Clause 93

Part of Welfare Reform Bill – in a Public Bill Committee at 11:15 am on 17 May 2011.

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Photo of Karen Buck Karen Buck Shadow Minister (Work and Pensions) 11:15, 17 May 2011

It is not a lot of money for the cap. The hon. Gentleman’s earlier intervention implied that he was slightly confusing the housing benefit cap with the universal cap. This cap does not only apply to housing costs. I completely understand that public opinion is shocked and surprised by high rents. That does not necessarily mean that a particular measure that deals with that public concern will work, let alone save money and let alone not have all kinds of unintended consequences that the public do not like either. We are all the same. We all want several contradictory things at the same time. There are consequences here that will cause a great deal of concern.

The nastiest dimension to the benefit cap is the fact that there is almost no way for many of these larger families to avoid its impact. One obvious reason—the Minister will tell me if I am wrong—is that around 5,000 of the 50,000 households who are currently assumed to go into the benefit cap are currently in work-search groups. That number may increase. It is possible that as income support fades out into universal credit and the assessment of incapacity benefit is rolled out, there will be an increase. None the less the majority of households currently covered are not in work-search groups. So there is another series of perverse consequences.

We had a debate earlier about the exemption of families whose children are under five. The Minister confidently asserted that work search would not be expected to apply to households with children under five. But the benefit cap, as currently constituted, requires such households to be included. The other, larger problem is that we know from the way that the benefit cap interacts with the total income of a household in terms of child benefit, child tax credit and so on, that the impact will be predominantly on people’s housing choices.

We are indebted to Ferret Information Systems for some of the analysis that has been done on way that the measure will apply to families. For larger families, such  as a single parent with five children, if that family is not to dig into their child tax credit and child benefit in a way that significantly lowers the disposable income available to spend on the children, there will not be a single private sector property of an appropriate size anywhere in England that they can move into—at proposed levels of local housing allowance and subject to the reductions that the Government are already applying—without facing a shortfall.

I cannot believe that the Government intend to leave households, which will be unable to cover their rental costs and would, therefore, need to move into cheaper accommodation—moving to cheaper accommodation is constantly repeated as being one of the purposes of the Government’s agenda—in a position whereby there is nowhere in the whole country that they could move to. The model example that Ferret Information Systems gives is that the lowest local housing allowance figure for a four-bedroom house in England is in the broad rental market area of Bradford and south dales, and, factoring in council tax and housing benefit there, a family would find that their benefit was still capped by £25 a week. If the family are unable to work, for all kinds of reasons, including long-term sickness or the fact that the children are under-five, they cannot take averting action. They will not be able to find a property in the private rented sector anywhere in England that they could rent without leaving them below the minimum income that the Government have stated—they continue to support that—is the least that they can live on. If the household in question is a couple, that situation is even worse, because the gap in income would be even larger. If they have more than five children, the gap would be larger still.

Returning to the argument about employment, we all agree that it is desirable, where households are able and where they are in a work-search category, for people to go into employment. If they cannot find work, however, it seems a little odd, as we have discussed with housing costs, for those families to seek to avert the impact of the cap by moving from higher housing-cost areas to the north of England—Bradford, as in the example, or Liverpool—where work opportunities are even fewer than in London and in the south-east. In my experience, the overwhelming majority of households that are physically capable of work, and for whom work can be made to pay through child care, want to work, and they want to look for jobs.

I want to share one or two examples of real households that I know. I have swapped some of the personal characteristics, so that they cannot be identified, but they are real people. Mr and Mrs B have four children, and they have been placed by the local authority in what is called settled accommodation. They were homeless, and they were then offered accommodation that requires them to pay market rents for three years, and, after those three years, their rent gradually declines. Mrs B and two of her children suffer from sickle cell disease, and she is unable to work. Mr B, who is a graduate, was made redundant two and a half years ago, and he is absolutely desperate to work. He is engaging in all the Jobcentre Plus work-search activities, and he came to me with his CV and was pleading with me about what I,  as a Member of Parliament, could do to help him back into work, because all he wants to do is find a job. If he finds a job, he will still need housing benefit to top up the rent for his settled home, in which he was placed by the local authority.

At the moment, if the cap applied to Mr and Mrs B, their family would face a shortfall well in excess of £200 a week. They have already been found homeless and placed in local authority accommodation, so they are now set on the same path. He will not be able to pay his rent—nobody would be able to cover his rent—and he will have to leave London, where he has worked and where he is trying to find employment, with his four children, two of whom have sickle cell disease. Where is he going to go? His children are teenagers, and he would not be able to find a property of an appropriate size anywhere in the country that did not leave him with an income shortfall. That is certainly the case according to my analysis. His rent for a three or four-bedroom private sector private property would have to be less than £120 a week. If somebody could find me a three or four-bedroom property for less than £120 a week, I would recommend it to Mr and Mrs B.

Mrs N has four teenage children, who will all be sitting public exams when the cap applies. Mrs N was also homeless and she was placed in temporary accommodation by the local authority, where she has been for six years. She is expected to remain there for at least another three years according to the points that she has, and she has a rent liability in local authority obtained private accommodation of £600 a week. She has severe osteoarthritis and severe depression, which in many weeks renders her unable to leave the house. She will be affected by the cap. Her husband was in employment, but sadly he died last autumn, so she is widowed and is now stuck.

Mrs Miah is another example, from a Bangladeshi family of the kind who will frequently be affected by the cap. She has five children, two of whom are below school age, and she was also widowed last year. She lives in a council flat, which is the cheapest form of accommodation that anyone can find, with a rent of £130 a week. The cap on her income will mean that the shortfall on her rent, let alone on her council tax, will be £65 a week.

We have dozens of examples of such people, who in many cases want to work, have tried to work, have been in work and are stuck through no fault of their own. It is not surprising that criticism of the way in which the cap works is pouring in from just about every quarter. We would expect criticism to come from Shelter, the Child Poverty Action Group, Barnado’s, the Children’s Society and other expert organisations which have some idea of the people with whom they are dealing and what the implications will be. We were surprised to see the criticism from the Centre for Social Justice, which was published last week. The CSJ, which is such a cheerleader for universal credit and the Government’s plans, is concerned that the benefit cap

“will bring hardship to as many as 50,000 large families who will have the rug pulled from under them overnight. The impact of the average projected loss for such families of £93 a week could be highly damaging, and for families who are predicted to lose much more, it is likely to be devastating. Giving such families tailored transitional support through initiatives like the Work Programme will mitigate some of the damage, but the Government should think again urgently about its implementation plans for the full benefit cap.”

In addition, the Mayor of London has made clear his deep concerns that the cap disproportionately applies in London because of higher housing costs. He, too, wants changes to be made to the cap before it has the kind of damaging implications about which he has also warned for the housing benefit cap. We discussed that at Christmas, and he and his researchers helpfully advised us that the housing benefit cap would cost more in additional homelessness and temporary accommodation costs than it would save.

Those are some of the reasons why we believe that the benefit cap is fundamentally misconceived and unworkable. Amendment 232 would require the Government not to apply the cap unless a reasonable offer of work has been made. The Government—again, in response to my hon. Friend the Member for Stretford and Urmston—stressed the centrality of encouraging people into work where possible. I could not agree more, but if a person such as Mr B desperately wants to work and is desperately searching for work, and is complying with every single requirement that the Government and Jobcentre Plus set—and has not been sanctioned for being in error or for not showing themselves keen to be employable—but still cannot find a job, why would the benefit cap apply to them? If the Government are so confident that the Work programme and Jobcentre Plus under their stewardship will deliver employment opportunities, surely it would be extremely easy for them to accept the amendment.