Housing Benefit Entitlement — [Hugh Bayley in the Chair]

Part of the debate – in Westminster Hall at 2:47 pm on 23rd January 2013.

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Photo of Yvonne Fovargue Yvonne Fovargue Shadow Minister (Transport) 2:47 pm, 23rd January 2013

I congratulate my hon. Friend Phil Wilson on securing this important debate.

This policy, more than any other, except perhaps direct payment, will have a major impact on local housing associations and social housing providers. Wigan and Leigh Housing manages 22,600 properties, and 68% of our tenants are on housing benefit. Of those properties, 4,571 are under-occupied and in receipt of housing benefit. Nearly £3 million in housing benefit payments will be lost to that social housing provider, and our shortfall is in one-bedroom and two-bedroom accommodation. For example, our one-bedroom stock is 5,591. In 2011-12, 852 properties were void, and demand for those properties was 2,089 people. We simply cannot re-house people in one-bedroom properties.

If, as predicted by the Cambridge Centre for Housing and Planning Research study, 32% wish to downsize and move to the private sector, that will not offer any savings. In fact, more will be paid for a two-bedroom property in the private sector in Wigan than is paid for a three-bedroom property in the social sector. We have an oversupply of three-bedroom properties. The cumulative effect of the council tax changes will be some £3.50 a week for exactly the same group of people. The study estimates that 26% of tenants will not be able to pay the under-occupancy charge. If 42%, as estimated by the study, do not pay, the ultimate sanction will be eviction.

Has the Minister tested the courts’ view of a tenant who has requested a move, for whom no property is available and who cannot pay? What will be the courts’ opinion? If such people are evicted, based on an average eviction cost of £6,852 per person, my local social housing provider will lose £13.1 million. That £13.1 million will not be spent on building houses, repaying debt or improving stock for tenants. Wigan has done some modelling and made some assumptions about what will happen if the under-occupancy tax goes through as planned, and the change will cost the Department for Work and Pensions £229,000 per annum and, as I said, the authority a possible £30 million in eviction costs. There is no saving for the Department—it is not a policy aimed to save money.

Moreover, as my hon. Friend the Member for Sedgefield mentioned, the reassurances about the discretionary housing payments will certainly not meet people’s shortfall. The total budget for Wigan is £456,000, which will assist with only 15% of the charge. If the amendment proposed by Lord Best was agreed—a penalty only for under-occupation by two bedrooms or more—the situation in Wigan would be mitigated somewhat and the DWP savings would be delivered. In Wigan, if one bedroom could be under-occupied, the savings to the DWP would be £371,000 and the scheme would reduce the number of tenants affected to about 1,000, potential bad debt to £249,000 and eviction costs to close to £3 million. That is not a great policy, and it would pass central savings to the local budget, but it would be more manageable in areas such as Wigan.

What modelling has been made for areas such as Wigan of that amendment and the increased savings for the DWP? Has all the modelling been London-centric? Will the Minister consider looking at Wigan and other areas in the north and north-west, where there is a shortage of smaller housing, to mitigate at least the effect on communities and tenants?

The under-occupation tax is trying to solve a problem that simply does not exist in my area and other such areas. In doing so, it is creating massive problems for individuals, social landlords and communities.