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[Mr James Gray in the Chair] — Housing Benefit

Part of the debate – in Westminster Hall at 10:41 am on 13th October 2010.

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Photo of Karen Buck Karen Buck Shadow Minister (Work and Pensions) 10:41 am, 13th October 2010

I congratulate my right hon. Friend Margaret Hodge on securing the debate. She has done us a great service by setting out to the House the implications for those local authorities that are likely to receive people who move from higher-cost areas. Many of us, including me as a constituency MP, have focused on issues that will impact on the areas from which people will be moving, but we must understand the sheer scale and extent of the proposals.

Almost 1 million households will lose out as a consequence of the combined measures introduced in the June Budget. As was rightly pointed out by my hon. Friend Sheila Gilmore, that will have implications for the entire country. The measures will have the most extensive impact in London, but that will ripple through all local authority areas in the country, including a particularly sharp effect in the south-west, Bristol, Brighton, Cambridge, Oxford, Edinburgh and parts of the north-west. Although London is at the sharp end of the proposals, it is not exclusively affected.

We heard powerful and well informed speeches from across the Chamber, and particularly from those hon. Members who will see the impact of the proposals. My expert and right hon. Friend Mr Raynsford spoke about the potential damage to the private rented sector, which is a valid point. My hon. Friend Heidi Alexander spoke correctly about how the image of work-shy households in Mayfair mansions is completely contradicted by the lived experience of the overwhelming majority of people who claim local housing allowance. She and others mentioned the fact that in east or south-east London, and many other parts of the country, there are no rooms or houses to spare to absorb that movement.

My hon. Friend Jeremy Corbyn talked about the sometimes perverse consequences of the right to buy, a popular policy that delivered much to those who benefited from it, but which down the line has contributed to some of the problems. In yet another extraordinarily powerful speech, my hon. Friend Glenda Jackson talked about the impact of dislocation on households and children. The hon. Members for Bermondsey and Old Southwark (Simon Hughes) and for Colchester (Bob Russell) talked about the impact on children, and they were right to do so.

Before I address one or two of the substantive points and ask the Minister some questions, it is important to place on the record a correct understanding of what housing benefit and the local housing allowance for private tenants actually do, and why they have risen so much. We have heard a great deal-including this week from the Secretary of State-about the explosion in the cost of the local housing allowance. Almost half, 48%, of the entire increase in housing benefit over the past five years has been a result of the growth in the private rented sector. It has been driven by cases and not by rents. Of that, 28% is accounted for by an increase in social rents, while a mere 20% is accounted for by rises in rents themselves at a time when house prices have doubled.

That does not mean that we do not have problems in some areas. We know that there are hard cases and that some people will always swing the lead; that is the case everywhere and in every system. However, such people are outweighed by thousands to one by those who rely on housing benefit and the local housing allowance to keep a roof over their heads. There are ways of dealing with hard cases by allowing local authorities discretion, and some such measures were set out by the last Government in the March Budget. We must not let hard cases dictate a national policy that impacts on 1 million people. That is the catastrophe.

Ministers seem to fail to understand the number of households on local housing allowance who are in work-again, the Secretary of State failed to refer to that. Over the past two years, there have been a quarter of a million new cases of people in work claiming local housing allowance. During the recession, as wages and the hours that people worked fell, people turned to housing benefit and the local housing allowance to stop themselves from being made homeless. The coalition Government have completely ignored that. Research commissioned by my party when considering housing benefit reform last year laid to rest the myth that, taken as a whole, the local housing allowance discriminates against working households.

Research published three weeks ago stated that

"housing benefits arrangements do not seem to unduly favour local housing allowance recipients compared to most low-income working households".

One clear message is that it would be a mistake to see housing benefit claimants and low-income working families as totally distinct categories. Most interviewees in the research study moved between those categories, sometimes several times, so that the same household could be a low-income working household one week, and find itself on housing allowance in another.

Despite all the evidence and research, in something like 20 weeks, a policy will come into effect that could impact on 114,000 households, mostly in London, who live in properties too expensive for them. The Mayor of London's own submission contains an expectation that 20,000 children will be moved. In my local authority, 5,500 households will be way above the cap. If we consider that half of those households are larger households with children, that is 5,000 children in one borough. Where are the school places going to come from? Where will those children be educated? Where will health services be found for them? Where will they be found homes? The sheer lack of planning for the scale of population movement, and the debt, homelessness and distress to be caused is overwhelming. That is in 20 weeks. In a year's time there will be a much bigger and deeper cut with the move to the 30th percentile, which is far wider.

The Minister says that rents will fall. Where is the evidence for that? Will all rents fall? Of course they will not. Some rents will fall, but where are the calculations about the numbers affected in areas where rents do not fall? Does the Minister think that the market does not exist, despite everything that we hear about it? When tens of thousands of people leave their homes in high-cost areas and move to Croydon, Barking, Southend, Hastings or Luton, surely the market will respond and rents will go up. Where will the savings be made? That is before households turn-as they will-to local authorities for rehousing.

Over the past two years, 120,000 households have been placed in the private rented sector by local authorities to prevent people from becoming homeless. What are those households going to do? Has the Minister considered how many of those households will apply to local authorities as homeless? It will be the overwhelming majority. Will local authorities have to pick up those duties and house those households in temporary accommodation, and at what cost? Do we not see the rankest hypocrisy from my own local authority of Westminster, which has been the cheerleader for some of these reforms for what I must say are highly political reasons? In response to a question that I asked the Minister, Westminster was the first council to write to the Government to ask for assistance in dealing with temporary accommodation costs. What extraordinary hypocrisy for it to be holding its hand out for financial assistance while lobbying for the changes that will see the majority of households, particularly those with children, moved out of the borough.

We are talking about a staggering movement of people, an increase in homelessness and an increase in the number of children-many of them vulnerable-throwing themselves on the mercy of ill-prepared local authorities in other parts of the country, including London, which are themselves expected to make a huge cut in their own expenditure at the same time. Many of the households involved are working households.

Has the Minister reflected on the effect of the policies on his own constituency and, indeed, that of the Secretary of State? It is worth remembering how they are affected. In the Secretary of State's constituency, 13,990 households are losers in the two broad rental market areas affected, and of those, just under 5,000 are in work. In the Minister's area, a shade under 1,000 working households lose, with families in two-bedroom properties losing nearly £1,000 a year. The policies are impacting in the Government's own backyard. I hope that that will give them some pause for thought.

Many measures are being proposed to ameliorate some of the most catastrophic impacts of the decisions. The Minister should allow time for impact assessment before local authorities are placed in the position that has been described, because I predict that even with the most minimal impact of the policies, we will see the most distressing scenes that we have seen in many years, as families are forced from their homes, are forced into debt and have to queue at local authority housing departments to make a claim for homelessness. There will also be an impact on the demand for services from local authorities throughout the country, which will have to deal with people's needs. Please will the Minister tell us what measures are being put in place to allow local authorities to cope with that?