cost the Exchequer £100 million a year. Unless Labour Members think that £100 million a year is not a lot of money, I should like to know why the shadow Secretary of State does not say that he agrees with the capping system that we want to introduce. Will he perhaps tell me whether he agrees with the capping system? No, he will not. Yet again we have heard no policy from the Opposition, but the fact is that we inherited a chaotic housing system.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I repeat what I said earlier: we want to avoid the arbitrary imposition of an immediate cap resulting in higher costs, not lower costs, for the taxpayer. We are prepared to look at a phased approach, but we also think that a regional cap should be considered. Is that clear enough for the right hon. Gentleman?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

The right hon. Gentleman knows that the vast majority of that £100 million comes from London. So what is he saying? Is he going to impose a cap on London?

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

Even the right hon. Gentleman and I would agree that London is contained within one of the regions of the United Kingdom.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

At last, we have an admission from the shadow Secretary of State that Labour is going to cap this. Now we only have to deal with the levels. It is unbelievable. If he wants to say that he is going to cap it, why was that not in the motion? There is not a word. Labour Members have spent the last two weeks scaring everybody out there and then not daring to tell people that they themselves want to cap. What a ridiculous lot of nonsense. The reality is that we inherited the mess that their Government left behind.

Photo of Karen Buck Karen Buck Shadow Minister (Work and Pensions)

On that point, will the right hon. Gentleman confirm that the Mayor of London's housing adviser has stated that, in London alone, the cost of temporary accommodation for homeless households, arising from the impact of the caps, could exceed the total savings by £13 million in one region alone? Will he also confirm that the figure for working households on local housing allowance is almost half the total case load, including those on JSA with the 90% annual turnover that he has just confirmed?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

The reality is that the adviser said that before he even knew about how much we were using for the discretionary allowance. [Interruption.] Hold on a second. He said "could". The reality is that this is not going to happen. There should be no need, with the discretionary allowance, for people to be made homeless. That is just the nonsense with which Labour Members want to scare everybody.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

No, no; I am already answering the question. I do not agree and we do not agree with the statement that the adviser made. I have explained the issue to him personally, and he has accepted that.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

No, I am not going to give way. I also want to say to the hon. Lady that she includes in her figures those who are in work with those on jobseeker's allowance. She must not confuse two different positions, yet again trying to merge figures that are not right.

Several hon. Members:

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Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I am going to make progress. Labour Members continue to try to accelerate the figures to the worst level and then make ludicrous assumptions. That is what is going on. The fact is that we inherited 5 million people on out-of-work benefits from the Labour Government-the hon. Lady was in the Government-which they did nothing about at all. Two million people of working age are claiming incapacity benefit, of whom 900,000 have been claiming it for an entire decade.

The figures that lie behind this issue are astonishing. Today we spend £1 in £3 on British welfare, which that Government left us, yet youth unemployment is higher, inequality is greater and there are 800,000 more working-age adults in poverty than in 1998-99. That is the great record of the last Government.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

The housing benefit reforms have to be seen in the context of that terrible bill that we were left. Housing benefit has rocketed from £14 billion in 2005-06 to nearly £22 billion in cash terms in 2010-11. By the way, I say to Caroline Flint, who I gather was on TV earlier saying that the benefit was basically in a steady state, that that is a real-terms 50% increase in the housing bill. That does not sound like a steady state to me or anybody else I know.

If left unreformed, the budget is projected to reach £24 billion in 2014-15. That is £1,500 per taxpayer per year. If Labour Members think that reasonable and fair-

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

No, I am not giving way right now because somebody else wants to intervene. If Labour Members think that that budget is fair, they should say to taxpayers, "We think it's fair to charge you, who are working hard, more, to give people housing that they could not afford if they were in work."

Photo of Andrew Griffiths Andrew Griffiths Conservative, Burton

I thank the Secretary of State for giving way. He will know that one of the myths put about by the Opposition was that councils in London were already booking bed and breakfasts across the city to cope with the consequences of this policy. I draw the Secretary of State's attention to a website called FullFact.org, which has made some freedom of information requests to local authorities in London. I shall pick just a few. In Kensington and Chelsea, no such bookings have been made; in Wandsworth, no bookings have been made in bed and breakfasts; Lewisham council confirms that it has not made any bookings-

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. That was supposed to be an intervention, not an opportunity to read statistics on to the record. I am sure the Secretary of State is perfectly capable of doing that himself.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

My hon. Friend Andrew Griffiths is right. That was based on one comment by one person, who backed it up with no evidence. The point here is that, as we are discussing with councils, there is no need for them to worry about having to put people into homeless accommodation because once we get these numbers right, which we believe we are doing, the money we will be allowing will be sufficient to cover the costs, such as for rents and school year changes, of those who may have to move, of whom there will be far fewer than the Opposition claim. That is the real point, so my hon. Friend is right. What did Labour do with the figure in question? They just used it by ramping it up and saying, "This is terrible, all these people are going to be shipped out to Reading or somewhere on the south coast"-another scare story put about by Labour. It is absurd.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

If the right hon. Gentleman wants to intervene yet again, he should take the opportunity to say something that he should have made clear in his speech: that he abhors all those who have frightened everybody over homelessness.

Photo of Douglas Alexander Douglas Alexander Shadow Secretary of State for Work and Pensions

I am very happy to condemn people who frighten on the basis of figures, like those the right hon. Gentleman has just used to suggest the total housing benefit bill at the end of this Parliament, as that is premised on there being absolutely no change in this Parliament, despite the fact that in the first half of his speech he seemed to argue that we had had lots of reform proposals up our sleeve. Please may we have some logic and rationality? Either we were proposing to reform the system, in which case the figure will not be £24 billion, or we were not going to reform it, in which case it was. Which is it?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

There was nothing in the spending plans and Labour Members never had the courage to tell the general public what they were going to do. They fought an election on a false premise. [Interruption.] They pretended- [Interruption.] No, it was they who pretended. They fought an election on the false premise that somehow they were not going to have to make these changes and they were not going to be severe. Perhaps the right hon. Gentleman will now tell me by exactly how much they were planning to cut the housing budget; would he like me to give way so he can tell me that? He does not rise to his feet because he cannot argue that case; he is completely wrong. Labour says one thing to the public and something else in its private discussions.

I want to make one other important point. I recently appeared before the Select Committee and an Opposition Member put it to me that one reason the local housing allowance figures had risen so much was that there was not enough social housing. I agree, but who do we have to blame for that over the past 10 years? That is the point. [Interruption.] Yes, 13 years in total, but the situation was particularly bad during the last 10 of them.

We must remember that the previous Government left us with a house building record that is the lowest since the early 1920s. Affordable housing supply as a whole was down by more than a third under the last Government. On average, 21,800 social rented homes were built each year, even lower than the figure-which they used to argue was too low-achieved by the previous Conservative Government, which was 39,000 a year.

The reality is that Labour Members set a double whammy for themselves. They introduced an LHA which then rose because they did not build enough houses, and they allowed the whole private rented market to balloon, all because of their failure during their period in government. I hope they will apologise for that one day, but I suspect not.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I will give way in a minute.

Nine tenths of the rise in housing benefit in the past 10 years is down to increased rents. To put that into context, if that increased spend in rents going to private landlords had instead been used to invest in social housing, we would have had 80,000 social homes being built per year. I therefore wonder who Labour Members think has squandered the money they had flowing into the Exchequer. Political short-termism was the reason for that.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

Okay, I will give way to the right hon. Gentleman as he was one of those responsible.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

Will the Secretary of State please now put the record straight and say that the increase in housing benefit attributable to rent increase covers both the social and the private sectors, and that the increase in housing association rents contributed to building the homes that were built? Will he now put the record straight and say it is completely wrong to imply that this is entirely going to private landlords when it is not?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

When the right hon. Gentleman is in a hole he should stop digging. The reality is that he was responsible for one of the lowest levels of building social housing. I do not know whether he is proud of that, but I would not be if I were sitting there with him.

We have to ensure that people who pay their way without recourse to benefits will no longer have to subsidise people who live in properties that the former could not afford. As I said, the maximum rate under the cap will be set at a level that is affordable and which some will consider generous. Based on what people spend on average on housing, the figure will be quite high; about £80,000 a year is what you would have to have.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

Forgive me, but I am going to make some progress, as I have given way a lot. I might give way again later.

Through the emergency Budget and spending review, we proposed a set of housing benefit reforms designed to bring back under control a system that has been out of control. I accept that the responsibility of Government is always to get the balance right as we protect, incentivise, and ensure fairness in the system. Critically, for housing, that means getting the rents down. Landlords have a responsibility, and I am prepared and determined to work with councils, with the Mayor of London and with any other mayor to help get those rents down. We are the biggest purchaser of rents and I believe we will have a real role to play there. As I have pointed out, private rents have, in any case, dropped in the past year-Opposition Members need to recognise that that involves an actual figure, not one that they can conjure up like the rest of their stuff.

Let me remind the House how distorted the private rental market is. As I said, between November 2008 and February 2010 private rents fell by 5% and local housing allowance rates rose by 3%. LHA has now run its unaffordable course and we must turn it around; it fuelled a landlords' charter to raise rents and has made housing more expensive for the whole population. It has not done any favours for those on low or marginal incomes; it has done them a great disservice. There are parts of central London where people can live only if they are on housing benefit or they are very wealthy. One could argue that Labour has socially cleared parts of London of working people who are trying to earn a living. That is the effect of what Labour has been doing. One would think that as the country grappled with the storm of the recession, these rents would come down, but they did not.

I agree with the right hon. Member for Paisley and Renfrewshire South that we must manage this transition, and I am happy to talk to him about how that works. We have sought to do that because local authorities still have a statutory duty to house people, and we will work with them as well; with my right hon. Friend the Secretary of State for Communities and Local Government, we are working with councils right now on the transition plan. Our figures show that 96% of claimants will face a shortfall of below £20 per week and the vast majority of those will see a shortfall of over that figure-I remind people that this relates to a steady state and does not even begin to recognise what happens when the rents start to fall. If they fall by any small percentage, that changes the picture dramatically.

Several hon. Members:

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Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I have said that I have given way enough, so I am going to complete this. For where problems do arise, we have tripled the discretionary housing payment to £140 million. We will keep that under review; I am prepared, where necessary, even to add to that. We will not shy away from the duty of care to provide housing for those who cannot house themselves. A safety net will not just remain; it will be improved for the most vulnerable. That will be done through an increase in discretionary housing payments and an additional bedroom for non-resident carers-the previous Government should have provided that, but never did. If we are prepared to pay, as we are, some £20,000, there is no reason anyone should be left without a home. Our choices are tough but right, and we are weeks from regulations to fix the broken system.

We are in touching distance of changing things, including through producing, later this week, a welfare Bill that will put all this into context and that could change the whole prospect for the next generation as we improve work incentives, secure fairness, and protect the vulnerable. We will introduce a comprehensive work programme, which will support people going back to work in a way that has never been done before; we will build a universal credit system to ensure work pays; and we will get welfare spending under control to regain economic credibility and stability.

May I remind the House of something that the Opposition did when they were in government? They made changes when they sorted out the pathway back in 2005. At that time, they made an assumption that those who were renting could cope with an £18 increase in their rent, which they duly did. It is not as if it was us who were hammering people in difficulty; the Labour Government were already doing it and then they took their eye off the ball. That is why, over the last week, we have witnessed Labour's confusion. Some Labour Members, although not the right hon. Member for Paisley and Renfrewshire South, to be fair to him, but a number of his colleagues-he knows this, and I am looking him in the eye-started to blow very faintly and then louder on the dog whistle, just trying to scare people outside, winding things up until they became ludicrous and he finally had to try to draw the tone back down to a reasonable level. I believe that the right hon. Gentleman is a reasonable man and that what we need is constructive dialogue-I am ready for that. He should say to his colleagues that if they want to show what it is really like to be in opposition preparing for government, they need to put the dog whistle away, change what they are doing and behave as though they have a credible plan.

Several hon. Members:

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Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. I remind hon. Members that Mr Speaker has imposed an eight-minute time limit on all speeches. There are 36 or 37 Members who wish to participate this afternoon and the time limit starts now.

Photo of Tony Lloyd Tony Lloyd Labour, Manchester Central 5:05 pm, 9th November 2010

The Secretary of State began by making great play about the fact that there had been what he described as "scaremongering". However, many of my constituents are very scared about his Government's proposals. If they have taken the trouble to listen to his speech today, I regret to say that he will have done nothing to allay their concerns. Of those in receipt of housing benefit in my city of Manchester-70,000-plus-10,000 will be affected by the proposals. Some will be affected significantly, as I hope to make clear in a moment. That is the reality. People are scared because they see either a significant loss of income or the reality that they will be forced to move home. That is what the proposals will do.

I am delighted that Simon Hughes is in the Chamber. He was quoted in an election leaflet for his party in my constituency recently and it seemed to run almost totally counter to his question to the Secretary of State. I will be happy to give way to him on this point, but the words that were put into his mouth in that election leaflet were that it was "Labour lies" that people would be forced to move from their homes-Labour lies told in order to win an election. A few moments ago, he asked the Secretary of State to confirm that were people forced to move, they would be in a position to stay in the same neighbourhood. He clearly accepts that people will be forced to move under these proposals, and that, of course, is not a Labour lie but something that the Government are proposing.

Photo of Simon Hughes Simon Hughes Deputy Leader, Liberal Democrats

For the avoidance of doubt, I am very clear that if people who are in the private sector have to move they should not be forced to move away from their communities, because community cohesion is very important, and that the proposal to knock 10% off people's benefit if they have been out of work for a year and have not been able to get a job is not something I support.

Photo of Tony Lloyd Tony Lloyd Labour, Manchester Central

That is very helpful, but I hope that if the hon. Gentleman speaks later he apologise to my constituents, at least for the words that were put into his mouth in a Lib Dem election leaflet that went out during the by-election that was won very successfully by the Labour party last week in Manchester. It was quite clear that he was quoted as saying that people would not be forced to move, but it is now clear that both he and I accept that the Government's proposals will force people to give up their homes, and that is unacceptable and atrocious.

Photo of Simon Hughes Simon Hughes Deputy Leader, Liberal Democrats

I do not think that we can anticipate exactly what will happen, which is why speculating and making people worried is unfair. We have to go on the figures that the Government have produced in their impact assessment and I hope that the local authorities and the Government, as I have said to the Secretary of State, will agree the figures. If we get common facts, we will reduce alarm considerably.

Photo of Tony Lloyd Tony Lloyd Labour, Manchester Central

I think that that was nearly the apology I sought, although it was not quite the apology that my constituents were entitled to hear from the hon. Gentleman, who supports this coalition. It was not quite the apology needed by those who will lose significant sums of money and will be forced to absorb that loss by not being able to spend their money on other things.

Photo of Steve Webb Steve Webb The Minister of State, Department for Work and Pensions

I think the hon. Gentleman's own manifesto pledged this precise policy.

Photo of Tony Lloyd Tony Lloyd Labour, Manchester Central

I am talking about the Minister's policy. My right hon. Friend Mr Alexander made it clear what a Labour Government would have done. That was clear also from the statements of the then Secretary of State, and it was very different from the current Government's proposals. The proposed income loss is not something that I recognise from any Labour manifesto.

The income loss will be significant for those in one, two or three-bedroom houses. In my constituency, for example, 8,000 people face an income loss of £12 to £14 a week. That sum may be trivial to a Minister or Secretary of State, but £12 to £14 is a significant part of the disposable income of somebody on housing benefit or on benefits more generally. The House ought not to countenance taking away that amount of money. It penalises the most vulnerable people in our society to prop up the Government's policies. That is not scaremongering; it is a disgrace. Ministers and their supporters should recognise that.

There is another aspect of the proposals that we should not countenance. The Secretary of State made a long and complicated speech, which gave no comfort whatever to those in my constituency who will lose money. It gave no comfort to those who will potentially lose their homes. It gave no comfort because the right hon. Gentleman is far more concerned with the polemic of his speech than with the reality of human beings who will lose out in respect of both housing and their finances.

I hope that the right hon. Gentleman and others on the Government Benches will think again, particularly about some of the most difficult aspects of their proposals. There are parts of them which, with proper care and attention, we could all begin to agree with. The problem, at least in part, is the ridiculous speed of their implementation and the lack of acceptance of the impact that they will have. Were the Secretary of State to stand at the Dispatch Box and say that the Government are prepared to look again at the speed of their implementation, we might have a basis for real debate.

The worry among my constituents is that the proposals are driven, first, by concerns of budgetary restraint-the battle that the Secretary of State fought with the Chancellor and lost-and secondly, although this is a claim that I do not make against the Secretary of State, by the apparent desire among some of his Back Benchers to penalise the poorest and most vulnerable in our society. That rhetoric has come through in some of the debate.

Photo of Tony Lloyd Tony Lloyd Labour, Manchester Central

The hon. Gentleman will forgive me, I have a limited amount of time and will lose some if I give way.

The speed of the changes raises real issues. Even if I believed that rents would adjust as the Secretary of State believes, they would not do so at the lightning speed required by his policies. People will not suddenly find their landlords voluntarily reducing their rents by £12, £13 or £14 a week. That will not happen for a number of reasons.

Photo of Tony Lloyd Tony Lloyd Labour, Manchester Central

No, I am sorry.

The first of those reasons is that there is no evidence that rents adjust at that speed. The second and more important reason is that in a city such as Manchester-a complicated city which is quite different from the London housing market, with different types of housing tenure and different types of housing cheek by jowl-the housing benefit system is not the primary driver of rental levels. Those are driven by other factors. If that thesis is right, the Secretary of State's proposals are doomed not to succeed. If they do not succeed, rent levels will not adjust downwards and people will inevitably lose money. Even if rent levels were to adjust, they would not do that overnight. That is why, partly as a plea and partly as a demand on behalf of my constituents, I hope that the Secretary of State will think again about the speed with which the changes are implemented.

The Secretary of State's argument about jobseeker's allowance was rather confusing. He seemed to imply that no one would really lose 10% of JSA because nobody would find themselves in that position. Even in the relatively high employment times under the Labour Government, my constituency still had serious pockets of unemployment because it is one of those constituencies that are the repository of the longer-term unemployed. In those circumstances, it is fanciful to suggest that no one on JSA will be unemployed for more than 12 months and fanciful to say that nobody will be hit by that 10% penalty.

Ten per cent. of JSA is a huge amount of money for somebody in that situation to lose. I hope that the Secretary of State will look again at this issue, because, as my right hon. Friend the shadow Secretary of State has said on many occasions, those whom we regard as blameless-those who have conformed to everything that the Government and society have asked of them, sought work and gone out of their way to upskill and everything else-simply should not be penalised in the way that the Government propose. I hope that the Secretary of State, almost mirroring what he said-if he believes it-will say that if all the other changes that he proposes to benefits are to be effective, he will withdraw the 10% cut. To follow his direction of travel, it is an unnecessary 10% cut, and it simply should not exist.

People in my constituency who are in work, looking for work or disabled are going to lose out under the proposals. When Manchester city council considered the measures, it discovered that the people most likely to be hurt were single parents and those seeking work. They are simply not the people whom we should penalise. If Government Members' ambition is to penalise, they should support their Government and these proposals. If their real intention is to reform the system, they should say to their Secretary of State, "Please think again."

Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire 5:16 pm, 9th November 2010

After the election the Government found themselves in a situation whereby it was necessary to curb costs in a number of areas, and housing benefit was one of them. However, it is important to do so fairly and to bear in mind the policy's overall effect. We cannot get away from the fact that housing benefit rents went up faster than the private rental market from 2000 right the way through to 2007. That is the evidence that was given to the Select Committee on Work and Pensions. In 2008, the system changed, the local housing allowance came in and the situation became worse.

The National Housing Federation, in its evidence to the Committee, said that

"private sector landlords increased rents with the introduction of Local Housing Allowances... the average housing benefit reward for Local Housing Allowance cases is over £9 per week more than for people still on the previous scheme... the Local Authority Omnibus Survey...finds that Housing Benefit managers say that some landlords are using the transparency of the arrangements to raise rents to the Local Housing Allowance level."

The British Property Federation said that

"rents in some areas have adjusted towards the local housing allowance rates and in markets where there are significant claimants this is seen as the 'going rate'."

Paddington citizens advice bureau in central London said that

"we understand the need to place a cap on rents paid by the tax payer, especially in central London where the LHA was spiralling out of control".

I shall not cite any more evidence, but I remember that during the Committee's previous inquiry into housing allowance earlier this year and before the general election, Blackpool, to which the hon. Member for Blackpool South (Mr Marsden referred, was specifically mentioned, because the broad rental market area there included Fylde. As a result, all the rents in central Blackpool went up far faster and far higher than was expected, so it is not surprising that the change under discussion, which I hope will rectify the situation, will have an impact in Blackpool.

Photo of Karen Bradley Karen Bradley Conservative, Staffordshire Moorlands

In evidence to the Committee, the Royal Institution of Chartered Surveyors told us that the average returns for private landlords in the housing benefit market were 4 to 5%. Does my hon. Friend agree that that seems to be a significant return for any private landlord?

Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

My hon. Friend, who makes an important contribution to the Committee, makes an important point. If we look at the effect of the policy, we find no doubt that landlords will reduce rents, because all the evidence to the Committee suggests that they will.

There are arguments about how much effect the changes will have, but the British Property Federation and the Residential Landlords Association have said that 29% of landlords would reduce rents voluntarily. The Cambridge university research for Shelter shows that 29% of tenants will not be able to negotiate a rent reduction or make up the difference. It concludes that of the remaining 29%, 50% of the group will be in difficulties because landlords will not accept the lower rents paid and will not forbear. It says that some £42 million to £82 million a year will be needed to help those who do not get that forbearance from the landlord, are unable to negotiate a change, and so on.

Let us bear in mind, however, that the Government have set aside very substantial resources for exactly this problem. One might say that the mid-point is around £60 million, which is the figure that the Government are moving towards, although the Secretary of State said, very reasonably, that he will keep it under review and see what exact figure is needed. It is completely wrong to suggest that the Government have gone into this without realising that they must match hardship if it is found.

Photo of Michael McCann Michael McCann Labour, East Kilbride, Strathaven and Lesmahagow

If this is about a recalibration of rent, why are the Government using the poorest and most vulnerable in society as a battering ram to get there?

Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

To be fair, the hon. Gentleman should think occasionally about the hard-pressed taxpayer. Working people on the lowest incomes pay lower rents than housing benefit claimants. Surely the principle should be that we all want to help someone worse off than ourselves, but that the average taxpayer should not be expected to put a person into a better position than he himself would ever be able to afford.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Business, Innovation and Skills), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Communities and Local Government), Shadow PC Spokesperson (Culture, Media and Sport), Shadow PC Spokesperson (Wales)

Would not a better approach be to follow the regulatory reforms in the Republic of Ireland and 40 other countries, and in New York city, where rents are capped for benefit recipients and for normal working people? That would enable the Government to control their benefits bill as well as making rents affordable for normal working people.

Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

As somebody who believes in markets, I think that what really needs to happen is that we have enough social housing. As the Secretary of State said, it is woeful that the previous Government, who were supposed to want to help people in that situation, did so little over all those years. I am very hopeful that the proposals will improve matters.

Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

I am running short of time, I am afraid.

Let me turn to disincentives to work. The fact is that the Government's welfare programme is all about trying to get people back to work. It is a big ambition to do something about the 3 million households where nobody works, even though there are people of working age.

Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

I have got only a few minutes left, and I have already given way three or four times.

It is a disincentive for someone to work if they know that they will never be able to earn enough to pay their rent. That is a ludicrous situation in which to have trapped people. We need to tackle that problem, and there is no other truly sensible way of doing so.

Photo of Karen Buck Karen Buck Shadow Minister (Work and Pensions)

Just before this myth takes hold too completely, will the hon. Gentleman at least concede that just under half the recipients of local housing allowance are either in work or on jobseeker's allowance? The Secretary of State confirmed that 90% of JSA claimants returned to work within a year. Constantly repeating the idea that housing benefit claimants are not in work is misleading the House, frankly.

Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

But the hon. Lady must accept that the Secretary of State has a grand ambition, which is to get people into work. One of the ways of doing that is the universal credit, which tackles the very problem that she is talking about. We should be supporting the Secretary of State, as a Parliament, for finally tackling some of these dreadful issues that have pulled our country back for so many years. She really must not go around telling people that 50% of such people are in work or on JSA, because 13% are in work, not 50%. Someone who enters work on low pay loses housing benefit very soon afterwards. Addressing that issue is one of the great improvements that universal credit will bring. I support the policy, and I believe that the independent evidence supports it.

Photo of William Bain William Bain Shadow Minister (Environment, Food and Rural Affairs) 5:24 pm, 9th November 2010

It is a pleasure to follow Mr Heald and the other right hon. and hon. Members who have contributed so far.

The Secretary of State likened his welfare reform programme to that of William Beveridge in the 1940s. I welcome his ambition, but I suspect that Beveridge would have major criticisms of the unnecessary hardship that the Government's housing benefit proposals will cause. It is a matter of great regret that no member of Beveridge's party has yet risen to their feet to criticise these unjust proposals. Beveridge supported a contribution-based welfare state and the Government doing more to stimulate job creation. That would represent the foundations of genuine welfare reform, and I hope that the Government will reconsider their plans, which will unduly punish those who have the least. They cannot in any shape or form be described as progressive.

There are three key issues of concern to my constituents: the proposals to slash housing benefit payments by 10% for those who find themselves on jobseeker's allowance for 12 months or more; the restriction of local housing allowance payments to rent for properties in the lowest 30% of rental levels, rather than the median level; and the plans for a crude national cap on housing benefit payments.

The 10% cut hides the inconvenient truth for the Government that affected tenants will have to make up the difference from their jobseeker's allowance. A single, childless person will therefore experience a drop of almost 30% in their disposable income, as the Scottish Federation of Housing Associations established in its briefing. For the 970 people in Glasgow North East who have been out of work for more than 12 months, the measure could mean a loss of £25 a week in their incomes. Across the UK, the proposals are expected to save £110 million a year from 2013, but at what price to my constituents and to 4.7 million constituents of right hon. and hon. Members throughout the House, who face being pushed into higher levels of poverty?

The SFHA underlined in its briefing that approximately 700,000 people in the social and private rented sectors would be affected by the new rule, losing an average of £9 a week. Overall, 5,445 people in Glasgow who have been on JSA for 12 months or more will lose out-some 22% of all housing benefit recipients in the city. The loss for the 2,750 Glaswegians receiving the allowance for a one-bedroom flat will be £7 a week, for the 2,390 affected people in two-bedroom houses it will be £10 a week, for the 590 recipients in a three-bedroom house it will be £15 a week, and for the 50 families in four-bedroom houses it will be £22 a week.

The Glasgow Housing Association has said that between 11 and 16% of its tenants will be affected by the changes to the rules on presumed under-occupancy of properties. Unable to make ends meet, tenants will suffer higher expenses and the prospect of substantial debts. At worst, they will lag behind on their rent payments and perhaps ultimately face eviction. People will be pushed out of prosperous areas where they have the highest prospects of finding work, and there will be an increase in unemployment and social tensions in areas that are already marginalised and suffer multiple deprivation.

Under the stricter medical tests that the Government have introduced, people will be moved off employment and support allowance, incapacity benefit and severe disablement allowance and on to jobseeker's allowance. They will be at a greater disadvantage in the labour market, and will they not find it more difficult to find a job within 12 months? If healthy and fit people are unable to find work under the Government's policies, what chance have the most vulnerable ?

In the June Budget, the Chancellor assured the House that he was aiming to protect the most vulnerable in our society, but the Government's proposals will hurt the most vulnerable and those who are trying to find work, at a time when their fiscal policies will make that much more difficult with the loss of almost 1 million public sector and associated private sector jobs, as PricewaterhouseCoopers established recently. The truth is, as the Office for Budget Responsibility established in June, there is no guarantee that the economy will be in a state to secure the availability of sufficient jobs by 2013.

Singling out those who can least afford to lose money is neither fair nor progressive. The Government should consider investing in affordable housing rather than slashing the budget by half over the course of this Parliament. That would not only secure savings in the long term, but protect the vulnerable and incentivise work in the coming year.

I support welfare reform that ensures that taking a job will pay and that improves work and training opportunities for those whom previous initiatives have not reached. However, my hon. Friends and I cannot support plans that set out to punish the most vulnerable in our society, who make great efforts to seek work, and who deserve a Government who is on their side and not preparing to abandon them at their time of greatest need. These are the wrong proposals targeting the wrong people. I hope hon. Members across the House will reject them and support the Opposition's motion in the Division Lobby tonight.

Photo of Jennifer Willott Jennifer Willott Liberal Democrat, Cardiff Central 5:31 pm, 9th November 2010

For many years, housing benefit has acted as a barrier for people who are trying to get back into work. I remember many debates in the last Parliament in which hon. Members raised concerns about people being trapped in poverty, out of work and frustrated. If, for example, a constituent got a job and lost their housing benefit, they would not be able to afford their rent. To be fair, the previous Government put much effort into ensuring that people would be better off in work than they were on benefits, but the housing benefit rules often scuppered such efforts. I hope that these proposals, which are part of the wider reform of the benefit system of which universal credit is a part, will help people get out of that benefit trap and into work. They should also benefit people who are working and paying tax. As many hon. Members have said, it is unfair when such people see the Government paying for a home for someone else that they could not possibly afford themselves, even though they are working.

There have been some positive changes, including the proposals for people with disabilities. Previously, a person who had a full-time carer could not claim for a room for them. In the previous Parliament, as Mr Heald said, the Work and Pensions Committee recommended a change to that unfair system. I am very glad that such a proposal is now being introduced, as it rights a wrong.

I warmly welcome the long-overdue decision to reform housing benefit. Although I have concerns about some of the Government's proposals, I have to say that much of the criticism of the plans has been extremely overblown. Much has been said in the media and in the debate today, and I am sure that more points will be raised later tonight. I will raise my concerns with the Minister, and I look forward to his response.

One problem with the local housing allowance that was identified in the previous Parliament concerns the broad rental market areas. Many BRMAs are very large and cover very different areas. Cambridge is often cited as an example. The BRMA covers the city itself, a large rural area and some smaller towns, including Newmarket and Ely. Shelter's research found that in Cambridge itself, only 4% of rental properties were affordable to people on LHA, while in rural areas up to 70% were affordable. That has significant implications for people on local housing allowance who want to access work. They are pushed out of the city, which is where most of the jobs, particularly the low-paid jobs, are to be found. That is not a new problem. It arose as soon as LHA was introduced.

If the Government change the LHA calculation from the median rent to the 30th percentile-I am afraid that this sounds like jargon-BRMAs such as Cambridge or Blackpool, which already have a problem, could find things getting even worse. The Select Committee recommended an urgent review of the particularly problematic BRMAs, which I hope the Government will consider further in the light of the proposed changes.

I would also like some reassurance on the raising of the age limit for the shared room rate from 25 to 35. I understand the Government's argument that it is often unlikely that young people in work could afford to rent on their own, and they are more likely to rent a room in a shared property. However, when the Select Committee considered that point earlier in the year, we found that the shared room rate led to an increased threat of homelessness, particularly for vulnerable young people. It is unlikely that those who have recently been made homeless, or those who are suffering from a mental illness or recovering from an addiction, will be able to organise living in a shared household, but they constitute the group most likely to face a shortfall between rent and local housing allowance. Increasing the age limit to 35 could broaden that pool of people and increase the number of people facing a shortfall and homelessness-and because plugging that gap is often left to discretionary housing benefit, this has implications for the Government's plans in that area.

I welcome the significant increase that the Government have announced in the amount available for discretionary housing benefit over the next four years. That will be very important in determining how well the changes are made. However, discretionary housing benefit is usually used only for short-term payments-certainly, my constituency casework leads me to believe that that is how local authorities see it. Often, for example, it will be paid, following a change of circumstances, to tide people over until they can make longer-term arrangements. Some of the Government's proposals for changing housing benefit will have more long-term implications there, including the changes involving the shared room rate, and so on. Local authorities need more flexibility in their use of discretionary housing benefit over the long term in order to plug the gap and ensure that we do not end up targeting particularly vulnerable people.

The biggest issue for my colleagues and me, however, is one that has been mentioned by hon. Members already-the proposal to reduce housing benefit for those claiming jobseeker's allowance for more than a year. If we really are trying to help people off benefits and into work, this arbitrary limit makes no sense. It does not take into account the job market in a particular area or the effort that a claimant may have made to find a job, and it could have serious implications for child poverty, in particular. I hope that the Government can think through that proposal again. If we are applying the test that the reforms should support vulnerable people, help them into work and ensure they have a roof over their heads, while ensuring that work pays, reducing housing benefit for jobseekers after one year fails that test.

That is a shame, because most of the rest of the proposals are sensible. Overall, I welcome the reforms, and I am glad that at last the Government are doing something.

Photo of Clive Efford Clive Efford Labour, Eltham

Will the hon. Lady confirm that her website states that the benefit cuts will hit the poorest hardest? If so, would she like to put that on the record in the House?

Photo of Jennifer Willott Jennifer Willott Liberal Democrat, Cardiff Central

I have to confess that I am not au fait with every page on my website. [Hon. Members: "Oh!"] Having returned a few weeks ago from maternity leave, I am afraid that my brain is suffering somewhat. However, that is for a debate on the comprehensive spending review in general. This debate is specifically about housing benefit, on which I have made my views very clear.

Overall, I welcome the reforms, and I am glad that at last the Government are sorting out housing benefit. It has been of significant concern to Members on both sides of the House for many years. Government Members all have the same aim, and I hope that the Government can take my comments in the constructive spirit in which they are intended. We would all like housing benefit to be set up in a way that helps people lift themselves out of poverty and progress through work, and does not act as a barrier to people trying to show ambition and better themselves. I hope that by tweaking the proposals we can do just that.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich 5:39 pm, 9th November 2010

Let me draw attention at the outset to my interests as declared in the register.

It is clear that the Government are pursuing a policy not of housing benefit reform but of housing benefit cuts-a policy based on assumptions that are wholly untested.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

No, I have only just started. I will give way in due course, but the hon. Gentleman is perhaps being a little impatient. He might benefit from listening for a moment before interrupting.

The policy is based on assumptions, many of which are wholly untested, premises that are, frankly, incredible, and an absence of detailed impact assessments of how the eight different cuts will cumulatively affect the 4.75 million households that currently receive housing benefit. In my view, it is that absence of a detailed and thorough appraisal of the impact of the cuts that is the most serious indictment of the Government.

We have heard the Secretary of State's claim that the effect of the changes will be to reduce rent levels in the private rented sector. His noble Friend Lord Freud made a similar claim last week when, according to a report in The Guardian, he said:

"We are expecting a large number of people who see less housing benefit to be able to negotiate their rents downwards, and the landlords will move to the new lower rate."

As the Secretary of State and Lord Freud are clearly not totally familiar with the rented market, let me remind them and their colleagues on the Front Bench what is actually going on. Yesterday's Evening Standard reported:

"Widespread rental 'gazumping' has hit London for the first time as desperate tenants fight to secure homes. Rents have soared by up to 35 per cent this year, with as many as one in four landlords asking for sealed bids from applicants, according to one agent."

The director of a lettings agency is quoted as saying:

"The exceptional demand for rental properties which we saw earlier in the summer is showing no signs of slowing down. If anything, the rental market is now more red-hot than a month ago."

He said that

"one four-bedroom ex-council home was recently let in Camberwell for £500 a week-£150 above the asking price and more than 40 per cent higher than the previous rent."

A partner at Cluttons is quoted as saying:

"occupancy rates stand at an unprecedented 95 to 98 per cent, as tenants opt to stay put rather than move and risk being frozen out," adding that

"the stampede for homes was at all levels of the market, from studio to family homes and is in all areas of London."

She said:

"We had a studio let at Cinnamon Wharf in Shad Thames that had been on at around £225 to £230 a week. I suggested putting it on at £305 and we got that within half a day."

The director of another agency said:

"The demand for rental property will heat up even further in the medium-term and gazumping will become even more common as tenants look for any way in which they can get ahead of the competition."

Photo of Bob Russell Bob Russell Liberal Democrat, Colchester

I was going to ask the right hon. Gentleman what interest he was declaring, but my question to him now is this: is he not talking about supply and demand? If the issue is supply and demand, why did the previous Government, in which he played a leading role for 13 years, fail with the supply?

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

Let me say to the hon. Gentleman what I have said in many previous debates. When we came into government in 1997 we inherited a very serious problem caused by the condition of the existing housing stock, as he knows. He also knows that a great deal of money was put into the decent homes programme to improve the condition of millions of social homes throughout the country. Because that was a priority, perhaps not enough was spent on building new homes, but if he looks at the figures, he will know that during the later years of the previous Government, until the recession hit, there was a rising trend of new house construction in all tenures, including social housing. Had that been sustained, we would now be seeing levels approaching those set out by Kate Barker in her report.

Obviously there has been a recession in the meantime. It has hit the world-it has hit this country and everywhere else-but given that situation, we want to see policies that will improve prospects rather than make things worse. The problem is that the present Government have managed to destabilise every part of the housing market. House builders are in shock because of the ill-considered planning changes. The private rented sector is in difficulty. Landlords are worried about the proposed changes to housing benefit. The social housing sector has been pulverised by the Government's proposal to remove security of tenure and to jack up rents to near market levels. That has created a serious problem of anxiety and lack of confidence in all sectors of the market. Not surprisingly, as the hon. Gentleman highlighted, there is therefore a problem with shortage of supply. That is precisely what is driving rent levels.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

No. I have given way once, and I must make a little more progress.

All hon. Members should realise that the Government's hope that the changes will lead to a reduction in rents is delusional. It will not happen, and the consequence will be that many people who depend on access to private rented housing, and on a degree of housing benefit to support it-many of them are in low-paid work-will find it harder and harder to compete in an increasingly tough market. I am afraid that the Government are making things worse.

Photo of Simon Hughes Simon Hughes Deputy Leader, Liberal Democrats

One factor over the past 13 years that affected supply was the number of right-to-buy applications exercised by tenants. Does the right hon. Gentleman support a discretion for local councils to decide whether to allow the right to buy? That has become the policy throughout Wales.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

The hon. Gentleman is going wide of the subject. The right to buy now has a relatively minor influence on the supply of housing, because most people in social rented housing are on incomes that make it impossible for them to buy. I would not change the current rules. I think it is right to have an option for people to buy, but in the current market there will not be many who take that up. I want the focus to be on securing a good supply of rented accommodation through social and private providers at rents that people can afford, supported by a proper benefit system.

We know that a substantial number of local housing allowance recipients are in properties where the rent is higher than the LHA. I have quoted the answer given by the Minister of State, Department for Work and Pensions, Steve Webb, earlier this month that 48% of LHA recipients had to meet a shortfall because their rent was higher than the LHA. It is absurd for the Government to argue that the LHA is driving increases in rent, when the evidence that I quoted from the Evening Standard shows that it is the private market and the huge demand in the private market that is driving the increase. A very high proportion of LHA recipients will find it increasingly hard to compete, because their LHA is already below the rent that they are paying.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

No. I will not give way because I have very little time left. The Minister should remember that private tenants who are dependent on housing benefit may find that they are priced out of the market as a result of the Government's policies. I am surprised that he and his party are prepared to countenance that.

The hard questions that Ministers must answer-they have not done so-is simply: where will the tens, and perhaps hundreds, of thousands of LHA recipients go when their allowance is cut to a level that makes it impossible for them to make up the shortfall, and their landlord declines to reduce the rent?

Photo of Steve Webb Steve Webb The Minister of State, Department for Work and Pensions

The right hon. Gentleman cited a £500 rent on a four-bedroom property-he quoted that from a newspaper-which is above our cap. Is it his policy that taxpayers should pay someone £500 for a four-bedroom property?

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

No, it is not, and the point has already been made that that is not a housing benefit letting; it is a market letting being driven by the market. The Minister finds that difficult to understand because of his extraordinary prejudice that the local housing allowance is somehow driving the increase. I would have thought that he understood that, because he has some grasp of economics. He should also understand the cumulative effect of a series of such changes: not just the cap, not just the local housing allowance, but the change in non-dependant deductions, the restriction of the entitlement of social housing tenants of working age who are deemed to occupy larger accommodation than they need, the extension of the shared room rate to single applicants aged 35-Jenny Willott raised that anxiety-the change to the uprating formula using the consumer prices index rather than the retail prices index, the 10% cut in benefits for those on jobseeker's allowance for more than a year, and the overall cap on benefit entitlement. Cumulatively, those changes will have a devastating effect. Why has the Minister, with his distinguished background in social policy, not insisted on proper appraisals of the cumulative impact, and the impact over a period, of all the changes, which will have dire consequences for many people on very low incomes?

This is not evidence-based policy making; it is faith-based policy making, using assumptions that most of the commentators in the outside world who have a real understanding of these things believe to be seriously flawed. I put it to the Minister that unless the Government can give us evidence that their policy will reduce rents in the private sector-for which there is not a shred of convincing evidence-and that the cumulative impact of the changes will not have dire consequences for many vulnerable people, the only decent thing for them to do is to withdraw their package and say that they will look again at the measures and discuss with the Opposition agreed arrangements to deal with abuses of the system without causing vulnerable people to suffer. If they do that, they will have our support. If they do not, I hope that all hon. Members with open minds will vote for the motion tonight.

Photo of James Wharton James Wharton Conservative, Stockton South 5:51 pm, 9th November 2010

I disagree with much of what Mr Raynsford said, but he made one key observation that many Opposition Members would do well to heed. He referred to the legacy that the previous Labour Government inherited from the Conservatives, and many Labour Members forget the context in which so many of the decisions that the new Government are now taking must be understood-namely, the terrible financial situation that we inherited from Labour. I do not intend to dwell for too long on the national debt that is approaching £1 trillion, the deficit of £150 billion, or on the fact that we are paying more than £40 billion a year in interest, which is £120 million a day. That is more than we are paying for either our police or our universities.

Photo of Russell Brown Russell Brown Shadow Minister (Defence)

Does the hon. Gentleman acknowledge that, when the Labour Government came to power in 1997, we had to pay more to service the debt based on borrowing to pay for tax rebates than the cost of defence and transport put together?

Photo of James Wharton James Wharton Conservative, Stockton South

The hon. Gentleman is right to voice his concern about any level of Government debt, and I entirely understand the historic context in which the new Labour Government found themselves, and the one in which we find ourselves today. It is important, however, that we do not spend all our time looking back. We must look forward and consider what the Government are doing to address the challenges that we face, and specifically address the issue of housing benefit, which is just one piece of that much larger jigsaw.

Housing benefit today costs about £21 billion a year, and we have heard about the trend of housing benefit costs in recent years. Between 2000 and 2007, it increased by about 25%, and, in the past five years, it increased by about 50%. The shadow Secretary of State mentioned the difficult times during the worst of the recession when it was increasing at its greatest rate. That was true, and we cannot take those times as typical and project them forward, but we can identify a clear long-term trend of housing benefit costs increasing unsustainably and putting a burden on the Exchequer that cannot be maintained in this day and age. The Government therefore have to make some tough choices.

A word that we frequently hear on both sides of the House, in different contexts, is "fairness". We are asked what it means to be fair. Opposition Members appear to dwell on outputs, rather than giving consideration, as is correct when considering any matter of fairness, to what people put in-that is, to inputs and outcomes. It is important to look at the proposed changes to housing benefit in the context of the national financial situation, and of the need for real fairness that takes proper account of what the Government can do to help people out of poverty and into work, and to take away the benefit traps that hold people back in poverty and on housing benefit. As my hon. Friend Mr Heald said, housing benefit is one of the very worst benefits when it comes to encouraging people and helping to make work pay, because of the very steep rate at which it is withdrawn.

Photo of Karen Buck Karen Buck Shadow Minister (Work and Pensions)

The hon. Gentleman mentioned the impact of housing benefit during the recession. Does he accept that 250,000 households claimed housing benefit during the period between 2008 and 2010 because their earnings dropped? Does that not show that housing benefit has a critical role to play in sustaining people, both in work and in their homes, during difficult times?

Photo of James Wharton James Wharton Conservative, Stockton South

The hon. Lady is quite right. That is why nobody on either side of the House would ever propose to do away with it. It is an important part of the welfare state in this country, but that does not mean that spending on housing benefit should be allowed to escalate out of control indefinitely. That is why the Government are introducing measures to bring it under control and to ensure that people are properly incentivised to find work, to earn and to contribute successfully to our economy. The hon. Lady is right to say that housing benefit is important, however; that is why it is being reformed in a way that will secure its sustainable future.

Photo of James Wharton James Wharton Conservative, Stockton South

I will not give way again.

In the context of the understanding of fairness, let us look at what the Government are doing. We have heard talk about the cap, and it is abundantly obvious that it is not fair for a family or an individual to be able to claim more in housing benefit than an average family takes home in earnings in any given week, month or year. If we set the cap at £20,000 a year, that will still be a very high level. That is the equivalent of earning just over £26,000 a year, as that is what someone would need to earn to have the income to pay that amount of rent without claiming housing benefit support. That is more than the average wage of my constituents, and more than the average wage in the north-east generally. It is also more than the average wage in many of the constituencies of Members on both sides of the House. We cannot expect people who work hard but do not earn large sums of money to pay tax to subsidise individuals and families who are unable to work, for whatever reason, to live in homes that those taxpayers themselves could not afford.

This is an important issue, but there are many other measures involved. The shadow Secretary of State asked whether it was fair to use the 30th percentile to set the level at which housing benefit would be paid in any given area. The Department's research has shown that, in any given area, just over 30% of properties would be available within that price band, and I suggest that that makes it abundantly obvious that this is not an unreasonable step. Given the difficult financial situation in which we find ourselves, this is a way of finding some of the necessary savings while ensuring that those who need help will still get it. It will ensure that support will be there for those who will benefit from it most, while not unfairly disadvantaging the people who work hard to pay their taxes to enable this to happen. It is important to look at these points in the round, and in the context of the world in which we live today.

Many Opposition Members are not keen to talk about discretionary housing payments because, for many of those who hit particular hardship, such payments will increase. This will help individuals who are in danger of losing their homes, who fall through the gaps between policies or who find themselves in difficulty through no fault of their own. The Government are increasing the provision to £140 million over five years to ensure that, when people are in particular need or when their circumstances are particularly difficult, help is there to ensure that they can stay in their homes and communities. People should not be made homeless by the steps that are being taken, and the Government are taking steps to ensure that that does not happen.

Another measure that Opposition Members often overlook relates to overnight carers. At the moment, the fact that someone has an overnight carer, because they have a disability or for any other reason, is not accounted for when calculating the amount of housing benefit they receive. The Government will change that, and 15,000 people who currently have overnight carers but are not entitled to have the need to provide accommodation for them taken into account in their housing benefit allowance will be better off as a direct result. Their needs will specifically be catered for in a way that, disgracefully, has not been the case for many years.

Lots of changes are taking place in housing benefit, as well as right across the Department for Work and Pensions and other Departments. Opposition Members are right to raise concerns, when they have them, and to call for a debate when that is appropriate. When I look at the motion today, however, I find it most striking that they have suggested no alternatives. This is not an Opposition who are here to put forward alternative proposals or an alternative plan to deal with some of the problems we face. It is an Opposition who are opposing for opposition's sake.

Photo of Matthew Hancock Matthew Hancock Conservative, West Suffolk

I compliment my hon. Friend on his extremely fluent speech. In talking about the tone of this debate, does he agree that it is important not to make scaremongering comments that put people ill at ease when the changes being made are very important to get a grip on this particular budget?

Photo of James Wharton James Wharton Conservative, Stockton South

As ever, my hon. Friend makes an excellent point. The point has been raised a few times already-that the tone of this debate in public and in the media has not necessarily been as it should. When we are talking about people's homes, people's allowances and changes that will affect people's lives, it is incumbent on all of us to ensure that we do so in a careful, measured and sensible way.

Photo of Gavin Williamson Gavin Williamson Conservative, South Staffordshire

I am not sure whether my hon. Friend's experience has been the same as mine, but many people I talk to in my constituency think that the proposals being put forward are sensible, logical and should have been made an awful long time ago.

Photo of James Wharton James Wharton Conservative, Stockton South

I thank my hon. Friend for another excellent intervention. He is, of course, right about how right-thinking people look at some of these measures-I single out the cap of £20,000 on the maximum amount of housing benefit that can be claimed. As I said at the beginning of my speech, this is equivalent to earning more than £26,000 a year. These are reasonable steps taken to deal with a very real problem. If Opposition Members wish to continue to oppose what the Government are doing, I urge them to come up with proposals and solutions of their own, so that we can have a properly informed debate-rather than mudslinging, calling names and worrying all the people who rely on Members from all parties to represent them and do the right thing.

Photo of Anne Begg Anne Begg Chair, Work and Pensions Committee 6:01 pm, 9th November 2010

I am grateful for the opportunity to contribute to the debate. I am keen to make sure that we do not get bogged down in a debate about what is happening to the caps in London, which has been the tenor of the debate in much of the media and, indeed, here today. I understand why my hon. Friends representing London constituencies feel angry and annoyed about the impact of the changes on their constituents, but I would like to look further afield at the impact across the country.

The difficulty with the emphasis on the caps that might apply only in London is that we need to acknowledge that the real cap is the 30 percentile that will apply in each of the broad rental area markets. It is not right to look at four-bedroom houses that can be had for less than £400 a week in an individual constituency and then say, as did Angie Bray, "Well, that's fine; you can get that if you are on housing benefit". That is simply not the case.

We already know, as alluded to by my right hon. Friend Mr Raynsford, that even at the present the 50 percentile level many of our constituents still have to supplement their housing benefit to pay the rent. We know that people, even today, before any of these changes come into place, have to spend perhaps £10 or £20 out of their benefit to pay their rent. We know that because on a Select Committee visit, we encountered an elderly gentleman at a citizen's advice bureau who had found it very difficult to get a house or a one-bedroom flat within the money afforded under the BRMA-broad rental market areas-level at 50 percentile. He already had to spend £10 a week out of his pension credit to supplement his rent.

Another point worth noting is that the people who receive housing benefit are not all of working age, so the Government's purpose of incentivising work does not apply to them. What incentive does an old-age pensioner have if they stand to lose perhaps a considerable portion of their rent, and what incentive is there for such a pensioner to have to move home in order to find an affordable rent?

I hope that we can start to concentrate on some of the people who are not in the percentages quoted-the people who can move and can find somewhere affordable. For every 50% of the people who can move, there are 50% who cannot move; for every 50% who can easily find affordable rented accommodation, there are 50% who cannot. As my right hon. Friend Mr Alexander said, only £65 million of the savings on the housing benefit budget will come from the cap, which will apply predominantly in London, whereas the full savings amount to £1.8 billion.

I would like us to consider what is happening in Aberdeen-not a typical place and probably an exception, but it might help to highlight some important issues. Only 6% of housing benefit claimants-910-in Aberdeen are in the private rented sector. Of them, only 370 of them-about a third-are likely to be worse off. Moreover, only 9% in the private rented sector actually claim housing benefit. If we accept what the Government are saying, this 9% should find it easy to find a house within the 30 percentile-obviously, because only 9% of them are trying to find it. That appears to be a no-brainer, but that is not the case. The reason is that they are competing with people who are already on low pay but perhaps do not have housing benefit and are trying to find somewhere else to live.

We also know that there is a housing shortage in Aberdeen, as there is in many other places, so many landlords will not rent for housing benefit. That might not be true elsewhere, but it is true in an area where we have a buoyant housing market. If only 6% of housing benefit claimants are in the private rented sector, it cannot be true that it is housing benefit rates that are pushing up the rents in Aberdeen. We know that rents are going up. It cannot be true that landlords will therefore reduce their rent because we know that there are plenty of other people who will be willing to take these houses if the housing benefit person cannot afford them. There will be areas in which the market will not operate effectively, as my "hon. Friend"-I call him that, because he is on the Select Committee with me-Mr Heald said, but although it may be true in some areas, it will definitely not be true in other areas that already have a buoyant market.

Lastly, even if we accept the Government's argument that landlords will reduce the rent, there will inevitably be a time-lag for all that to happen. I do not think that people will move all that often in Aberdeen. Constituents have come to see me because they cannot afford the deposit on their new house or they cannot afford their first month's rental or they cannot afford the bond that they are expected to find-I believe that applies just in Scotland. The cost of moving is difficult for people to meet. Landlords, however, will not reduce the rent initially; they will need to be persuaded in some way that they cannot get that rental anywhere else. In the meantime, individuals will have had to move at great cost and it might be difficult for them to find somewhere until the market adjusts. Even accepting the argument that the market will adjust, we are still looking at a six-month period in which people will be either forced to move or build up a huge amount of arrears. It is going to be difficult for this group of people to negotiate lower rents.

I have tried to show that there are issues beyond what is happening in London. Different areas can have different problems. There is no single solution that will have the same effect across the whole country. I hope that the Government will listen to that argument.

Photo of Amber Rudd Amber Rudd Conservative, Hastings and Rye 6:09 pm, 9th November 2010

Fairness is a constantly recurring theme today, and fairness has been the dominant feature of this reforming Government's coalition agenda. I agree with my hon. Friend James Wharton that we must also be fair to the people who pay the taxes that pay for the housing benefit and local housing allowance.

I know what I am talking about, because my constituents earn extremely low wages. In the past 10 years the average wage in Hastings, which used to be £30 below the average United Kingdom rent, has fallen to £100 below that figure. I know about low wages. Mr Bain spoke of people who were vulnerable. People on low wages are also vulnerable, and I feel strongly that they should not be charged with paying the housing benefit of people who live in houses and in areas where those on low wages could not begin to live themselves.

Photo of Caroline Flint Caroline Flint Shadow Secretary of State for Communities and Local Government

Does the hon. Lady agree with councillors in Hastings who have expressed concern about the additional pressures that the Government's policies will impose on their local community, including additional costs for education and children's services?

Photo of Amber Rudd Amber Rudd Conservative, Hastings and Rye

I am grateful to the right hon. Lady for making that point, because it is exactly the one with which I am about to deal. Earlier in the debate, we heard about sensational articles in newspapers and unrealistic reporting. I am afraid that Hastings has been on the receiving end of quite a lot of that. I have spoken to the councillors who made those comments and to our director of housing, Andrew Palmer, who has done excellent work. I asked him how many London councils had made inquiries of him, and he said none. I asked him whether he had had an opportunity to speak to the people who run the bed-and-breakfast establishments that he very rarely uses-although he has had to do so occasionally-and to the landlords whom he uses for the purposes of the local housing allowance. He said that he had spoken to all of them, and that not one of them had received such an inquiry.

I strongly believe that we have been reading sensationalist reports in the newspapers. There is an apocalyptic vision of a group of Londoners arriving on the south coast, but it simply is not happening. I think it important to repeat that so that people do not become fearful. They do not have to believe what is said by Caroline Flint about extra pressure on education establishments, because that is not happening at the moment.

We hope that rents will fall. Members will not be surprised to hear that I agree with much that has been said by Conservative Members about reducing rents. Mr Raynsford spoke of the unrealistic aspect of falling house rents, and referred to an article in the Evening Standard that focused mainly on larger houses. In my constituency at least, between 80% and 90% of people who receive local housing allowance live in homes with one to two bedrooms. The larger house element does not feature so much, although it represents a large cost. I am told by Westminster council, whose representatives I have consulted, that house prices in its area are falling rather than rising.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

When the hon. Lady reads the record of the debate, she will see that among the quotations that I gave from the article in the Evening Standard was one from an agent who said that properties of all sizes were affected, from the largest to the smallest, and that all areas of London were affected.

Photo of Amber Rudd Amber Rudd Conservative, Hastings and Rye

I am interested to hear that London is affected. We will see the consequences, but at present I am receiving different answers and people are reaching different conclusions. It is not entirely clear how the private sector will respond, but one thing is entirely clear: we cannot continue with the cost as it is now.

Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

When the London councils gave evidence to the Select Committee, they said that 40% of landlords would cut their rents.

Photo of Amber Rudd Amber Rudd Conservative, Hastings and Rye

The 40% figure is totemic in this debate. As we know, 40% of private rented properties are used by the Department for Work and Pensions.

Photo of Chris Ruane Chris Ruane Labour, Vale of Clwyd

Like me, the hon. Lady represents a seaside town. If Kosovo-style clear-outs do take place in the inner cities- [Interruption.] It was Boris Johnson who used that phrase. If that does happen, it is logical to assume that people will go where there is cheap available accommodation: houses in multiple occupation in seaside towns such as the hon. Lady's and mine.

Photo of Amber Rudd Amber Rudd Conservative, Hastings and Rye

The hon. Gentleman obviously does not want to let the facts interfere with a good story. Some of the newspapers have taken the same view. However, he too should try to look at the facts. He should establish whether London councils are making such inquiries, and whether B-and-Bs are being booked up. There is absolutely no evidence of that. Rents are expected to fall, which will make things less costly for us all.

Photo of Karen Buck Karen Buck Shadow Minister (Work and Pensions)

My local authority, Westminster council, has written to me and to Ministers in the Department for Work and Pensions and the Department for Communities and Local Government, asking for changes in the homelessness legislation because of the potential impact of the cuts, and stating that it will expect substantial out-of-borough bookings for temporary accommodation if the proposals go ahead unamended.

Photo of Amber Rudd Amber Rudd Conservative, Hastings and Rye

That is an interesting comment, but I can tell the hon. Lady that I have spoken to the cabinet member in charge of Westminster council-which has the largest supply of houses at the top level above the cap-and she told me unequivocally that the council was not doing that.

Photo of Amber Rudd Amber Rudd Conservative, Hastings and Rye

I also have a letter. Perhaps we can exchange letters later, and see what the conclusion is.

It is impossible not to see these reforms of housing benefit outside the context of the overall attempt to carry out the reforms of the welfare system to which the Government are so committed. I commend to all Members a fascinating article in today's The Times by a former Labour Secretary of State for Work and Pensions, in which he draws strong parallels between our efforts to reform the welfare system and the proposals on which he had been working for the past few years, until the last two years or so, when he was unable to obtain any traction and had to resign. He spoke of the line that Government must tread between the poverty trap and the welfare trap. That is exactly what this Government are trying to do, but let me add that there is not just a welfare trap or a poverty trap. The welfare trap is a poverty trap in its own right. It is not a good place in which to be, but our efforts to reduce housing benefit and introduce a universal credit will start to change the present position and make a fairer society for us all.

Several hon. Members:

rose -

Photo of Lindsay Hoyle Lindsay Hoyle Chair, Panel of Chairs, Deputy Speaker and Chairman of Ways and Means, Chairman of Ways and Means

Before I call the next speaker, I must inform the House that I am going to reduce the speaking time to seven minutes, because so many Members wish to contribute and I want to ensure that all of them can do so.

Photo of Bridget Phillipson Bridget Phillipson Labour, Houghton and Sunderland South 6:17 pm, 9th November 2010

Let me begin by referring the House to my declaration in the Register of Members' Financial Interests.

I am grateful to you, Mr Deputy Speaker, for calling me to speak in this important debate, and I am pleased to follow Amber Rudd, although I beg to differ with her interesting interpretation of the word "fairness".

The Government's £1.8 billion cuts in housing benefit will push the most vulnerable families in our society into poverty and debt. It has been estimated that up to 12,000 households in the north-east could be made homeless. The Government are using extreme examples to justify their wholesale swingeing cuts, but the simple truth is that most housing benefit recipients are low-income, hard-working families, pensioners, carers, and people with disabilities. The housing charity Shelter estimates that only one in eight housing benefit recipients is unemployed. We should not lose sight of the fact that housing benefit is also an in-work benefit. In fact, the average housing benefit award to private sector tenants in Sunderland is just £93 per week, and for social tenants it is even less: £69 per week.

What concerns me most is that the cuts in housing benefit will affect not only hard-working, low-income families, but pensioners. In Sunderland alone, more than 20,000 housing benefit recipients are over 60. Those people have contributed to society throughout their lives, but in return-when they need help from the state at the time when they are at their most vulnerable-their security is threatened, and they are treated as mere statistics.

Photo of Steve Webb Steve Webb The Minister of State, Department for Work and Pensions

I am sure that the hon. Lady does not wish to alarm pensioners in her constituency. The figures that she has given relate to housing benefit, which applies overwhelmingly to social tenants who will not be affected by this change. Will she correct the record?

Photo of Bridget Phillipson Bridget Phillipson Labour, Houghton and Sunderland South

What I will say is that many older tenants will move into different tenancies at different points, and will be affected by the changes that the Government are introducing. Many older people will, at times, vacate social homes and move into the private sector as their needs require, and may be affected by the Government's changes. The only alarm being caused is coming from the Government Benches. I hope that the Minister will think again about some of these measures.

The Chartered Institute of Housing summed things up best when it stated that the Government's motive

"appears to be reducing expenditure with little co-ordination or regard for the purpose of the benefit itself."

This is not a genuine attempt to reform housing benefit and introduce a better system in its place; this is a Treasury-driven hit on the poorest and most vulnerable in our society.

Photo of Kwasi Kwarteng Kwasi Kwarteng Conservative, Spelthorne

I am grateful to the hon. Lady for giving way. The House is unclear about Labour's position on the cap. Labour Members have accepted that there is a need for public spending restraint, but Government Members want to know whether they think the cap is fair or not.

Photo of Bridget Phillipson Bridget Phillipson Labour, Houghton and Sunderland South

I respectfully suggest to the hon. Gentleman that had he been here earlier, he would have heard some of the arguments articulated by my right hon. Friend the shadow Secretary of State. I also respectfully suggest that I am not referring to the cap. That is not the issue that I am discussing in relation to Sunderland; I am discussing the changes in respect of the 10% and the 30th percentile. That is my concern, and that is why this debate has to be on issues broader than London. I understand the concerns of my hon. Friends with London constituencies about the impact there, but the impact it will have in Sunderland will be different.

On average, claimants of local housing allowance in the north-east will see a cut of about 10% a week, or £468 a year, in what they receive. That will have a massive effect in the region, and in Sunderland it will affect more than 4,500 households. Furthermore, those out of work on jobseeker's allowance for more than one year will be hit particularly hard, with a cut of 10% in their housing benefit. Currently, 2,500 of my constituents are claiming jobseeker's allowance in an area of ongoing deprivation, where jobs are increasingly hard to come by. That will simply drive people into further poverty and drive up homelessness at a time when, no matter how hard people try, it is often difficult to find a job.

Sunderland city council prevented homelessness for 157 households in 2009-10, helping people to find accommodation, often in the private sector. Overall, the changes made in the comprehensive spending review will make it even harder for Sunderland city council to prevent homelessness. In the long term, the use of temporary bed-and-breakfast accommodation will inevitably drive up housing costs for local councils and have massive social consequences.

Changes in the calculation of housing benefit-pegging it to the consumer prices index-will lead to a dramatic rise in rent arrears, contributing to increased use of temporary accommodation and increased homelessness. It is not yet clear to me whether those who fall into arrears because of the cuts will be deemed to have made themselves intentionally homeless, which would mean that councils would not have a duty to house them. I would be grateful for some clarity from the Government on that issue.

Before I was elected, I managed a refuge for women and children fleeing domestic violence, and the city council supported these homeless families and got them rehoused, often in the private sector. The women would often pay a small top-up to their housing benefit, often to be near supportive family who could help with child care so that they could undertake training or return to the workplace. Such women will be doubly hit, and at the point when they are trying to get their lives back on track.

It is clear that the Government have failed to come up with an acceptable plan for housing benefit. They fail to recognise the long-term solutions to the underlying causes, and they are certainly not progressive.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport)

Does the hon. Lady agree that for a great many people the purpose of housing benefit is to get them out of low-income housing? The changes that the coalition Government are proposing will keep those people in poverty and low-income housing for the rest of their lives. That is my concern. Does the hon. Lady share it?

Photo of Bridget Phillipson Bridget Phillipson Labour, Houghton and Sunderland South

I do. It is clear that the changes will have a huge impact not only in England, but in the hon. Gentleman's constituency.

While more social homes need to be built, the coalition is cutting investment and scrapping regional housing targets. When people are crying out for help on unemployment, the coalition Government are set to cut 23,000 public sector jobs in the north-east alone. Until we tackle unemployment and until the Government bring forward a credible growth strategy, the housing benefit bill will not come down. In the north-east, the situation has not been helped by the scrapping of One North East and the lack of a regional industrial strategy.

Finally, when we need a system to stop unscrupulous private sector landlords from profiteering from the local housing allowance, the coalition Government do not even consider it. Instead, they focus their programme of cuts on the defenceless, the elderly and the least well off in our society. That cannot be allowed to happen. Labour Members all agree that there is a need to reform the current system of housing benefit-but not at such a cost, and not with the plan that the Government are implementing with such ill regard for the consequences.

I oppose these rushed, punitive and divisive measures. I will do what it takes to protect the low paid and the most vulnerable people across the country, who rely on housing benefit, and I encourage colleagues on both sides of the House to do so too.

Photo of Bob Russell Bob Russell Liberal Democrat, Colchester 6:25 pm, 9th November 2010

The debate so far has made only fleeting reference to child poverty. The previous Government left 3.9 million children living below the official poverty line, so we need to think long and hard about whether this Government's measures are going to make that figure worse.

According to Shelter, the average loss per family in my constituency will be about £9 a week. For a low-income family, that £9 now has to compete; if the rent is not paid, and a family lose their home, they are, in law, deemed to be intentionally homeless. Whatever faults there are in this country, one thing is for sure: the children of this country are not responsible. They must not be allowed to lose their homes. For that family in my constituency, having to find another £9 a week for rent means £9 a week less on food, clothing, shoes and utility bills. We know that fuel poverty has an adverse impact on low-income families. Others have mentioned pensioners and their points have been well made, but I am going to concentrate on the families.

The loss of £9 from such a family's disposable income will mean that the local economy will lose out. That could affect what else is going on. Incidentally, I have come up with a novel saving for middle-England households. It is not compulsory to buy the Daily Mail or The Mail on Sunday, and not buying them will produce a saving of about £500 a year to a middle-England household. I recommend it.

The Local Government Association has kindly provided the following suggestion:

"a full and robust new burdens assessment should be made of the extra local authority costs that will be incurred as a result of these changes. This should not just include the expected homelessness costs, but also community safety, physical and mental health, social care, child protection and other services.

The wider impact of these costs should not be underestimated and will result in increased costs for councils."

The LGA has suggested that local authorities should have more flexible powers, so that they can work with local landlords to negotiate rents downwards. That would fit in with the Secretary of State's view that the object of the exercise is not to penalise families, but to force rents down. In a spirit of collaboration, coalition and fairness, I think that the Government should take equal measures-put a cap on the rent as well as on the housing benefit.

The problem is that we have had 30 years of successive Government failures to provide sufficient housing for rent. The last Government were as guilty as the previous Conservative Government, building fewer than 7,000 council houses in 13 years; even the dastardly Thatcher Government managed to build more than half a million. Indeed, the last Labour Government sold half a million council dwellings. I intervened earlier on the question of supply and demand because of the simple fact that for 30 years supply has not matched demand.

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee

I welcome the hon. Gentleman's commitment to increasing the number of social houses built, but does he accept that under the comprehensive spending review the expenditure plans for new social homes have been cut in half? The only such homes that will be built on the current tenures and rents will be those to which the previous Government committed? All new homes built after that will cost 80% of market rents, and that building will be paid for by increasing the rents on re-let tenancies to that level as well, so this Government are committing to no new social housing at all.

Photo of Bob Russell Bob Russell Liberal Democrat, Colchester

I was praying for an Opposition intervention because it gives me an opportunity to pick up and wave these pages containing the more than 50 questions on council housing that I have put in the last decade, including to former Prime Minister Blair, his successor and former Deputy Prime Minister Prescott, all of whom failed the Labour party. We should contrast what the last Labour Government did with what the real Labour Government of 1945 led by Clement Attlee did in the aftermath of the war.

Photo of Chris Ruane Chris Ruane Labour, Vale of Clwyd

I concur entirely with the hon. Gentleman. In my constituency I visited a lady who had an 18-month-old child and who lived in a house of multiple occupation. She had one bedroom. That cost £85 a week in housing benefit, topped up with £20 a week from her own dole money. That is £105 a week for a one-bedroom rat hole, whereas the council charges £60 for a three-bedroom council house with both a front and back garden. It makes both economic and moral sense to spend money on building new council houses and social housing, and that would also penalise the Rachman landlords and reward the local authorities and social landlords.

Photo of Bob Russell Bob Russell Liberal Democrat, Colchester

I agree with most of that; and, of course, if the last Labour Government had taken note of what I said in those 50-plus parliamentary questions-if two successive Prime Ministers and a Deputy Prime Minister had listened-we would not be in the pickle we are in now. I might add that all of us know of former council houses in our constituencies that were sold and are now being let out at higher rents than those for the council house next door, and where the housing benefit tops that up. The coalition Government should address that.

"When social historians write the history of the 20th century, they will contrast the huge advances made in the living standards of the British people between 1900 and 1999. Even allowing for two bloody world wars and the years of economic depression, by the end of the century the quality of life had improved dramatically for the mass of the population, beyond the wildest dreams of those doughty pioneers of social change who sowed the seeds in Victorian Britain for better health, higher standards of education, longer life expectancy, improved working conditions, wider opportunities and vastly superior housing conditions for most people.

While the improvements in the overall quality of life spanned the 100 years, for millions of people it was in the middle 50 years or so of the 20th century-the second and third quarters-when the great advances were made in housing. Council housing did it."-[ Hansard, 11 June 2003; Vol. 406, c. 237WH.]

I know that Members are fascinated by what I have just said, and they can read the 2003 speech I made in Westminster Hall on the subject of council houses. Again, had the Labour Government listened and taken note seven years ago, things would have been much better.

For most people, the aspiration to home ownership cannot now be fulfilled. The resumption of council house building would have the twin outcome of supplying good quality houses for families to rent and lessening demand in the house buying market. There would be another bonus too; it would give a boost to employment in the building industry.

The conclusion of my speech is aimed at my coalition partners. When I was leader of Colchester borough council between 1987 and 1991, I attended a meeting of the Essex branch of the Association of District Councils at which I told the then Member for South Colchester and Maldon, now Lord Wakeham, that a combination of the large-scale sale of council houses and a failure to build replacement houses would result in thousands of people being forced into the property owning market who would not otherwise have been, and that the demand for lower priced houses would therefore be greater than the availability, and that that would lead to an increase in house prices throughout the housing market. I suggested that that policy did not make economic sense, and that it was not fair on those who would be deprived of a decent home in which to live. I have been proved right, but, tragically, the problem is considerably worse than I ever thought it would be.

For the homeless and those in accommodation that is less than ideal for their needs, there is no such thing as the dream of being part of the property owning democracy. Instead, there is the 24-hour nightmare of housing despair. That is particularly the case for the children involved. Big cities, towns and villages all have residents who are suffering because of the lack of council houses. In rural areas, young people are being forced to leave the villages in which they were born, and where their families may have lived for generations, because there is no housing for them, or none that they can afford.

I urge the coalition Government to think again. They are right to tackle the higher rents, but that has to be done with fairness. At the moment, however, their proposals are being aimed only at the tenants, and I am particularly concerned about the children of the families who will be affected.

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee 6:35 pm, 9th November 2010

From what Bob Russell has said, I take it that he will be voting with us in favour of this motion, because it seems that that is where his heart lies, if nothing else.

The issue as presented by the Government is that we have a problem with housing benefit. Two explanations have been given for that. One is that local housing allowance levels are pushing up rents, and my right hon. Friend Mr Raynsford dealt with that very well. The other is that housing rents and housing benefit levels are rising because there is a shortage of houses in this country. The hon. Gentleman said that that was the case, and I have a lot of sympathy with his point about the need for more social housing.

Let us look at Government policies on housing provision to deal with this fundamental problem. The hon. Gentleman mentioned social housing provision, but he ought to understand that this Government's policy is to withdraw from social housing provision, and that is what they are doing. Under the comprehensive spending review, the budget for new social housing is being cut in half, and the half that is left will simply fund the houses to which the previous Government were committed, which is about half of the 150,000 target. Where will the other 75,000 come from? The answer is that there is an assumption that social housing landlords will raise the rents on new lettings to 80% of market rents and that that increase in rental income will then fund the building of these extra 75,000 so-called social houses. They will not be social houses, however; they will be houses at 80% of market rents-or at intermediate rents, if we prefer that term. Effectively, therefore, the Government are withdrawing from the provision of social housing.

I know some Liberal Democrat Members will not agree that that is what the Government are doing-indeed, the Lib Dem Communities and Local Government Minister, Andrew Stunell, said exactly the opposite in a recent Westminster Hall debate-but that is the policy. If it is not what they intend to do, the Minister who is currently in the Chamber should stand up and say so.

As the Government claim that their key policy is to reduce housing benefit costs, they must also explain how the two bits of their agenda join up. If getting housing benefit costs down is the right thing to do, will there not be an increase in housing benefit costs from these new 80% market rents they are going to introduce, and how much will they increase by? I have asked that question, but no one can answer it. Do the Government not know or have they not done the figures? Is this another consequence of the impact assessment that they have not done? The Minister has done a lot of jumping up and down in the Chamber today, but he is surprisingly silent and sedentary at present.

That is another major question to which we need an answer. Why are the Government intent on pushing up rents in the social housing sector? What will be the housing benefit costs of that, and is the fact that there will be such costs not an inherent and fundamental contradiction in the Government's policy?

Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

I do not think the hon. Gentleman understands the scope of the ambition of this Government. They want to get people back to work. They do not want there to be 3 million homes where nobody works and everybody is on housing benefit. They want to change that, and that is how the costs of welfare will come down.

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee

I thank the hon. Gentleman for that helpful intervention. I am not sure how putting 1.6 million people in the dole queue is part of a grand strategy to get people back to work. At some point, somebody will add those bits of the grand strategy up and explain how they connect together.

On the lack of joined-up thinking, we have been taking evidence in the Select Committee on Communities and Local Government about the impact of the Government's policy of abolishing the regional spatial strategies. Some people have told us that that is a good thing to do, others have been more critical of the inherent aim of Government policy, and some have said that eventually we will get policies in the localism Bill that explain the Government's long-term strategy. However, almost every witness has said that in the meantime there is a complete vacuum in housing planning policy. The National Housing Federation has commissioned detailed research and it has been estimated that 160,000 planning permissions that would have been given under the previous planning regime have not now been given. That means that fewer houses will be built when eventually the housing market returns.

Photo of Richard Graham Richard Graham Conservative, Gloucester

The hon. Gentleman mentioned joined-up thinking. Does he feel it is fair that so many families who are not working and who are not disabled receive more in benefits than families who are working and are on the average national salary or less? What would he say to my constituents about the joined-up thinking of the past 13 years that allowed that situation to continue unchanged for so long?

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee

As Labour Members have clearly said, those on the Government Benches are involved in a complete misthinking about the fact that not everyone on housing benefit is unemployed; many people on housing benefit are on low wages and they will be affected by these changes too. There is a real issue to address about disincentives to work and tapers in the housing benefit system. I would appreciate those tapers being flatter than they have been or are now, but we all have to recognise that if the steepness of housing benefit tapers, or of any other benefit tapers, is reduced, the cost is increased. That is a problem and I look forward to seeing how the Secretary of State will solve it when he introduces his universal credit.

I have alluded to the impact that these changes will have in Sheffield. It is not the cap that affects cities such as Sheffield; it is the 30th percentile change that affects us. That is the fundamental problem and it will cost the average family on housing benefit in Yorkshire and Humber about £7 a week. The total cost of the change for the average family in Sheffield will be more than £30 a month, and it will lead to dispersal. There are considerable differences in the rates that apply in different parts of Sheffield, and not only the unemployed, but those on low wages who are renting in the private sector will be dispersed from richer parts of the city, in the constituency of Sheffield, Hallam, to other parts of the city. I did not use the word "cleanse" or "clear", because "disperse" is an accurate and proper word to use when describing what will happen. The city will become more segregated and more divided. The situation will get worse, because local housing allowances are linked to the consumer prices index but rents rise at a higher rate. Therefore, over time, people will be dispersed from progressively more parts of the city. That is what the impact will be on cities such as Sheffield-that is the reality.

At the same time, housing departments, such as Sheffield city council's, will face pressure because unemployment will create more housing problems and more homelessness. The budgets of these departments will have been cut, yet they will have to deal with advising or re-housing people in desperate circumstances. What we have not had a clear answer to is whether people who have to move home because they cannot pay their rent as housing benefit no longer covers it will be considered intentionally homeless. That is a fundamental point, so can we have an answer on it please? Can we also have an answer on whether the Government really are going to change the homeless legislation as Lord Freud indicated in order to see their way out of this problem without local authorities having to have the responsibility of housing people? Those are fundamental issues.

Why is it necessary to punish the couple in their 50s who lose their jobs, whose family have left home and who are living in a three-bedroom council house? Why is their home at risk because they have lost their jobs and housing benefit will not cover their rent as they are deemed to be under-occupying? This is simply not fair. It is a vicious and nasty policy that is aimed at hard-working people who happen to be unemployed and who then need to be re-housed too. These benefit reductions are not part of any grand policy on welfare reform and they are certainly not part of any clear housing strategy. They are part of an unfair agenda driven by the Chancellor, who has simply cut the incomes of some of the poorest people in our communities.

Photo of Laura Sandys Laura Sandys Conservative, South Thanet 6:45 pm, 9th November 2010

I thank Mr Betts for his speech, despite disagreeing with many of the things he said, not least the last one. This is an interesting debate because we are considering housing benefit change, but in many ways it has to be regarded as part of a much wider welfare reform programme. As such, we can ensure that some of the observations of Labour Members will be addressed by the universal credit benefits, the Work programme and many other areas where the Government will make work reward and pay, by ensuring that we put the right value on, and give the right level of reward to, those who work.

It has taken a lot of political courage to address housing benefit. It has not been done early enough, but the coalition can now deal with what has become a ludicrous and highly inflationary system. Like my hon. Friend Amber Rudd, I represent one of the poorest areas in the country-it has the second highest number of low-paid workers. These people earn less than £7 an hour and often hold down more than one job at a time; they work in the care sector, in our hospitals and in the low-paid retail sector. Before and during the election, my campaign with them focused on asking how we could show how greatly we valued them. I promised to do something about this issue and said that my Government would try to help those people who hold down one or two jobs, who put food on the table and who ensure that they pay their rent.

Photo of Eilidh Whiteford Eilidh Whiteford Shadow SNP Spokesperson (International Development), Shadow SNP Spokesperson (Women), Shadow SNP Spokesperson (Work and Pensions), Shadow SNP Spokesperson (Agriculture and Fisheries)

Does the hon. Lady acknowledge that the majority of housing benefit recipients are people in work, pensioners and disabled people, and that less than one in five of the recipients are unemployed?

Photo of Laura Sandys Laura Sandys Conservative, South Thanet

First, it is 13% of people who work who receive housing benefits. It is good to see on the Front Bench the Minister who is responsible for disability, because in addition many provisions are made for people with disability. We need to protect those who are vulnerable, and they will be protected. It is crucial that we ensure that equity and justice is at the heart of the housing benefit structure.

Housing benefit is one of the key problems in Thanet. In an area of real deprivation, the rate of housing benefit has dramatically distorted the market, disadvantaging those on low wages while not delivering an improvement in the housing stock for those on housing benefit. I wish to highlight three blights that my constituency faces as a result of the level of housing benefit. As I said, it is unfair on the low paid, who do not claim housing benefit. The double whammy of inequity is compounded by the inflationary impact on the overall housing market.

Photo of Guto Bebb Guto Bebb Conservative, Aberconwy

I, too, represent a seaside constituency, so I know that my hon. Friend's point is strong and fair. The average wage in my constituency is £21,800. People earning that will be paying about £4,500 in taxes, yet they often find themselves priced out of the local market by people who move into the area from other parts of the world.

Photo of Laura Sandys Laura Sandys Conservative, South Thanet

My hon. Friend mentioned £21,000, but the average wage in the south-east is £17,000. The inflationary impact of housing benefit on those families has been huge.

My second point is that these rates have not seen an improvement in the housing stock. Some landlords are interested in the rental value rather than the capital appreciation because that gives them such a high return on their investment. Investing in the properties and in the fabric of them is therefore not a priority.

The third issue is the extreme concentration of housing benefit claimants in pockets in my constituency. That problem was brought up by my hon. Friends the Members for North East Hertfordshire (Mr Heald) and for Cardiff Central (Jenny Willott). We create micro-economies that attract a significant amount of housing benefit because property prices are so low and the return from housing benefit is proportionally high.

The current situation has fundamentally distorted housing in my area. The average wage in Thanet is £17,000 and housing benefits for the unemployed stand at more than £8,000 a year. Most working families cannot compete in that market.

Photo of Richard Graham Richard Graham Conservative, Gloucester

Does my hon. Friend agree that one of the bizarre uses of the word "fair" during the whole debate has been the assumption that it is somehow unfair to people who are not working for them not to have better housing than those who are working? The whole point of this reform is to enable a level playing field in which people can live in the houses that they can afford from their work.

Photo of Laura Sandys Laura Sandys Conservative, South Thanet

Absolutely.

As I said, concentration is also an issue. Two wards in Thanet have 83% privately rented accommodation and 20% of all the benefits claimants in my district, but only make up 2% of the population of Thanet district. Some 30% of the activity of all our housing benefits department is taken up by those two wards. Why? The housing benefit has increased by more than 50% over the past 10 years. Some landlords are making a return on their investment of more than 12% through housing benefits whereas similar properties in Westminster would generate only 4 to 5%. These pockets are hugely attractive to landlords, particularly in coastal towns, and that can be very inflationary.

In certain areas across the country, these micro-economies have significantly lower house prices than areas within their broad market rental area. I urge the Government to consider the possibility of allowing local authorities to create sub-districts to ensure that they can exercise the localism that is at the heart of our agenda and the discretion to assess where low market values are creating a magnet for housing benefit claimants. However, that has to do with broader issues of welfare reform. I am sure that throughout the universal approach that the DWP is taking, we will be able to reverse the current situation.

Our system is broken. Those who want to work know that work does not pay. Those who work get less than those who claim and those who do not work often receive the most. I commend these measures and believe that many in my constituency and those areas that have lower income workers will welcome the reforms.

Photo of Phil Wilson Phil Wilson Opposition Assistant Whip (Commons) 6:53 pm, 9th November 2010

I want to broaden the debate, because for me it is about not just housing benefit but housing in general. In particular, I want to talk about the problems that we have with private landlords. It seems to me that the Government are more than prepared to attack the tenants, whereas we need to look at the escapades and state of some of the private landlords we have to deal with-not just in the cities, but in ex-colliery villages in County Durham, such as those that I represent.

There seem to be three basic problems. We need to look at housing benefit and the LHA and to reform them, but we also need to look at the rented sector and at housing supply in general. There are three pillars to the problem, as I see it. If we do not control and manage the private landlord aspect, it will suck the community spirit out of some of our villages and communities up and down the country. I have had problems in places such as Chilton, Ferryhill and Trimdon Station, where the police have been involved. I have had to address large meetings and the problems have basically been to do with the behaviour of some private landlords and, indeed, the tenants too.

We should consider not only the reform of housing benefit but the depth of the problems in some of our communities. For example, we did a survey in some of the communities that I have just mentioned of just under 1,100 houses, 38% of which were in the hands of private landlords. More than half of those private landlords did not even live in the county and quite a few-a significant number-lived outside it. What kind of relationship with and understanding of the local community will they have if they do not even know where some of the properties they own are? That is something that the Government need to address.

The Labour Government started to address it with a selective licensing scheme sanctioned by the Secretary of State. I have two or three in my constituency and they are starting to happen around the country, too. Local authorities can implement these schemes and they go some way towards imposing rules and regulations on private landlords and on the behaviour of tenants. The only problem is that although we have the legislation, if the Government are interested in that aspect of housing they should give it some funding so that we can have stable communities where there are private landlords and a lot of people on housing benefit live.

Another thing that we wanted to introduce was a national register for private landlords. That was one of the things that I discussed with the then Secretary of State, my right hon. Friend John Healey, before the election. However, the Government have said that they will not introduce it. I understand that they think that it is over-bureaucratic, but local residents who have to put up with some of the behaviour of the private landlords and their tenants do not believe that it is too bureaucratic. If there is a will, there is a way, and we will have to consider that in future.

I do not agree with those who think that if housing benefit and the LHA are reformed in the way that the Government propose, rents will automatically come down. The British Property Federation briefing that I have received states:

"Currently in areas across the country from Harrogate to Trafford to Brighton and most of the South West, for every LHA claimant searching for a two bedroom property to rent there are between five and ten individuals who are in work doing likewise. LHA"- and housing benefit-

"claimants will be left behind as landlords naturally seek individuals who are looking for property to rent and are in work."

That is what will happen. People on housing benefit and LHA will be priced out of some of their local communities because the first port of call for the private landlord is those people who have a secure income-people who are actually in work. As the federation has said, five to 10 people in work are chasing every let, compared with two or three people on housing benefit. That is one of the main reasons why rents will not automatically come down. A major survey by the Cambridge centre for housing and planning research has found:

"A majority of 500 landlords surveyed for the study believes the changes will increase arrears, and a large proportion of those who currently let to LHA claimants intends to reduce the number of such tenancies they offer."

Those are some of the issues that we need to address. We should not focus on housing benefit and tenants and think that these people are just sitting watching the television all day long. Perhaps some of them are, but a lot of them are not. Some are pensioners, some are out of work because they have been forced out of work, and some are among the five people chasing every job vacancy. The Government must confront these issues. It is about not just sorting out the tenants, but sorting out the rest of the market, too.

Let me end on one point. I have with me a copy of a written answer from the Treasury. At the moment, about 100,000 tenants in the private sector are paying rents to private landlords-about 44,000 of them-who have not paid tax on that rental income. More than 50% of those landlords are receiving income from housing benefit claimants. The Government need to look into that. It is a case not just of tenants claiming benefit, but of many people in the private sector who rent out properties who are not playing the game. We need to look at both sides, not just one.

Photo of Paul Uppal Paul Uppal Conservative, Wolverhampton South West 7:00 pm, 9th November 2010

I speak in this debate as somebody who has had experience in the commercial and residential property markets for more than 22 years.

I was heartened to hear the comments of my hon. Friend Laura Sandys. She highlighted the 12% return on some investments and the fact that that seems to attract a certain type of landlord. Phil Wilson alluded to that as well. It is almost an open secret in the property business that that aspect needs reform. If truth be told, it seems to attract those who are not the best landlords.

The shadow Minister, Mr Alexander, quoted Liz Peace, and the hon. Member for Sedgefield quoted the British Property Federation. Both quoted selectively. The context in which Liz Peace made that comment was much broader. She was making the point that many landlords do not receive housing benefit directly, so they prefer tenants who are working. Her comment was quoted selectively. As a member of the all-party group on urban renewal and regeneration, it is part of my remit to read such quotes comprehensively.

Photo of Phil Wilson Phil Wilson Opposition Assistant Whip (Commons)

Those affected by the cuts will find it increasingly difficult to find a place to live. I quoted most of the paragraph. In the private sector there are good landlords and bad landlords. The problem is that many of them are amateur landlords who have one or two properties. That sector needs to be regulated, and a national register would be extremely helpful.

Photo of Paul Uppal Paul Uppal Conservative, Wolverhampton South West

Brevity is always required of us, so I shall press on.

Throughout the debate, I have been saddened by one feature of it. All of us on both sides use partisan language. Let us be honest and acknowledge that some of us use political partisan language, but the language used about the issue under discussion has been inflammatory and poorly judged. I refer specifically to the term "cleansing". My family experienced partition in India in 1947. My father was eight years old when he saw people forcibly removed-Hindus, Sikhs and Muslims. My maternal grandfather had to protect his neighbours from a mob of Sikhs and Hindus who wanted to burn out his Muslim neighbours. It is particularly difficult for them to accept the sort of language that has been used in the debate.

As a new Member I say these words not through any pomposity or grand-standing, but because our words resonate widely outside the House. The advice that we received at the very beginning to use temperate language was impressed upon us by wiser heads than ours.

Photo of Russell Brown Russell Brown Shadow Minister (Defence)

I am sure I recognise the background that the hon. Gentleman comes from. May I offer him a quote?

"A mark of any society is how it cares for the vulnerable. It is not possible for any society to guarantee equality of outcomes for all; it is however possible to achieve equality of opportunities."

That is a quote from the convener of the Church and Society Council of the Church of Scotland. Can the hon. Gentleman explain to me and to the House how people being forced from their homes because of the rent levels and the actions of his coalition Government will produce equality for anyone?

Photo of Paul Uppal Paul Uppal Conservative, Wolverhampton South West

I was going to respond to Mr Brown, but I am happy to give way to my hon. Friend Chris Heaton-Harris.

Photo of Chris Heaton-Harris Chris Heaton-Harris Conservative, Daventry

I thank my hon. Friend. Perhaps I can add another quote from a Labour Front Bencher:

"This would lead to social cleansing on an unprecedented scale, with poorer people shipped out in large numbers".

Does that bring anything whatever to the debate?

Photo of Paul Uppal Paul Uppal Conservative, Wolverhampton South West

We could trade quotes, but the issue was eloquently covered earlier by my right hon. Friend the Secretary of State, who made a passionate and pertinent point about the inflammatory language that has been used.

Government estimates show that spending on housing benefit has risen from £14 billion 10 years ago to £21 billion at present. These figures self-evidently make the case for reforming the system and I, for one, believe that reform is long overdue. The central point of the proposed reforms is that people who receive benefits should have the same choices regarding housing as people who do not get benefits. To be balanced in these reforms, the Government have announced more support for the additional discretionary housing payment to help the most vulnerable cases, particularly where there are unusual difficulties.

In a nutshell, if we are prepared to pay, as we are, £20,000 in housing benefit, is it not reasonable to assume that we can meet the vast majority of housing requests? But with a massive deficit, tough choices have to be made. We need to push ahead with the changes to ensure that hard-working individuals and families will no longer have to subsidise people living in properties that they themselves could not afford.

Figures will undoubtedly be bandied across the Chamber today, and I have no desire to rerun arguments that have been put forward already, but it always important to put things in perspective. The maximum rent following the cap will be £400 a week, which is equivalent to £20,000 a year. As the Secretary of State said, based on what people spend on average on housing, this would require an income of more than £80,000 a year. The current maximum local housing allowance rate is £104,000 a year, which would require an income of well over £250,000 a year to fund. Can that be right? Indeed, it could be argued that extreme LHA payments act as a barrier to mobility, trapping people in unemployment and benefit dependency. It is also grossly unfair to expect hard-working low-income taxpayers to fund these rates.

Recently a constituent of mine wrote to me about his experiences as a landlord. The tenant received housing benefit directly after the landlord had been advised that he could be paid directly only if the tenant was in arrears by two months. I say this to show that there are always two sides to the argument-the tenant's perspective and the landlord's perspective. I quote my constituent:

"Currently tenants are assessed for housing benefit and the amount paid is dependent on the tenant's personal circumstances and size of house . . . However if the housing benefit awarded is over the amount of rent agreed on the assured shorthold tenancy, the tenant is allowed to keep the difference."

If the tenant benefits under the existing assured shorthold tenancy agreement, the landlord would have to make up the difference in the rent agreed.

My constituent continued:

"If the tenant is not happy that the rent is being paid directly to the landlord then the tenant has the right to move to a new property and the whole process starts again.

My tenant advised the housing benefit department that she had left my property; they subsequently stopped paying the rent. In fact she stayed at the house for three weeks without paying a penny. When I advised the council that she was still residing at the property and provided them with evidence of this, they said they had to take her word for it".

Although I welcome the broad measures in the housing benefit reforms initiated by the Government, I believe that significant savings could be achieved if the local housing allowance were paid direct to landlords instead of to tenants. That would remove a significant disincentive for landlords to provide accommodation to LHA claimants. Research by the British Property Federation has shown that as a consequence, 60% of the landlords surveyed do not offer tenancies to those receiving LHA, mainly for fear of rent arrears. At the very least, claimants ought to have the right to choose how their housing benefit is paid, and be able to choose that their payments should go directly to the landlord.

I reiterate that I wholly support the Government's measures, not only because they mark a move away from dependency towards independence, but because under the Labour Government housing benefit was allowed to spiral out of control. However, it would be wise to revisit the issue of direct payment to landlords to prevent public money from being wasted, and to encourage landlords to continue to let property to those receiving housing benefit. All of us would agree that the welfare system should provide an effective safety net, but it should not pay workless families far more than most working families earn. As has been said, the 2010 Labour party manifesto stated:

"Our goal is to make responsibility the cornerstone of our welfare state."

I wonder whether the shadow Secretary of State still stands by those words.

I appreciate the acknowledgement in today's Opposition motion that

"housing benefit is in need of reform", but they mean "at a slower pace", which in essence seems to apply to almost all the debates that we have. Government Members have decided to address the problems that face our country, and, although Opposition Members now talk of reform, under their stewardship housing benefit increased by more than 50% in one decade.

This debate is not just about reform; it is essentially about responsibility-and Government Members have taken on that responsibility for the good of the country and its financial future.

Photo of Frank Dobson Frank Dobson Labour, Holborn and St Pancras 7:10 pm, 9th November 2010

I make no apologies for saying that as a Member of Parliament, before that as the leader of Camden council, before that as an individual councillor for Holborn ward, and before that as a human being, I suppose, campaigning locally, I have always been obsessed with trying to ensure that the beleaguered ordinary residents of the area be allowed to stay there. However, that does not mean that I believe that spending £20 billion on housing benefit is a sensible use of public funds. Not a penny of that £20 billion goes on building flats or homes, it is just used to subsidise rents that ordinary people cannot afford, and I remind Government Members from both parties that 100 years ago, Winston Churchill rightly said that rent is a preliminary tax on all economic activity. That was true 100 years ago, and it is true now.

In my constituency there is a gross shortage of housing for ordinary people at rents that they can afford.

Photo of Frank Dobson Frank Dobson Labour, Holborn and St Pancras

No, I shall not give way. I do not have time.

When I say ordinary people, I mean nurses, street cleaners, bus drivers, shop assistants, people who clean the hospital, ambulance drivers, kitchen staff, waiters who serve Government Members, butchers, bakers, plumbers, electricians and builders. Those are the ordinary people who I want to be able to stay in my constituency, in decent housing and at rents that they can afford. That is not the case at the moment, and the Government now propose not just to cap housing benefit, but to slash the funding to build decent homes and flats that people can afford.

The Government are cutting housing investment. In Camden, certainly, private rents are very high, and in the south of my constituency they are very, very high. However, the ordinary people living there did not set those extortionate rents; grasping landlords did, and then they gave some of it to fund the Tory party's election campaigns, election in, election out- [ Interruption. ] It is no good Conservative Members jeering; they know that the landlords help to fund their party.

Those profiteering landlords have set the rents, yet the Government claim that if they cap housing benefit the landlords will cut the rents. In my area, nine out of 10 private lettings are nothing to do with housing benefit, so if there is to be a reduction in housing benefit for one flat in 10, it is clearly not going to have an impact on the rest of the sector. There is unlikely to be very much impact at all.

Let us look at the cap. All hon. Members who live outside London rightly receive an allowance for a one-bedroom flat so that they can live in London. The going rate, according to the Independent Parliamentary Standards Authority, is £340 for a one-bedroom flat. According to this generous Government, the going rate for a three-bedroom flat if one is on housing benefit is also £340. Well, if it is the going rate for a one-bedroom flat, it cannot be the going rate for a three-bedroom flat, and that just shows how unfair the system is.

All the talk about the unemployed getting housing benefit is significantly misleading, because at least one third of the people on housing benefit in my constituency are in work. They struggle to make ends meet, they send their children to local schools, and they frequently rely on support, both financial and practical, from family and friends. Many were homeless, but then the Liberal Democrat-Tory coalition council in Camden urged them to rent in the private sector. They were told that that would be okay. It did not matter what the rents were, because housing benefit would cope with them-or, as the current Leader of the House of Commons said some years ago, housing benefit would "take the strain". All those people were told that housing benefit would take the strain, but the Lib Dem-Tory coalition Government are now going to take away the money that would have helped them, and I believe that that is wrong.

Many people from my constituency will be pushed out to outer London where they do not want to be, and among neighbours who do not want them to be there, which does not seem a very good formula for establishing decent communities in outer London. It is also worth bearing in mind that some of those areas already have higher mortgage and landlord repossessions than inner London.

The situation will affect not just people in work, but those out of work. Three such cases were brought to my advice surgery last weekend, all by well-spoken middle-class people who had hit a bad patch. One had lost a well-paid job, another was suffering from a serious illness, and another was experiencing a family breakdown. They all faced being pushed out of their homes, because the housing benefit that helps out middle-class people going through a bad patch is to be taken away from them just to suit the Treasury. Money will be taken away from those in the greatest difficulty.

We have heard of the highland clearances. There are no highlands in my constituency, but what we face is the lowland clearances-a combination of grasping landlords and a malignant Government, as existed at the time of the highland clearances. We do not want those in London, and I hope that we never will have them.

Photo of Jackie Doyle-Price Jackie Doyle-Price Conservative, Thurrock 7:17 pm, 9th November 2010

I am grateful for the opportunity to speak in this important debate. Many Government Members have said that at the heart of this debate about housing benefit is fairness-fairness for those on average incomes who face higher tax bills because of the size of our welfare budget. I remind the House that when £1 in every £3 spent by the Government is spent on welfare, the need for reform is acute and unavoidable. The need to control housing benefit is an important component of that.

The way in which housing benefit operates causes a major distortion in the way in which our housing market operates generally. As any A-level economics student will tell you, subsidies lead to higher prices, and the result is that as taxpayers we all subsidise the rents that even above-average earners would not be able to afford.

Photo of Neil Carmichael Neil Carmichael Conservative, Stroud

In my constituency one of the biggest problems is that people cannot access houses. It is one of the biggest distortions of which we should be aware, and it is grossly unfair. My hon. Friend makes a good point, because we have to free up the situation so that people who really need a house have access to a house.

Photo of Jackie Doyle-Price Jackie Doyle-Price Conservative, Thurrock

My hon. Friend makes a good point. It is easy for Opposition Members to say, "It's all about those evil Tory reforms to housing benefit," but the housing market is much more complicated than that. It involves a lack of supply and, under the failed regulatory system, the over-provision of credit by our banks. All of us together have a big job to do in tackling it, but I am glad that we have seen fit to grasp the nettle and do exactly that.

Photo of David Lammy David Lammy Labour, Tottenham

On that point about grasping the nettle, will the hon. Lady and the leader of her local council join me and the leader of mine in making provision to house in her constituency some of the overcrowded tenants in Tottenham?

Photo of Jackie Doyle-Price Jackie Doyle-Price Conservative, Thurrock

Tottenham is not in my constituency, I am afraid.