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As Mr Speaker has indicated, Lords amendment 47 impinges on the financial privilege of this House. I ask the House to disagree to it, and I will ask the Reasons Committee to ascribe financial privilege as the reason for doing so. Notwithstanding that, the House has an opportunity to debate the substance of the Lords amendment and I intend to provide the Government’s full rationale for rejecting it. I will also deal with the matters raised in the amendments tabled by the Opposition and explain why they should be rejected as well.
I should like to start by stressing that this debate is not simply about the financial aspects of what we are doing. The fact is that the arguments in favour of a cap are about fairness and about ending a situation in which, for some people, benefit rates are so high that is it not worth working. It is worth my saying that on this issue, the public of this country are overwhelmingly behind us.
I congratulate my right hon. Friend on disagreeing with the Lords on this point. He is absolutely right that the public are right behind us, but does he agree with many of my constituents who think that the cap is still being set too high? They find it incredible that anybody could possibly think that it was too low.
Indeed, and what my hon. Friend says makes all the more extraordinary the flip-flopping position that we have seen from the Opposition in the past few weeks.
A recent YouGov poll showed 76% support for the cap, confirming what all of us will know from our mailbags—that the vast majority of the general public agree with the Government. It is not just the general public as a whole who agree with us, it is Labour voters as well. More than two thirds of them support the principle of a benefit cap. They agree with us that it is wrong to pay people who do not work more in benefits than people earn on average when they do work.
The cap will set a firm upper limit on total benefit entitlement, which for families and lone parents will be equivalent to the average wage for working households. We estimate that to be about £500 a week or £26,000 a year, which is equivalent to gross earnings of £35,000 a year.
I would support entirely what the Minister says but for the fact that in my constituency, rents are so high and housing shortages so great that people do not have a choice. They are obliged to rent properties that entitle them to higher housing benefit, which costs more than the cap. That is the fault of landlords for the rents that they charge, not of the poor people who have no choice and will become homeless under the cap provision.
The right hon. Lady uses the evocative word “homeless”, but what happens to people in her constituency who are bringing up a family and earning a salary of £35,000 a year? Should they pay for those who are not working to have a home at the taxpayer’s expense?
Of course people on lower incomes can receive housing benefit, but I am not aware that it is paid to families earning £35,000 a year. Surely that is the point. We are setting a dividing line.
The Opposition say that they agree with the principle of a cap, but they have been an unedifying sight in the past few weeks. Labour has said one thing one day and another the next. Let us take the example of the former Minister and now Opposition spokesman in the House of Lords, Lord McKenzie. On Second Reading, he described the cap as an “arbitrary measure”. On Report, however, he said that he was in favour of a benefit cap. Then bizarrely, no doubt at the instigation of the shadow Secretary of State, he tabled an amendment that was officially judged to be a wrecking amendment. When the vote on it was lost, the Opposition decided that they would support the exclusion of child benefit, and the new clause that they tabled effectively stated that they believed £26,000 a year was not enough.
Of course, if child benefit were excluded from the cap, a household in work would have to earn a gross salary of around £40,000 a year to receive as much as a household with four children would get in benefits.
I am sure that my right hon. Friend has seen that, in recent years, a large number of new jobs in this country have gone to people who have recently arrived. They have not seemed to be attractive to people who have been settled here longer and are unemployed. Does he think that is because it is not worth their while, as benefits are too high relative to pay?
That is exactly the problem. Many people are taking a hard look at the financial situation and asking, “Why would I return to work?” Surely that has to end.
I was going to come on to the Opposition amendments, but I should make the point that, although this debate is not simply about money, there is no getting away from the fact that their amendments would be costly. They would cut the savings that will be generated by £120 million in 2013-14 and £130 million in subsequent years.
I have great respect for the hon. Lady, and she makes an important point, but it would be altogether more credible if it had not been made at the very last minute. I do not ascribe the blame to her personally, but what we have heard from the Labour party has been quite extraordinary. Its latest effort, in today’s amendments, is to propose a regional benefit cap set by an independent body. The Opposition have tabled that idea and want to discuss it. However, did they table it on Second Reading? No. We had an extensive debate in Committee, which included many of the right hon. and hon. Members who are currently in their places, and I have no recollection of any mention of a regional benefit cap. We then had
Report, and again I have no recollection of its being mentioned. My right hon. Friend the Secretary of State led on Third Reading. I have asked him, and he cannot remember mention of a regional benefit cap. There were then the debates in the House of Lords, in which there was no mention of it. I believe that the first time we heard about it was on the “Today” programme about 10 days ago. Frankly, it is a proposal designed to get the Opposition off the hook.
That may well be the case, but of course it is not clear. We do not quite know what is in the mind of the Labour party. Is it suggesting—this is not in its amendments—that the cap should still be set at £26,000, in which case there is no reason why Labour Members should not back our measures? Or do they plan a higher cap in some parts of the country and a lower cap in others, accepting that our benefit system should be regionally based? Frankly, I am completely confused, and the House has every reason to be the same.
The Minister expressed surprise at the concept of variable caps and benefits. Is he not aware that that concept has applied since the time of Beveridge, in the form of local reference rents, which have existed up to now? Why does he not recognise that regional or area variations in the cap are appropriate, because rents vary enormously from area to area?
We need to be clear about what has happened. We have been through months of debate. The Labour party has got itself on to an almighty hook on the issue of the benefit cap—it is on the wrong side of the argument—and is desperately trying to wriggle free. The Government are having none of it. We are standing by our proposal. The benefit cap that we propose is the right thing and we will press ahead.
My right hon. Friend is right that in the 26 sittings of the Welfare Reform Bill Committee, which I had the pleasure of attending, we did not hear once about the regional benefit cap. Fifty-seven per cent. of those affected live in London. Does the timing of the Opposition proposal have anything to do with the London mayoral elections?
There might be an element of that—it is difficult to escape that conclusion. The Opposition proposal would have more credence had it not been made at the 59th minute of the 11th hour. We should not take them seriously when they make such ill-thought out, last-minute proposals.
The Government are clear that average earnings are the right way to determine the level of the cap. We do not need the Opposition’s proposed independent body—another quango, I hasten to say—to tell us otherwise. The cap needs to be a single, national one for the policy to make sense. The Government will lay before the House a report on the policy’s impact evaluation after a year of operation.
The Minister knows that the Committee extensively discussed the impact of housing costs and their interaction with the cap. If a household loses income through the benefits system through no fault of its own, can it claim legitimately to a local authority to be found statutorily homeless, in line with existing homelessness legislation?
I am sorry, but I simply do not buy the homelessness argument that Labour Members keep making. We are talking about a cap equivalent to a salary of £35,000 a year. Labour Members were vociferous 12 months ago when the housing benefit cap was introduced, but we have not seen the consequences of which they warned in the terms they used. I simply do not accept that somebody receiving the equivalent of £35,000 a year should be categorised as homeless and unable to find anywhere to live.
Much was said in the other place on the importance of child benefit. Let me make it clear that the introduction of a benefit cap will not result in a single household losing its entitlement to child benefit, which will continue—rightly—to be paid to the current recipient. That important principle will not change.
We are, however, changing another important principle: households on out-of-work benefits should not in future expect to receive unlimited financial support from the state. Like other welfare benefits, child benefit is funded by taxpayers. We therefore believe that it is right for its value to be taken into account along with other state benefits when applying the cap.
I agree with where the Minister is coming from, but he should not doubt the sincerity of many London Members, particularly those of us who represent inner-London seats. We have deep concerns that some of our local residents will have to move. They will not be made homeless—I agree with him that we should not exaggerate—but they will have to move to other parts of London or the UK.
However, all London Members have constituents who might be forced to move out of central London if they have a second or a third child because of the requirement for more space. Does my right hon. Friend think it perverse that the one category of people who are exempt from that is those on housing benefit?
That is important. I said at the beginning of the debate that our amendments are not simply about money, but about points of principle. What we are trying to achieve with our reforms is to replicate in our benefits system the realities of the world of work so that people can move quickly from one to the other—we need to do that as closely as we can. Fundamentally, that is what the our proposals are about.
I shall make some progress because we do not have that much time and other hon. Members will want to contribute.
The Government have said that there will and should be some exemptions from the cap, but we believe that work should be the primary way in which households can avoid it. We will therefore exempt households that are entitled to working tax credit. There will be a similar exemption after 2013 for working households on universal credit. Excluding child benefit will only dilute our aim. Being in work—even part-time work—must always pay better than relying on benefits alone.
We have always acknowledged that there will and should be exemptions from the cap among benefit recipients. Those will be households where someone is in receipt of disability living allowance. We will also exempt war widows and widowers. I can announce today that we intend to exempt the small number of households where someone is in receipt of the support component of employment and support allowance but not in receipt of DLA.
We have been clear that we are looking at ways in which to ease the transition for families and to provide assistance in hard cases. That is no different from what we did when we introduced the housing benefit cap a year ago. We used the time before the measure came in to work with those affected; we had flexibilities around the start; and we ensured discretionary funding for local authorities to support hard cases. It is our intention to take the same approach with the Bill.
I support the principle of the cap and appreciate the Government’s efforts to understand the difficulties of those hon. Members who represent high-cost housing areas. The house price in my constituency is roughly double the national average.
“to a far-off community with which they have no links, and that the intention will always be that”,
if they have to move,
“they should ideally stay in the community or council area where they come from and where they have lived”?—[Hansard, 9 November 2010; Vol. 518, c. 166.]
The Secretary of State gave me that assurance. Will the Minister repeat it?
My understanding is that those were not the words used by the Secretary of State, but I want to reassure my right hon. Friend.
Let me set out in a little more detail how the transitional measures will work. First, those who are affected by the cap will receive and have access to immediate support from Jobcentre Plus and the Work programme, starting from April this year. We know who the families are. We need them to understand how the cap will work and how it will apply to them, because people in receipt of working tax credit will be exempt from the cap. So we have a 12-month period to work intensively with the families concerned to explain what steps they need to take, to provide support through the Work programme and to look for employment opportunities for them, which will address the issue and move them back into work.
We also always expected that we would provide a grace period—a degree of transition—for people who simply lose their jobs and find that their circumstances have changed dramatically through no fault of their own. We will not penalise those who are in work and doing the right thing. We will put in place a nine-month grace period for those who have been in work for the previous 12 months and lose their job through no fault of their own. We have always intended to make this measure, and I am happy to make that clear to the House today.
In addition, the Secretary of State and the Prime Minister have made it clear that we will provide transitional support to help manage families into more appropriate accommodation—as we did when we introduced the housing benefit cap. So we will follow the same model of additional money for discretionary housing payments that we adopted for the introduction of the housing benefit cap last year. We will ensure that resources are available in the right areas, such as London, where a larger proportion will be affected. We will provide short-term, temporary relief to families who may face a variety of challenges, such as not being able to move immediately for reasons of education or child protection, supporting minimum levels of access to the housing market.
We will provide up to £80 million for this purpose in 2013-14, and a further £50 million in 2014-15. However, we intend to work extensively with these families over the next 12 months. It is not our expectation that we will need anything like that amount of money, but it is there and available to ensure that we can provide appropriate transitional support for those who may require it.
The whole House will welcome these transitional provisions. In my constituency, many people get up at 6 in the morning to catch the coach to London because they cannot afford to pay the fare for the train, let alone for a flat in Bermondsey. It is not fair on them for their taxes to be supporting benefits for people to live permanently without a job in some of the most expensive accommodation in the country.
My hon. Friend is absolutely right. As I have said, we have to seek to replicate the realities of working life as closely as possible in the benefits system. If we are paying for people to live in a part of town that they could not afford to live in if they were in work, we are trapping them in a way that will prevent them from getting back to work.
More than 1,000 households in my borough will be affected, as in that of Mark Field. Does the Minister realise the implications of what he is saying? It is easy to score political points, but more than 1,000 children will be taken out of their communities and sent, not necessarily to other parts of London but to other parts of the country. That is happening now, and the Minister is complacent about it. Is he prepared to see the dislocation of whole communities in order to make a political point?
I am afraid that the hon. Gentleman is simply out of touch with the reality of what is happening in our country. He talks about the impact of the cap on children. But children are already having their life chances and opportunities damaged by growing up in households and communities in which no one is working. That is what we are seeking to change. The former Archbishop of Canterbury, Lord Carey, said last week:
“If we cannot make the rewards of hard work more appealing than a life spent on the dole then we will have failed a generation of children.”
That is the reality that we face today and it is why we seek to change the way in which our welfare state operates. The Government clearly have the support of the British people on the cap. If we do not reject the Lords amendment, the public will not understand why. This is a reform that is long overdue and the Government are determined to deliver it.
I rise to speak in favour of the amendment in my name and those of my right hon. and hon. Friends. I shall state at the outset that we wish to seek a Division on that amendment, and I am disappointed that the Government have tried to invoke financial privilege to defend against a vote on our amendment in the House of Lords, where they know very well that they will once again be defeated. I am, however, grateful that the Minister has incorporated half of our amendment, by ensuring that there will be a grace period of nine months, but I want to set out the dangerous flaws that have now been exposed in the “one cap fits all” approach and also set out what I think would be a better approach.
The right hon. Gentleman says that he is upset that we are invoking financial privilege. Will he tell us why, throughout all the debates in the
Lords and here, his party has not tabled an amendment to regionalise the cap at any stage, but instead chose to knock out child benefit?
Of course. The Labour party advanced the position in our amendment not, as the Minister said in a slip of the tongue, 10 years ago but well over one year ago. It was advanced by my predecessor and the Leader of the Opposition. During the passage of the Bill, we have talked extensively about the risks—[Interruption.] The Secretary of State might like to listen to the answer. We have given the Government ample opportunity to put in place safeguards against the dangers of their having to spend a lot of money patching up what is being done this afternoon. In the absence of those safeguards, I want to propose to him a better approach.
In a moment. I will give way to him as often as he wants.
We have set out a clear alternative approach. The Government have today burned one third of the savings that they proposed for this measure because they got the policy wrong. Today, by conceding a nine-month grace period, they have incorporated part of our amendment, but now I want to show the Secretary of State a better way of instituting a principle on which I think we both agree.
Throughout this debate, we have seen a game played out by the Opposition: on the one hand they are in favour but then they vote against everything. I cannot understand why, if the right hon. Gentleman takes this principled position and if Labour has believed in it for a while, he has not previously advanced this amendment, which he apparently believes so passionately now needs advancing? Why not in the Lords? Why not here before? There is no answer except that he is trying to indicate one thing and run away with the other.
I spent much of this morning perusing the helpful Conservative party briefing on the Bill—I am sure that Government Members have a copy—page 2 of which contains a useful summary explaining how I, the shadow Business Secretary, the shadow work Minister and the Leader of the Opposition have set out clearly their support, in principle, for the Bill. However, we want to give the Government the chance to institute important safeguards—for example, not allowing the cap to kick in if someone has not been offered the chance to work and instituting new safeguards for homelessness, on which they have had to spend a lot of money today. The Government have not listened to any of that, and now they have had to come back to the House accepting half of Labour’s amendment and spending a huge amount of money, thus burning many of their savings.
We will seek a vote on Labour’s amendment on Labour’s benefit cap, and we are disappointed that the Government are trying to invoke financial privilege to prevent us from having that vote again in the House of Lords, where the Government know they will lose.
It is important to start by debating a principle on which both sides agree—the principle that people should be better off in work. Back in 1971, my right hon. Friend Mr Field pointed out the dangers of the poverty trap and the possibility of changes in the tax and benefits system resulting in people not being better off in work. Frankly, little progress was made in tackling that problem during the 1980s and the 1990s, which was why the institution of tax credits under Labour was such an important part of our welfare reform. Together with the national minimum wage, it ensured that people were better off in work. It was wise, therefore, for the Government to accept the principle of tax credits in their proposed changes to universal credit. That, too, is a principle that we support, and it is why we are in favour of a benefit cap, but we would like one that does not backfire and one that works in practice. That is what our amendment sets out.
Will the right hon. Gentleman answer the question put to him just now by Government Members? Does he or does he not accept that it is wrong in principle in the long term for a family to live indefinitely in an area where they could not afford to live if they were in work?
The principle on which we both agree and which we have advanced reforms to put in place is this: people should be better off in work than on benefits. That is why we are so frustrated with the Government’s failure to get people back to work. Five people are now chasing every job. That is the situation with which we now contend in many of our constituencies. In my constituency, 33 people are chasing every job. That is frustrating for those who believe that people should be better off in work than on benefits. That is why we are so disappointed with the performance of the Work programme.
In constructing a regional cap, will the right hon. Gentleman ensure that no more money is expended than by having a cap of £26,000— in other words, that the regional pot will remain as it is? If we are to go down that route, will he also support the idea of regional pay and regional benefits?
I will come to the localisation of the benefit system, which, as the hon. Gentleman will know, we have had for 70 years in this country, when I set out how I believe our proposal can work in practice.
Will my right hon. Friend help those Government Members to understand one simple fact: that housing support and council tax benefit are in-work benefits, and that—thanks to those benefits and the tax credits policy—it is virtually impossible for any household of comparable size and comparable housing costs to be worse off in work than on benefits? The whole system is constructed to avoid precisely that scenario. Will he also help those Government Members to understand that the impact of the cap hits not only Knightsbridge and Mayfair—the Government want to run the policy by anecdote—but outer London boroughs and suburbs, such as Enfield, Barnet and Brent, as well as Birmingham? Where will those households find somewhere that they can be priced into?
My hon. Friend did an extraordinary job of deconstructing the Bill as it went through Committee, and she is an acknowledged expert on this subject. Her point is absolutely right. The Minister was not able to confirm that somebody on £35,000 could receive, for example, housing benefit. I am reliably informed that that is, in fact, the case. Because the Government have not thought this measure through, we are now confronted with the extraordinary spectacle of a cap that appears to cost more than it saves. As was pointed out by Philip Davies, who is not in his place now, in some parts of the country that will not send the signal that people are better off in work than on benefits. Only the Government could have introduced a proposal that is, frankly, that much of a dog’s breakfast.
Let us take the cost side first. In this debate, we are in the happy position of not simply having to rely on costing an assertion made by Opposition Members. We are very grateful that we have got the analysis that was presented by our good friend, the Secretary of State for Communities and Local Government. In a blunt warning—not just to anybody, but to the Prime Minister’s Office—the principal private secretary in the Department for Communities and Local Government said:
“we think it is likely that the policy as it stands will generate a net cost”,
and that was before the Government burnt all the money that they have put up in smoke just this afternoon.
In a moment.
We are grateful to the Children’s Society for telling us that about half the families who will be affected by the current “one cap fits all” proposal will be families with five children, and on the basis of the first impact assessment—I think—the Children’s Society calculated that about 21,000 families would be affected.
I will give way in a moment.
Let us just see what that scenario looks like in London. The House of Commons Library tells us that a family in that situation will be taking a hundred quid in jobseeker’s allowance, £74 in child benefit, £255 in child tax credit, £32 in council tax benefit and—because of the high levels of rents in London—£350 in housing benefit. Under the cap, a family in that position will lose about £243. There is no way on earth that their rent will fall by that amount. Even out of London, a family in that situation will face losing £87 a week, and there is no way that their rent will fall by that amount either. Those families—some 21,000 of them—will be made homeless. Coincidentally, that is exactly the figure in the analysis produced by the Secretary of State for Communities and Local Government. I am afraid that it is therefore rather ludicrous to suggest that there will not be widespread homelessness as a result of the “one cap fits all” approach, and if anyone wanted any proof of that, the Minister has just given it by telling us that he has had to burn a third of the savings that he proposes to make in sorting the problem out.
My right hon. Friend is making a powerful case. Does he recall that, when the housing benefit capping measures were introduced, the Government said that rents would be likely to go down? What would he say to my constituent, a higher executive officer with Her Majesty’s Revenue and Customs, whose landlord has put her rent up by £100 from
My hon. Friend has highlighted a problem with which we are confronted in London and elsewhere. It was remarkable that the Minister managed to get through his speech this afternoon without making any reference to the latest DCLG estimates for how much rents in London and elsewhere are going to rise. According to some analyses that I have seen, they could rise by something like 41% over the next few years. Nowhere is that corrected or remedied in the Government’s proposals. One Department is simply not talking to the other.
Has the shadow Minister not just illustrated that this is a Greater London-centric issue, given that 60% of the high claims and high benefit payments are in the Greater London area? Across Northern Ireland, only one claimant is in receipt of an amount that would reflect a higher benefit. Yes, something needs to be said about London, but this issue does not affect the whole of the UK in the same way.
The hon. Gentleman is making the point that we tried to make in our amendment—namely, that a “one cap fits all” proposal does not look as though it is going to work. We have heard the Minister’s reassurances this afternoon that certain families will be referred into the Work programme, but I am afraid that the Work programme is failing. The off-flow rate—the rate at which people flow off benefits and into work—in the last quarter of last year was the lowest since 1998. People are not getting back into work, because the Government’s back-to-work programmes are failing. Perhaps the Minister will tell us what he is going to do about that problem.
I have two questions for the right hon. Gentleman, to which I would appreciate simple answers. First, as there are not yet any statistics to demonstrate how the Work programme is working, how can he make assertions about it? He does not know, one way or the other. Secondly, as he is skating round this issue in a big way this afternoon, will he tell us whether he supports the principle of a £26,000 a year benefit cap in London? Yes or no?
As I have rehearsed this afternoon, we simply think that a “one cap fits all” approach is not going to work. The Minister has had to put his hand in his pocket and spend a fortune to fix the problem. He tells us that the Work programme is working well, but the rate at which people are flowing off benefits and into work speaks for itself. It is at its lowest point since 1998. That tells us, I am afraid, that the back-to-work programmes are simply not going to work.
The right hon. Gentleman says that some people will have to move home. Why does he think that that is unacceptable for the long-term unemployed? Every day, people’s circumstances change. They might lose their job, their marriage or their relationship, and those circumstances mean that they have to move home. Why should the long-term—often third generation—unemployed be exempt from the real world that so many people live in?
I am very grateful to the hon. Lady for making that point with such force. No one is against people having to move home or to lower-cost areas of accommodation. What people are worried about is 21,000 families being made homeless, local councils having to pick up the bill for that, and that bill having to be paid for by council tax payers such as hers. What conversations has she had with her constituents about how much their council tax bill is going to go up because there is a new bill for homelessness to pay?
I can assure the right hon. Gentleman, following conversations with my constituents in Broxtowe, that hard-working people overwhelmingly take the view that the long-term unemployed should no longer be better off on benefit than in work. That is not only for the sake of the public purse; it is a result of the compassion that we feel—[ Laughter. ] Hon. Members should not laugh; they should know better. In the real world, some of the people I used to represent as a criminal barrister were third-generation unemployed. It is for the sake of them and their children that they should be back in work, and that is what these measures have at their heart.
They should be back in work, which is why we are so angry that unemployment is set to rise, rise and rise again over the course of this year.
Let me remind my right hon. Friend and, through him, the House that we are talking about benefits and caps that are completely and utterly inappropriate in London where many people in receipt of housing benefit because of high rents are in work. When they are told to move, as Anna Soubry suggests, there is nowhere for them to move to. Our constituents are being told to move to outer boroughs, but Conservative Members know perfectly well that moving to Croydon, Bexley or Bromley is no solution for people who live in Lewisham, where rents are lower. Let me make a further point. I am told on good authority that Croydon, where it is suggested my constituents could move, is now looking to towns in the north of England to house its homeless.
Does my right hon. Friend agree that we are getting slightly misleading information about the percentage of people who are long-term unemployed? About 40% of them are on jobseeker’s allowance and have been for less than a year; a further 22% have been on employment and support allowance for less than two years; the remainder are on income support and are not required to look for work. These are not long-term unemployed people idling about; they are people who are either not required to look for work or who have not been on benefit for a particularly long time.
My hon. Friend is absolutely right. Perhaps if Conservative Members had not tried to play politics and had thought the policy through, we might be in a better place this afternoon.
My right hon. Friend is making a powerful speech. In my constituency, as in that of Ian Paisley, rents might be £500 a month. That is not the sort of rent that we see in London, but one thing the areas have in common is landlords who are quite happy to take the money as often as they can, but who are not so happy to look after the property that the tenants have to live in. There are a number of rogue landlords. Is that not where the fire of Government Back Benchers should be turned—on those landlords?
Absolutely right, and I shall say a few words later about the dramatic escalation in the housing benefit bill that the Department for Work and Pensions foresees. Somehow, that has not featured in this afternoon’s debate, but we will come on to those facts and figures shortly.
Having sat through almost every sitting of the Public Bill Committee, I do not recall this issue getting any traction at all, so it is quite a surprise to hear it come up now. The right hon. Gentleman says that one size does not fit all, so is he going to tell us what sizes do fit, starting with London?
I am going to do exactly that. The Minister makes an important point about regionalisation and localisation, but the point has already been made that we have a local component to the benefit system, and we have had it for 70 years. It was such a big feature of the benefit system that in 1942 William Beveridge devoted an entire section of his report to “the problem of rents”, as he put it. I know that the Conservative party tried to block the Beveridge report back then and that Conservative Members do not want to admit this problem now, but I am afraid that it is a problem that bedevils their policy.
I am glad that the right hon. Gentleman enjoyed my recently published Centre for Policy Studies policy that mentioned regional benefits. On that subject, for the most expensive part of the London would he set the benefit higher or lower than £26,000?
I shall come on to that directly, but I agree with the hon. Lady on one important point. It is important to take local factors into account. If we take out the pension system, the housing benefit bill is something like a quarter of the overall benefits spending. It has been localised for something like 70 years. Admitting a degree of localisation in the way we set a cap sounds as though it could be perfectly consistent with her proposals, although I have not read her pamphlet.
Let me give the House one more illustration of why this is so important. Perhaps the problem of the five-child family in London is included in the hon. Lady’s pamphlet. Almost half the benefits received by that family will consist of housing benefit, as opposed to only about a third of the benefits received by a family in similar circumstances living in a different part of the country. Pretty often, incidentally, that money goes to the landlord rather than the family in question. I believe that we should have a cap that is different in different parts of the country, but takes account of differences in housing benefit.
Would not a much simpler and more cost-effective solution for London be to do something to control the excessive rents that landlords are pocketing? Then we would not have to transport pensioners halfway around the country.
My hon. Friend is right, and what has been noticeable by its absence this afternoon is any argument from any Government Member relating to what we should do about private landlords.
I promise that I will give way to the hon. Lady in a moment.
A one-cap-fits-all approach will not work in London, and it will not work elsewhere. As has been pointed out by many Members representing all parts of the United Kingdom, the cap that the Government propose may not send people the signal that they are better off in work. Our argument is in our amendment, which says that the cap should reflect differences in housing benefit costs in different parts of the country. That has always been an element of our benefits system, but we would add a couple of extra safeguards. There should be a safeguard against homelessness and the kind of costs that the Minister has had to fix this afternoon, and—in my view—there should also be a safeguard against child poverty. Heaven knows, that is worsening enough under the present Government., and we do not want it to become worse still.
The hon. Lady will have read our amendment, so she will know that we propose to take politics out of the issue, and to establish an independent commission to set the level of the cap. As has been demonstrated this afternoon, when it is left to politicians, they make a pig’s ear of it.
What discussions has the right hon. Gentleman had with his colleagues in the Welsh Government about his proposals for a regionalised or localised cap?
We have indeed had discussions with our colleagues in the Welsh Government, who accept the importance of introducing different arrangements for London and other parts of the country and of a solution that recognises the need to localise the benefits system.
I am still confused about exactly what the right hon. Gentleman’s policy is. He may not know that the average salary in his constituency is less than £18,000 a year. Does he propose to reduce the cap to £18,000 in his constituency, or will his constituents be gutted to learn that he is defending the fact that they can obtain more on benefits than they can on the average salary in his constituency?
The hon. Gentleman would be wise to look to his own policy. I suspect that some people in his constituency would be better off on benefits than in work on the cap that is being suggested. Is that not true? Yes or no?
The right hon. Gentleman might like to know that according to the Office for National Statistics, the average annual salary in Enfield North is £25,500, which is close. I can assure him that many of my constituents do not think it fair that while they are earning a gross salary of £25,000, it is possible to receive the equivalent of £35,000 on benefits, which means that work does not pay.
The hon. Gentleman will accept that there will be people, under the £26,000 cap, who could be better off on benefits than in work in some parts of the country, so surely he too will admit the wisdom of having a different cap in different parts of the country. That is why we suggest that principle, and why we suggest that an independent commission looks at the levels. We have seen the muddle that the Government have got into—a muddle that has cost the Exchequer £80 million this year, and will cost it £50 million in the year after that; that is the cost of sorting out the homelessness that it has, over the past year, been telling the House would not arise. If the Government tried to take politics out of the issue just for a moment, and focused on the good old-fashioned business of getting the policy right, they might be in a better position to put in place a cap that does not backfire.
I am interested in the right hon. Gentleman’s idea; I presume that the regulator would be called Ofcap, or conceivably Doffcap. Would his party tell Doffcap that it would have exactly the same amount of money as the Government are proposing, or does he think that there ought to be more money because the amount is not really generous?
As we have seen, the budgets are moving around all over the place; we have just had £80 million put in this year, and £50 million will be put in next year, so it is not quite clear what the baseline is.
I am grateful to my right hon. Friend for giving way; he has been extremely courteous to the whole House in giving way so many times. May I ask him to comment on the idea, mentioned many times by Government Members, that the scheme will get people into work, including those in long-term unemployment?
What does he think that they would say to my constituent, a very senior teacher, who says:
“I am a teacher and because of the cutbacks to local councils am unemployable owing to my experience and qualifications as I cost the same as 2 newly qualified teachers…I have survived these past months by selling my possessions and borrowing money” but
“these avenues are virtually spent and I am in the situation of having to decide between food and heat, let alone how I will pay for my accommodation”?
This man has always worked in my area, has lived there most of his life, and has served my constituents and their children, yet he is being consigned to moving to another part of the country under this legislation.
That brings me to the final point that I want to make, which is about how the policy will be implemented. We are pleased that the Government will take on half of our amendment and introduce a grace period. The Secretary of State has made it clear, from a sedentary position, that the cap is not intended to apply to those who are in work, but we are still not completely clear about how many hours a week someone will have to work to secure that exemption. I understood, in Committee, that someone needed to be working at least 24 hours a week on the minimum wage for that to happen, but the whole thrust of universal credit is to ensure, and to encourage people to take, mini-jobs. If someone is working five, six or seven hours a week, would they, too, be exempt from the benefit cap?
Finally, what would happen if a partner left their spouse, and that spouse, who had four children and lived in a constituency or neighbourhood across the river, automatically found themselves in receipt of benefits that were above the cap? In that tragic situation of family break-up, what happens to the parent looking after the children? Those are important transitional issues that I hope the Minister can clarify.
Will my right hon. Friend take at least a minute or two to try to get across to Government Members that housing benefit is not kept in people’s handbags or wallets? It is paid out to grasping private landlords, and until we do something about those landlords, the housing benefit bill will continue to soar.
The Minister with responsibility for pensions asks what we did about it; again, in the Conservative party’s briefing for today’s debate, there are some interesting figures about the rise in housing benefit over the past few years, but of course closer inspection of the DWP forecast for the next few years shows that housing benefit is set to rise, year on year, at the same rate as in the past 13 years. That is why Labour has been right to expose the dangers of cutting investment in new housing and the lack of any policy making from the Government on what should happen to the private rental market.
This afternoon, Labour has set out its proposal for a benefit cap that will work in practice. We hope to press it to a vote and that the Government will think again about giving the other place a chance to vote on it—just to reinforce that point.
This is rightly difficult territory. I am relieved to hear that Ministers have reconsidered the transitional arrangements, and I am pleased that the Opposition welcome that. In the noise and heat of the debate, important truths are getting lost or ignored. We are not generous enough towards the disabled, and I was pleased to hear that they are completely exempted from the proposals, which should be widely welcomed across the House. The exemption of war widows, who often have very little to live on and whose former husbands sacrificed so much to help our country, is extremely welcome, as both parties in government have asked their loved ones to go into battle on our behalf.
I am also pleased to hear that anybody in work is exempted. The Government’s case revolves around something with which I believe the Labour party normally agrees: working should always be worth while. In today’s debate, there has been more heat than light. If the Labour party, the Conservative party and the Liberal Democrat party all believe that it should be more worth while to work, we need such a provision to achieve the desired effect. It comes down to the last-minute proposal that there should be some regional differentiation of the cap. We are no longer arguing for or against caps—we all now believe in that type of headgear—but Labour believes that there should be different fashions of cap across the country whereas, on the Government Benches, the passion is apparently for uniform caps.
My hon. Friend is ahead of me in my argument. So far, I think I have carried an expectant and worried Labour party with me. Labour agrees with all the exemptions, agrees with the delayed transition and agrees that we need to make working worth while.
No, I like representing my constituents and I suspect that the two jobs would not be compatible. I am very grateful for the kind offer, however, and I notice that the right hon. Gentleman prefers the name Ofcap to Doffcap. As Labour has not yet put forward proposals to deal with the people it describes as fat cat landlords, I think it might well be a case of Doffcap to the landlords, as we seem to be discussing how much money we will route to the landlords through the housing benefit mechanism.
I suspect that if I strayed into the subject of proposals for the housing market and landlords, you would rule me out of order, Mr Deputy Speaker, but perhaps that is a debate for another day. There might be common ground on how we can get better value for the public money being spent while ensuring that we do not cut off the supply of housing, which would be a very stupid thing to do by clumsy intervention. We need more housing at an affordable level for people on modest incomes.
We are talking about a group of people on very modest incomes, and it ill behoves people on decent incomes, such as Members of the House, to be too mean about it. We have the conundrum, however, that we always want to make it worth while for those people to work. We all accept that there will be a cap, but, if it is to be a regional cap, before deviating from the Government’s proposal to the Labour proposal we would need to know what Labour has in mind for the total costings and how the proposal would work fairly within an area as well as between areas.
One thing that the right hon. Gentleman has not mentioned is that when we compare the working family with the non-working family, all too often in this debate we are not comparing apples with apples. The working family would have child benefit for their children on top of the wage that is constantly mentioned and, depending on the number of children they have, they might well qualify for child tax credit. We are not comparing properly, so simply saying that the situation is unfair to those working families gives the wrong impression. Does he not agree?
I thought it was now common ground that for a large number of people on certain kinds of benefit, work is not worth while. We are trying to solve that problem, so despite all those things that the hon. Lady truthfully reports to the House, we still have that problem, with which both parties are wrestling. That is why the Labour party is not here today saying, “There is no problem: we are going to vote against the whole thing,” but is here with an alternative proposal at the 11th hour—the last possible chance to consider this.
Let us go back to Labour’s argument on the regional cap. If it had come with a properly costed and working proposal, I might have been sympathetic to it, but we do not yet know from Labour what is the total package of money available. We have not even been told whether it wants to live within the budget that the Government have come up with for the proposal or whether it thinks the overall proposal is too mean. If it wants to spend much more, it will not solve the “Why work?” problem because provision will become too generous again and it will have a public spending problem.
Can the right hon. Gentleman tell us what the budget actually is because although we have heard some figures from the Minister today, he has not set out, for example, whether the grace period will cost any money?
Ministers are very capable of setting out their own figures. I do not have, at the top of my mind, all the detailed figures the right hon. Gentleman wants, which are properly things for Ministers to report to the House, but they have detailed the total savings overall and they are trying to live within that budget. As has rightfully been reported to the House today, they have given up some of the savings to accommodate the transitional period. It is entirely fair to ask the right hon. Gentleman, who is a specialist, as is the Minister he shadows, to tell us how much difference there would be in his proposals. Clearly, Labour has not yet thought through what the total should be.
There is another, very difficult, issue to consider with regionalism: there are big divergences in house and flat prices within, as well as between, regions. We should recognise this point, which in some ways makes this policy a bit easier to stomach than some on the Labour Benches suggest. I heard a former Westminster councillor saying that she had done some work on the situation of families who would be caught by the cap in Westminster. Naturally I was worried and wanted to hear what her answer was. She said she had found a considerable number of properties that she thought would be suitable for those families, quite close to where they were currently living, which happened to be rather better value than those in which they were currently living, supported by benefits. That seemed rather good news to me. Members from London constituencies will know that within London there is a huge variety of cost in property—often street by street, not merely borough by borough—so I do not think the proposal is quite as penal as some on the Labour Benches suggest. That makes it quite difficult to set a regional cap because such a cap might be no more appropriate as an average than the national cap.
I thank the right hon. Gentleman for making this point, which a number of Opposition Members from Northern Ireland have concerns about. I represent a Belfast constituency and there are massive disparities between rents in the Greater Belfast area and those in more rural constituencies. If this sort of regionalisation was driven down to a very local level, it could distort people’s ability to seek work in the city or outside it.
I am grateful to the hon. Lady.
I am conscious that others want to speak so I shall not extend my argument further. I just want to make the point that in order to consider fairly what is an interesting proposal from Labour, the minimum we would need to know is the overall cost in comparison to the Government scheme and how these difficult problems of judgment within areas or regions would be settled. That is an important consideration.
Presumably, the fact that homelessness will not be created, which is what the Secretary of State has argued over the past year, is the reason why he has had to find another £80 million—to solve a problem that does not exist. In direct answer to the challenge put by Mr Redwood, our amendment suggests that the right place to start this debate is by having a level for London and a level for outside London. That would begin to address the problem he is highlighting.
That is something we need to think rather more about, but unfortunately we have little time to do so. That suggestion might have been helpful, but there is also the problem of the big variety of levels within London. We need to know the extent to which the Labour party wants to validate the current high rents and whether there might be some other solution to the problem of very high rents that lies behind some of this difficulty.
The conclusion I must come to is that the best offer on this issue at this late stage is the Government’s. Something must be done to move things in the right direction and make it more worth while to work. All of us, on both sides of the House, are extremely concerned that in recent years, under both parties, although quite a lot of jobs have been generated a very large proportion of them have gone to people who have recently arrived, because they think the jobs are good enough and that the pay is high enough. There have been reasons—perhaps very good reasons—why people who are settled here and out of work have not wanted those jobs or been able to take them, but part of the answer must be that we have the wrong balance between benefit and work income, and we need to do something about that.
If I may, I shall make one comment on the previous contribution. I thought that Mr Redwood was going to go a stage further: might there not be a connection between the number of newcomers coming here to work and the extraordinary rise in rents in some parts of the country? That also needs to be introduced to our debate today: we cannot run a welfare policy if we have an open-door policy as well.
Those on the Treasury Bench are having, they think, a good day, but if they look behind them they will see that all their supporters are newcomers to the House returned at the last election, except for two Members. There is no reason why those supporters, who have been enjoying themselves so much today, should know where we will be this time next year, or a little later. Some time next year, the Bill and, we are told, universal credit will come into operation. It might be that when those two things hit the tarmac Government Members will hope that Opposition Members show a little more foresight and consideration for those on the Treasury Bench than Government Members have shown this afternoon. My guess is that there will be two God-almighty catastrophes hitting this country. The constituents of Government Members will be at their surgeries and Government Members will be baying for blood. The tables turn in this game.
I want to make three quick points, if I may. I say to those on the Treasury Bench that I do not have their confidence that these measures will be implemented smoothly, neither universal credit nor the proposals before us. A lot of people will be in transition. Whatever the arrangements, there will be hurt, and they will make that hurt felt in the constituencies of Government Members, as well as in our constituencies.
If my hon. Friend does not mind, I am going to be brief.
On the insurance principle, those on the Treasury Bench prayed in aid the public being behind them on the measure. Indeed, the public are behind them on that, but the public are against them on the first group of amendments, which we pushed through. Obviously, the Treasury gave a total that the Department for Work and Pensions had to save from the benefits bill. The truth is that we will never get past the stage of picking on weaker people until we are prepared also to look at stronger people. Why is it that, somehow, the benefits of people in my position—those who are part of the baby boom who have done really well out of this country over the years—are never looked at? Why are we frightened to look at the concessions that, for example, people over retirement age receive as universal benefits?
If we are not to go down this track again—the biggest growth in the budget over the past 20 years is in the transfer payments that we are, in effect, discussing today—we must be a little braver and much more open about those areas that we think should be questioned, rather than having a diet of the sort that has been served up to us today.
On the £26,000 a year cap, are there not lessons for Members on both sides of the House to learn? One is that the Government’s proposals are unbelievably crude. I hope that they will adopt our proposals before they go much further in this reform programme. To my own side, I say that I do not want people to think that it is only out in the sticks that people think £26,000 is a high cap. People in London who work think 26 k is high.
We should not make policy because odd people have talked to us in the street, but yesterday, a couple of blocks from here in Strutton Ground, a window cleaner said to me, “Frank, I start at 4 o’clock in the morning. I wish I could get a guaranteed £26,000 for my efforts.” There are lessons for both those on the Treasury Bench and the Opposition.
My final point has already been made by my right hon. Friend Frank Dobson, who probably knew that I was going to make it and so has disappeared. We have had a nationwide housing benefit for more years than I can remember, and one lesson I have drawn is that landlords are very clever at turning whatever we think of as a cap into a floor. Obviously we want to meet people’s rents where possible, although they do not have a right in the long run to live somewhere irrespective of what the rent is, but can we run a housing benefit system while having a free market in rents? My suggestion, drawn from the decades I have been in this House, is that the two are incompatible if we are trying to protect taxpayers.
I hope that those three points have been useful. Given that in a year’s time those on the Treasury Bench will want some sympathy from us when they are operating these measures, it might be rather gracious if they looked more favourably on the amendments tabled by my right hon. Friend Mr Byrne, which would make their reforms better rather than worse.
It is a pleasure to follow Mr Field, who always provides the House with a thoughtful contribution. It is important to state that the number of newly elected Government Members shows that we were elected on a promise to get to grips with the welfare state. I represent a constituency where the average wage is very low, yet the jobs created there over the past few years have been taken predominantly by hard-working people from eastern Europe. I think that there is something completely wrong with the system if I can meet people on the streets in Llandudno and Llanddulas who tell me that they are better off not taking employment. There is a passion for these changes on the Government Benches, a passion for change that will allow people to do the right thing with their lives and take a job.
I am intrigued and disappointed to see that not a single Labour Member from Wales is in the Chamber to discuss this issue, and I think that I know why. It is because time and again Government Members have asked the shadow Secretary of State to tell us whether his proposed regional cap is for an increase in London, with no change in the rest of the country, or for a reduction in other parts of the country. I do not know a single Labour Assembly Member, councillor or MP who has advocated a lower cap in Wales than in the rest of the country, so it is pretty clear to me that the concept of a regional variation is based on increases in expensive parts of the country but no reductions elsewhere. The Labour party has provided no financial information on its proposal.
I am all in favour of debate on this issue. My right hon. Friend Mr Redwood made the point extremely well that there is an argument to be had about the regional variation in pay and benefits, but it is completely unacceptable for the Opposition to turn up with a proposal that is uncosted, untested and, in my view, intended to get the Labour party off the hook rather than contribute to any change. I do not consider myself to be a cynic on this matter, but I wonder why, when the Chancellor highlighted in the autumn statement the possibility of looking at regional pay, the Labour party attacked the proposal, yet it is now looking at proposals for a regional cap, as logically a regional benefit system must follow. I can only conclude that the difference is that benefit recipients are not union members, but public sector workers are.
I am sorry that the hon. Gentleman felt the need to add that rejoinder. There is already a very localised dimension to the benefits system: housing benefit. We have had a localised housing benefits system for about 70 years, and that is why the amendment states that, if we are to have a different solution for London, compared with the rest of the country, it is housing benefit differences that should be taken into account if an independent commission is appointed to set the cap levels. We already have that in place in this country.
That is an interesting comment. The right hon. Gentleman almost implies that there are no differences between housing costs in other parts of the country. In Wales there are certainly huge differences, for example between Cardiff and north Wales. In my constituency, there has been growth in the population of young people in villages such as Penmaenmawr and Penmachno, and it has been driven by young people who are working but cannot afford to live in the most prosperous areas. They have moved into areas where it is cheaper to buy because that is what they can afford. Why are people who do work and do take responsibility expected to commute to own a house, while that is not the case for somebody who is in receipt of housing benefit? That is another challenge to which we need to respond.
May I ask the hon. Gentleman a simple question? Does he not get the fact that people who work are also in receipt of housing benefit? Instead, he is trying to put everybody into the same hole of being workshy and wanting to claim benefits?
I reiterate the point that my Front Benchers have made: there are not many people in my constituency earning £35,000 a year before tax who are in receipt of housing benefit. That is the crucial difference. The average wage in my constituency is £23,000.
People say, “Are we in touch with the general public?” When I was appointed to the Bill Committee on this proposal, I held three public meetings in my constituency, and one message came through loud and clear: “Why on earth are you going to put in a cap of £26,000?” I think that the cap can be justified, because the Government are taking into account the needs of people throughout the country, not just those in my constituency and those in a low-wage economy such as Wales—a low-wage economy, dare I say it, that has suffered badly from continued Labour party rule for the past 80 years.
The big issue is that we are bringing forward a proposal. If the Opposition were serious, they would also bring forward costed proposals, but we do not have that. We have platitudes and excuses to try for tactical purposes to defend the party position. Ultimately, in this measure, we are proposing a benefits cap, trying to ensure that people see that work does pay and protecting the disabled and people who are in work, and this proposal, in the absence of anything else from the Opposition, is a proposal that we should support.
May I just make it clear that I oppose a benefit cap in principle? This policy has been borne out of prejudice and political expediency, rather than reason. In every recession there are scapegoats, and it is usually the poor, who become a political football for political game-playing and advantage. I am not morally willing to involve myself in that debasing political game.
We all have to bring our own experiences of our constituents to this debate, which has exposed differences in their lifestyles, and at times it has been apparent that we do live in different worlds. I do not begrudge Members and their constituents who are in good, well-paid employment, in a secure home that they can afford and in a decent environment, but that is not the experience of many of my constituents, or of many constituents throughout the country.
I have lived in my constituency for about 35 years, and I live in statistically the most deprived ward in the borough. The vast majority of people whom I see around me desperately want to do what is needed to ensure that their families have a good quality of life. They pay back into the community in many ways, they work long hours often in insecure employment and their pay, in many instances, is low and often below the London living wage.
The risk is unemployment, which over recent years in my constituency has increased by 52%, and over the past year by 7%, so there will be times when many of my constituents will not be able to find work. They struggle, above all else, just to provide a decent roof over their family’s heads, and that is because we face the worst housing crisis since the second world war. Housing supply has not kept up with housing demand, council houses that were sold off in the 1980s and ’90s have not been replaced by successive Governments, and there has been an expansion in buy-to-let, higher-rent-charging landlords, who provide many of my constituents with squalid housing conditions and overcrowding—Rachmanite landlords, who are building up lucrative property empires.
Some Members will have seen recent television programmes that relate to my constituents and to Rachmanite landlords. It has not happened overnight; I blame what has happened over the past 30 years. So what is the logic of the cap for my constituents. Is it an incentive to secure work? The vast majority need no incentive; they are desperate for work. Yes, there is a small minority who will always refuse to seek work, but there are already sanctions for that, introduced by this and the last Government. I already have constituents turning up at my surgery who have been automatically suspended from benefits for three months for the slightest infringement, and they include many who suffer mental health problems or who simply cannot work through the system themselves.
Is the idea to force people to move to cheaper accommodation? Most in my area pay the rents that they pay because they have no other option; there is nothing to downsize to. In any case, the new housing benefit regulations to force down rents have already been introduced. Benefits in my area already do not meet the full cost of rents. People are faced with options. How do they make up the gap between the benefit and the rent? In some instances this winter, there has been a choice between heating and eating.
I repeat that in my constituency—and this is happening across the country—we now distribute food parcels to keep people in some form of civilised existence. If people are to move, where do they move to? My local council is advising people to move to Leicester, Southampton, Manchester and elsewhere in the north. The problem is that the lower-rent areas are where there are no jobs. We are in a vicious cycle of forcing people into areas where they cannot survive.
For me, the cap simply means that more of my constituents will be forced into poverty. All the statistics demonstrate that children will be hardest hit. There is already the problem of children in families being churned from temporary accommodation to temporary accommodation. That destabilises the family and has an impact on their education. The cap is supposed to control costs, but, as has been said time and again, we simply need to control rents. Halt the profiteering by landlords that has gone on in recent decades.
My view is simply that the cap is unnecessary and based on prejudice and political posturing. In past debates in the House, there have also been discussions about cutting the cost of welfare. There was one quote about benefits being an incitement to idleness. Such expressions were used in the debates about the poor law and eventually led to policies of less eligibility and the workhouse. We do not seem to have learned anything in two centuries about poverty and how to tackle it.
I have made clear my view on the total benefits cap a number of times already in the House, but I take this opportunity to highlight again that
Liberal Democrat Members support the principle of a cap and the important message that it sends out that it has to be better for people to be in work than on benefits.
It is also important to exempt those in the support group of employment and support allowance and those who receive disability living allowance. We do not expect those people to work and it would be inappropriate to apply a cap to them, so I welcome the move announced earlier today. I also welcome the package of transitional measures that the Government have announced—in particular, the grace period to protect those who fall out of work. The Government’s grace period of nine months, announced today, is more generous than the six-month period that Labour proposed and was discussed in the other place. I believe that nine months is the right period of time to allow people a chance to get back into work. The vast majority of people who fall out of work will get back into work within that period, so the provision is fair both to families and to taxpayers.
During the debate on the cap in recent months, there has been a lot of rhetoric about huge families sponging off the state. I have sympathy with some of the points made by John McDonnell. Some of that rhetoric has been extremely unhelpful. Suggestions that all those on out-of-work benefits are getting more than people in work are simply not true. The rhetoric has been ramped up a little and that has been unhelpful for getting to the truth.
Like my hon. Friend, I welcome the Government’s announcement on transitional arrangements, which is particularly valid for those of us with London constituencies. She mentioned unhelpful rhetoric. Does she agree that it is important that, across the House, we convey what those transitional arrangements are, rather than spending a lot of time making political points and scaremongering, which affects all our constituents?
Many living in London have been told that they are going to be made homeless and that everybody on benefits gets more than people who work. Those messages are unhelpful. They scare people and we need to make sure that, from now on, there is a more sensible, measured tone to the debate.
What does the hon. Lady make of what the Secretary of State for Communities and Local Government said about the number of people who will be made homeless because of the introduction of this policy?
I understand that those are old figures that have been withdrawn and that new impact assessments have been published since. The hon. Gentleman can look at those and see what the new figures are.
As has been highlighted by many Members, the cap will hit people hardest in areas with high housing costs. Those tend to be in London, but are also found in cities around the UK. We are not talking about feckless, workshy families with hundreds of children who are sponging off the state. That is why what the Government have put forward today is much more sensible than the proposal sent down from the other place. Exempting child benefit would help those on the margins, but do nothing for those affected by the highest housing costs, who will potentially be most affected by the cap. The Government’s package of targeted support and discretionary housing payments is a much more effective way to deal with the issues that will be created.
I note that Labour Members have not tried to argue otherwise today. They have said little about the amendments that have come from the Lords. Mr Byrne will correct me if I am wrong, but I think that I heard him say that the Opposition plan to vote against the Government on the motion to disagree, as well as to vote in favour of their own amendment.
I disagree strongly with the localisation of the benefit cap because that would create a hideously complicated system that it would cost a fortune to implement. It has been suggested in desperation by the Labour party at the very last minute. The proposal is incredibly vague and was summarily demolished by Mr Redwood.
I will not give way any more because I want to give other people the chance to speak.
There are no arguments in favour of what Labour has put forward. It is far too vague to even be considered at such a late stage. I think that the Government’s approach is right.
As other hon. Members have said, alongside the targeted support and the grace period, we need to look at the issue of rents and the ridiculously high housing costs in parts of the country. That affects working families who are struggling to keep a roof over their heads, as well as those who are on out-of-work benefits. The Government have been forced into a number of the measures that they are taking because high housing costs have forced up housing benefit and local housing allowance budgets over the past few years. That money is going mainly into the pockets of private landlords. Alongside the transitional support, which will help with high housing costs and help families in the greatest need, I hope that Ministers will work with the Department for Communities and Local Government and local authorities to bring down rents in high-cost areas. That would be a much more effective way to tackle this problem in the long term in particular areas and would save the Government money in the long run.
Finally, I am grateful that Ministers have now made it clear that the Government will review the implementation of the cap after a year. I welcome that. I hope that it will identify any issues or areas where there are problems so that action can be taken.
My hon. Friend has done a huge amount of work. Before she sits down, may I say that the things that should give London Members the greatest confidence are the letter from the Secretary of State, which confirms that an independent consortium is carrying out a review of the recent local housing allowance changes, and that Ministers have today made it clear that this policy will be reviewed in a way that is public and accountable, and that if it then needs to be re-evaluated, that can be done by Parliament and Government?
I referred to this earlier, but I would like to put it on the record that we certainly intend to carry out a review, as my right hon. Friend Simon Hughes said. We would automatically do so with a major policy innovation of this kind. We will carry that out in a transparent way. I also confirm that we are carrying out the other work that he talked about. I want that to be on the record for him.
I am grateful to the Minister for clarifying those points.
Finally, the Harrington process that has been put in place to review the work capability assessment has been an extremely effective way of getting outsiders to take an independent look at how Government policy is working. It has made significant improvements. I hope that we can learn from that process for the review of this policy to ensure that we are doing what is in the best interests of those who are affected by the cap and of taxpayers.
This is how the benefit system works in high-rent areas. If someone with four children goes to Hammersmith council and asks to be placed, they will not be given a permanent home and will be told that they have no prospect of ever getting one, because Hammersmith council is demolishing, not building, social housing. They will not even get temporary accommodation. They will be put in a direct let property under the relationship that the council has with some of the seediest landlords going. They will be charged market rents, but will be living in appalling conditions.
Let us take a real example of a family with four children who live in an ex-council property—these slum landlords go around buying up such properties—on a council estate in the poorest ward in my constituency. They currently get £450 a week in housing benefit for a four-bedroom flat. That will of course be reduced to £400, so they will slowly but surely get to the point of being evicted.
On the day when they are evicted, those people will go back to the town hall with their children. They may then be accepted as non-intentionally homeless, and they might be put into accommodation in Croydon. However, Croydon council says that when the overall cap comes into effect, it will move its families to Hull. That family will therefore face the prospect of a double move.
I will not.
I end by asking Mr Redwood, who talked about how people should work, how much more likely it is that that family will be in work when they are in Hull. I mean no disrespect to Hull or its Members, but that family will have been taken away from the schools and community network in Shepherd’s Bush, where they have lived for generations and where there are employment opportunities.
This is about not just intolerance or inhumanity but incompetence. The Government are sundering communities and sending people away from their families and communities, and giving them no prospect of either a decent life or employment.
It is an absolute delight to join the debate, which is of key interest to my constituents.
I first wish to talk about the people who have had the least said about them today. Indeed, I do not think any Opposition Member has referred to them. They are the people who pay the £175 billion benefits bill that the Government run up each year on behalf of the people of Britain. I wish to speak for some of the taxpayers in Gloucester.
I have done some research on average earnings in my constituency. The figures are not complete, but I think it will be of interest to Members, and relevant to their own constituencies, that of some 20,000 public sector workers in Gloucester, I estimate that 90% have pre-tax salaries of less than the £35,000 that is equivalent to the £26,000 benefit cap that the Government propose. That figure of 90% means that 18,000 people working in my constituency of 100,000 people are in that position
It is harder to get the same figures for people working in the private sector, but based on a straw poll of three companies employing more than 400 workers, I estimate that some 87% are on pre-tax salaries of less than £35,000 a year. I believe that the vast majority of workers in my constituency would be astonished that Labour proposes that there should be no cap on the benefits that people get.
We all appreciate that the hon. Gentleman’s constituents who are in work are hard-working and may be getting less than the national average wage, but will he acknowledge that they may well be entitled to a raft of in-work benefits such as working tax credit, child tax credit, child benefit and housing benefit? It is not a case of saying that people in work have only a certain amount of money and others should not have so much. There is a real difference between people’s overall entitlement and the simple figures about their wages.
The right hon. Lady makes a perfectly valid point. Some workers receive benefits, but I do not believe that any of them will receive benefits for their family equivalent to, let alone more than, £26,000 a year. I stand to be corrected, even immediately by e-mail to my office, but I am pretty confident.
I tend to agree with the hon. Gentleman. I do not know Gloucester very well, but it would be unlikely for people in Edinburgh to reach that cap, which is exactly the difficulty. Not everywhere is the same. Hon. Members have said that some rents are far too high, but we cannot compare the situation of people in Gloucester with that of people in London?
The hon. Lady is welcome to visit Gloucester. We have lots of things to show her that she will enjoy. If her point was that there are specific problems in London, I agree with her, but I shall come to that later if I may.
The second group of people in my constituency whom I want to address is those on the lowest wages of all. The Government have been clear that one of their major goals—many of us campaigned for this long before the general election—is to reduce, and if possible to eliminate, income tax for the lowest earners in our constituencies. They have done a great deal towards that goal—I believe that 1.1 million have been taken out of income tax altogether. What message do we send to those who are not earning very much and whom we would like to take out of income tax altogether if we do not cap the benefits that those not in work can clock up?
We should send the lowest earners the message that this Government are on their side. We want to take them out of income tax when we can, and at the same time, we want to put a cap on those families who, for whatever reasons, are unemployed. That is a very important message to send, for example, to the young worker at Asda in Barton and Tredworth, who finds that the presents she buys her children at Christmas are not nearly as good as those bought for the children of the family next door, who are living more comfortably on benefits. This is a worker-friendly policy and Bill.
The third group in my constituency whom I should like to address is those who are the most worried and the most vulnerable, including the disabled—I have had several mails from disabled people—war widows and those on PIP or attendance allowances. As the Minister has made absolutely clear, the Bill provides protection for the most vulnerable in our constituencies.
I absolutely recognise that people could well be affected by some elements of the Bill, and the vast majority of them probably live in London. It is not for me to speak on their behalf or on that issue, but the Minister has addressed the problem with three measures: first, the 10-month grace period; secondly, a special nine-month grace period for those who lose their job; and thirdly, a package of discretionary funding. That seems to me to be a significant proposal for hon. Members whose constituencies are likely to be affected.
Mr Field made a good point when he warned of the consequences of the Bill in a year or two. Many Government Members, including me, are new to the House and indeed to the world of politics, whereas he has years of experience. I do not have his experience of debating measures that sound great on the day but do not deliver quite what they intended, but in 2010, the Select Committee on
Work and Pensions, of which I was a member, looked very carefully at changes to housing benefit. There were warnings from well-known charities such as Shelter and speeches from Opposition Members such as Ms Buck that thousands, if not hundreds of thousands, of people would be thrown out of their accommodation and have to sleep rough on the streets. A year later, none of that has come to pass, although I may have missed something.
Does my hon. Friend agree that one of the biggest problems in these debates about welfare is that contributions from the other side, with the exception of Mr Field, are characterised by massive scaremongering about every single change? That has been reprehensible.
My right hon. Friend makes an important point. I have heard from many charities, whose work I deeply respect in many ways and who are active in my constituency, and the strength of their words on some of these issues does amount to scaremongering. I hope that, as on housing benefit, they are proved entirely wrong.
I hugely congratulate Mr Byrne on the ingenuity of his argument. I have no doubt that were he to go more deeply into the private sector, as I believe he is starting to do, he would be a fantastic salesman of unsellable products. Today, we have heard from him an extraordinary, last-minute and uncosted proposal that leaves us none the wiser about what the Opposition really believe. I sympathise with the right hon. Gentleman. He said that if we left matters to politicians, they would make a pig’s ear of it. He is right: he did. From the man who was in charge of the spending of taxpayers’ money and realised that he had spent it all, that was a hugely motivational factor for many Government Members, who realised that politicians had made a pig’s ear of it and perhaps it was time for people from outside politics to come in and try to do something to help.
The hon. Gentleman is very generous and I am grateful for his compliments. But he must accept that Ministers have so badly thought this policy through that they have had to face the indignity of coming to this House and promising to spend £130 million solving a problem that they have told us for the last year would never present itself.
As the right hon. Gentleman will have just heard, I came into this House from outside politics, with a background in the public sector, the charity sector and business, where making concessions and being flexible in achieving goals was generally considered to be a merit. Perhaps if he had shown more flexibility in his approach to the handling of taxpayers’ funds, we would not be in quite the situation that we are today. I am sorry, because I enjoy his company, but I came to the conclusion that his approach today does not remotely add up to a policy. It is simply the continuation of a welfare culture by his party that amounts to gross irresponsibility, married to a something for nothing culture.
In summary, the Bill achieves the following goals. It protects the weak, the disadvantaged and the disabled. There are transitional arrangements in place to help families who are unintentional victims of the Bill in places with high housing costs such as London. It does ensure that workers who are paying the tax that goes to support an enormous benefits bill can see that the Government are taking steps to cap the amounts that are paid out. It is the right thing for Gloucester and for this country, and the amendment is a clumsy, last-minute fudge rather than any solution. I have no hesitation in rejecting it and supporting the Government’s proposal.
I need only a couple of minutes to ask three questions, particularly in relation to the Lords amendment on leaving child benefit out of the cap.
As has been pointed out many times, families earning £35,000 or £40,000 and families on benefits both receive child benefit—it is a universal benefit. First, then, how can it be right to have the same cap for a single, childless adult as for a family with children? Secondly, why are this Government, of all Governments, importing a new couples penalty into the benefits system? It might make more sense for a couple, each of whom might separately be below the cap, to separate than to stay together and incur it. I have never understood why this Secretary of State, of all Secretaries of State, wants to introduce such a policy.
Thirdly, how will the cap be uprated—if, indeed, it is to be uprated? What will happen if a family is forced to move to cheaper accommodation because their costs exceed the cap, and then rents rise in their new area and they are forced to move again and again and again? Until we know how the cap is to be uprated, children’s well-being and family stability will be put at risk, but I have yet to hear Ministers address that issue.
In the past hour and 45 minutes, we have listened to a debate that sums up the difference between the Labour party and the parties in government. With the leave of the House, I will respond briefly to the remarks that we have heard.
It is my view—and, I believe, the view of the public listening to this debate—that we have to change the nature of our welfare state. We have to move away from the world that existed under the previous Government, where children grew up, generation after generation, in houses where no one worked, and where entire communities had people with no experience of work in their family and who knew nothing about how to improve their lot in life. In the Bill, we have introduced a package of measures that will do nothing short of transforming our welfare state.
The great tragedy of this afternoon’s debate is that Labour just does not get it. We have seen an extraordinary attempt by Labour to get itself off a highly visible public hook over a policy that commands overwhelming public support in every constituency in the country. If we walked out on to the streets this afternoon and asked the public what they thought about a benefit cap, we would discover that virtually everyone was 100% behind this policy. Yet what we have heard from the Opposition over the weeks has been an exercise in dancing around the issue. There have been moments when they have said that they favour the benefits cap, but there have been moments when they have said that they oppose it.
I stood up to say that we cannot simply go to the population in the way suggested. When I was out on Sunday, one of my constituents said to me, “Yes, £26,000 seems a lot of money”, but when I asked her what she thought about so much money going in rents to landlords, she immediately changed her mind. We cannot create policy by giving people insufficient information.
You’d think they hadn’t been in government for a generation!
As we stand here, we still do not know exactly where Labour stands. I cannot, hand on heart, say, when the House divides in a minute’s time, whether Labour Members will vote for the benefit cap or against it. We asked the question again and again but they would not answer. They dance around the issue and come up with lame last-ditch excuses and new ideas that they did not discuss in Committee. At the end of the day, they do not want to give an answer to the public. In a moment, they will have to give that answer, because out there are millions of people watching us this afternoon, asking, “Will the House of Commons back something we passionately believe in?” We on this side of the House will be walking through the Division Lobby tonight in support of a benefit cap. We will be backing the views of our constituents; the question is: will the Opposition? Will the shadow Secretary of State, will the shadow Minister, will all the people who we have listened to in debates in Committee and in this Chamber—
Debate interrupted (Programme Order, this day).
On a point of order, Mr Deputy Speaker. This has been an important debate, yet the Government have ensured that no time was available to discuss Labour’s amendment and to put it to the vote before the knife fell at 5 o’clock. They declared financial privilege on the amendment in order to stop it being debated in the House of Lords. What advice would you give me, Mr Deputy Speaker, on how to ensure that this place is able to vote on Labour’s benefit cap?
Far be it for me to suggest an answer, but Mr Byrne might like to reflect on the fact that his party did not vote on the programme motion.