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Welfare Reform Bill

My Lords, this combined amendment seeks to achieve a compromise on the so-called bedroom tax, the underoccupation penalty that reduces the housing benefit entitlement—later the universal credit entitlement—for those of working age in a council or housing association property. Perhaps I might recap on the position we have reached on this measure. I have argued since Committee that the Government should stay with the current definition of underoccupancy from the Department for Communities and Local Government, which allows a household one spare room, which may actually be a room that is occupied all the time; for example, where children are not sharing because one has a disability or because a teenager wants a separate bedroom to do her homework and so on. Requiring people settled in their council or housing association homes to move or pay a fine of what will now be £728 per annum on average seems very harsh. The housing benefit of these tenants will be cut by this amount so they will have to find the bedroom tax out of other benefit income. For an unemployed separated father who has a spare room so his children can stay, this represents a cut of nearly 20 per cent in his income from jobseeker’s allowance. Even though £14 a week may not seem a huge sum to most of us in this House, it means a very significant reduction in living standards for all households affected. Your Lordships will recall that the earlier amendment on this theme was carried in this House with significant support from all parts of the House. It did not go so far as to allow families one spare room, but it changed the position so that the penalty would only become payable if the tenant refused an offer of a smaller, suitable flat. This amendment would still require all 670,000 households—rising to 740,000 households as the pension age rises—to move if they were to avoid paying the tax, but no one would have to pay until they had been offered and had turned down an alternative tenancy. This took away the surely inequitable requirement to pay the penalty for staying put even where there was nowhere else to go. As your Lordships know, the majority of council homes built from 1920 onwards have three bedrooms. Requiring a move to a two- or one-bedroom flat can mean waiting for vacancies for some time; for example, in rural areas there are places where all the council houses have three bedrooms so if the tenants are to downsize they must leave the village, perhaps after living there all their lives. Some urban councils purposely avoid putting families into tower blocks, so singles and childless couples have been allocated larger flats there. To suddenly impose the underoccupation penalty on all these households before they have any chance to move elsewhere seems most unjust, and your Lordships voted for the amendment that would provide some relief for this problem. It is important to note that the earlier amendment did not abolish the bedroom tax, and the penalty would still kick in for those who felt that they could not accept the alternative flat offered to them. Their reasons for refusing to downsize might be very compelling, but regardless of those reasons, the amendment—the compromise from the position of permitting a spare room—meant they would still have to pay if they did not accept the offer of the smaller accommodation. This Lords amendment was rejected in the other place, though with a relatively small majority of 42, and with support from the amendment from all parties, including 12 Liberal Democrats and two Conservatives. This gives me some hope that if an amendment that cost half as much were to be presented to the other place, it might indeed gain acceptance there. I am therefore bringing forward an even more modest amendment, in the hope of salvaging something here. The new amendment confines the postponement of the imposition of the bedroom tax to certain categories only, rather than to all tenants. I deeply regret abandoning hundreds of thousands of households who, even if this amendment is approved, will still be caught by the penalty charge on the 1 April next year. Even if they are willing to move, they will be trapped where they are because there are no smaller flats available. However, needs must, and the new amendment reduces the cost in the early years from perhaps a maximum of £300 million by around half, a far cry from the billions referred to in earlier debate. In due course, the Government will collect the great majority of the tax if, as gradually some people are offered a smaller home and do not take up the offer, they are then required to pay up. The cost implications are not, I suggest, too frightening. Therefore, for the categories spelt out in this new amendment, no fine, penalty, tax, or housing benefit cut would apply unless and until they turned down an alternative offer of something smaller that is defined in regulations as ““suitable””. The categories given relief in the amendment are: first, claimants who are not required to work for reasons already set out in the Bill in Clause 19, including those with, "““regular and substantial caring responsibilities for a severely disabled person””," or for, "““a child under the age of 1””." These are households for whom pressures to take a job—which, as the Minister has explained, is a key policy driver for the Government—are not relevant. For these people, the penalty simply represents a substantial loss of income with no escape. If the household felt that they could not accept an offer of an alternative flat, they would still have to pay, but only after that offer had been made. Secondly, the amendment covers claimants who have already been exempted from the household benefits cap, mostly because they are disabled, but also including war widows. These are people who the Government recognise as having extra costs. My amendment simply replicates the categories which the Government have acknowledged should not be penalised by the benefits cap. Many of the 70 charities that are urging parliamentarians to accept an amendment on this issue represent people with disabilities, who are particularly badly affected by having to share bedrooms. Again, I fear that these would not be exempt from paying the tax unless they moved out, but the tax would not be payable until they turned down another home, deemed to be suitable, but smaller. Each household would still have a very tough decision to take. For one it would be, ““Could we move and put our disabled child with his special bed into the same room as his sibling, or should we take the cut in our living standards and stay in this house with a separate bedroom?””; or, for an older couple, where one is under pension age—under 61 years and 5 months next April—the choice could be, ““Should we move from our two-bedroom flat to a one-bedroom flat, even though we often sleep apart when my husband is ill, and we frequently use the other room when my daughter comes to give me a hand for a few days?””; or, ““Must we move, because £14 per week off my husband’s state pension would be just too much?””. I fear that these difficult choices would still have to be faced even if the amendment is carried, since the amendment only postpones the moment of truth until an offer of a suitable alternative flat is made. Thirdly, this concession would apply where the household regularly takes in foster children. Barnardo’s and other children’s charities are keen to see the nonsense of taxing foster parents removed. What are the arguments against my case for a now extremely modest element of relief from the proposed underoccupation penalty? It cannot be said that granting this relief takes away the pressure on scroungers—people able to work but not working—since the revised amendment does not cover anyone required by the benefits system to seek work. Can it be argued that the Government have already announced a sufficient safety net to cover the most extreme cases? They have made available £30 million against the expected savings of £470 million, which the bedroom tax would yield, for discretionary housing payments which local authorities can use to cover the tax for deserving cases. The Government have mentioned two groups in particular to be helped by local authorities; namely, those living in homes that have been specially adapted and for whom downsizing would require the smaller home also to be adapted, no doubt at considerable cost, and households with foster children where the underoccupying rule is particularly inappropriate. The funds for this discretionary power to bail out some hostels is confined to these special cases. If something was left over, it would leave local authorities with an invidious task; that is, how to assess the relative hardship of the bedroom tax in each of the other 670,000 cases where the discretionary housing payments are available to help only one in 16 of those affected. Nevertheless, I confess to having been thankful for this small mercy—until I learnt that the £30 million for these discretionary housing payments is to be paid for not by the Treasury accepting any reduction in the gains achieved through the bedroom tax but by increasing the tax for the other tenants by another £50 per annum from the previous £13 per week to the new £14 per week. What about the argument that those on very low incomes could find the money to pay the penalty charge from their savings? I fear that it is more likely that such households will be struggling with debts, perhaps depending on payday loans and even resorting to the loan sharks, rather than sitting on a pile of savings. While older tenants may have put aside a bit, few will be able to cope when faced with a new tax of £728 every year on top of the rises in their heating bills and other costs. One other remedy suggested by the Minister is for these households to take in lodgers. That is certainly to be strongly encouraged, although the current disregard as to the amount that tenants are allowed to keep without losing benefit has not proved a sufficient incentive to date. Obviously, however, taking in lodgers is not appropriate for most of those in the priority categories of the very vulnerable and disabled people now covered by this new amendment. By all means promote lodgers’ schemes among those not helped by this amendment but it seems unrealistic to expect this idea to be of much help for those singled out in my new amendment. I hope that since the earlier, more expensive amendment gained such a high level of support from all parts of this House, this lesser version will be acceptable. As noble Lords know, there is backing for any such measure. It comes not just from the many charities concerned with children and disabled people but from the social landlords—the councils and the housing associations. These social landlords have expressed grave concerns, not only on behalf of their tenants but because of the administrative and financial problems that the Government’s proposals will create for them. The landlords will be asked to be the tax collectors of the £14 per week from each liable tenant to make up the weekly deficit on the rent that the penalty will create. They know that they will have a huge job identifying who may be eligible. I am grateful for the reassurance from the Minister that there will not be an army of snoopers to check on whether a young person has left home or is away for just a few weeks. But landlords will have the problems of collecting the £14 per week or £25 per week if there are two rooms. That will not be covered by housing benefit any more. Even if the housing benefit is paid direct to the landlord because the tenant is classified as vulnerable or has run up arrears, the extra sum—the penalty charge—will still have to be collected directly from the tenant. This will not be easy. A gradual accumulation of rent arrears seems inevitable, meaning in turn evictions in due course and less money for renovations, new homes or regeneration. The gain to the Treasury is likely to mean losses for housing, as well as the misery of loss of income for those unfortunate tenants who have to pay up. This will be a particularly painful levy on communities in the north-east and the north-west where 45 per cent of the relevant tenants will be hit, and in Northern Ireland, where rather higher standards have justifiably applied, 68 per cent of these tenants will be affected. In this House we are not troubled by postbags full of protests from aggrieved constituents, as I strongly suspect will be the case in the other place, but I know that many of your Lordships feel strongly that we have a role in restraining government where measures seem excessive or unfair. Even though this amended, amended amendment is now providing much less relief than I feel the situation requires, it nevertheless draws a line by mitigating at least some of the hardship for at least some of those on the lowest incomes, and now exclusively for those who are not in a position to go out to work because they act as carers or are disabled themselves, I hope very much that noble Lords’ support for these households will be sustained. I pay tribute to the Minister who has worked extremely hard and effectively on this important legislation. I congratulate him on the changes he has achieved, but I know that he feels the hot breath of the Treasury on his collar. I therefore ask him to feel emboldened by the strength of feeling in your Lordships’ House to accept this very modest new amendment. I beg to move.