§ Ms Clare Short (Birmingham, Ladywood)
I am pleased to have this opportunity to raise the very serious matter of the reduction in income which will be imposed on some of the poorest families in the land as a result of the cuts in housing benefit announced by the Chancellor in his autumn statement. The changes that he announced will cut the income of one in eight of all households in the United Kingdom, so we are discussing a large group of persons and a serious cut.
It is now absolutely clear that a major objective of Government policy is to increase inequality in Britain. They boast openly that they wish to cut the taxes of the better-off to increase incentives and efficiency. We have seen little increased efficiency as our economy is battered and goes into ever-increasing decline. One of the Government's objectives, which they do not spell out openly but which is clear from their actions, is to make the poor poorer. A great increase has taken place in the past few years in unnecessary unemployment, and millions of people have been thrown into poverty. Unemployment has been created deliberately by the Government's economic policies. Cuts have been made in all the benefits relied on by the poor. The housing benefit scheme has suffered two cuts; those introduced by the original scheme a year ago and the recent proposals.
The Chancellor of the Excehquer said that he sought to save £230 million by cutting housing benefit, but £5.5 billion per annum is given away in the form of mortgage tax relief. Such tax relief was increased substantially in the spring Budget. There can be no argument that the Government do not have funds, that the cuts are necessary and that the money could not be found by other means.
When the Government introduced the housing benefit scheme, many poor families lost out. About 400,000 persons, who previously received help with their rent and rates, lost out completely and received no further Government help. More than 2 million persons now receive less than they did prior to the introduction of the scheme. As a result of the Chancellor's autumn statement, more poor families will lose out. The Government's own estimate is that a further 540,000 householders will cease to receive any help at all—270,000 will be pensioners and 270,000 low-paid workers.
An even larger number—2,170,000 householders—will lose out by becoming poorer as they are given a smaller benefit. The figure is much worse, according to the Institute of Fiscal Studies. It says that 4.5 million households will lose out. The Government can give the 2 million figure only because 2 million families entitled to claim do not do so.
The Government will make certain groups poorer by the changes. First, they will affect the low earner about whom the Government claim to be so concerned. The changes will make the poverty trap even worse. We have heard many sentiments of concern from Conservative Members about the working poor and the disincentive to work, yet this scheme will undoubtedly make that problem worse.
Secondly, the changes will affect the young unemployed—a group that has suffered massively under this Government. The 18 to 20-year-olds will lose £3.10 a week from their benefit. The Government may argue that when they live at home with their parents, their parents 188 will receive housing benefit to make up for that. But 18-year olds are past the age of majority and families do not always claim, so the increased dependence will be deeply resented. The Government may not know it, but Opposition Members are well aware of the family tension caused by large numbers of youngsters being unemployed, at home and on low incomes. There is no doubt that the change will make that problem more serious.
The youngsters who are lucky enough to be in work will also suffer. Their number is few, and it is still diminishing. The Government should note that 18 to 20-year-olds, on whom they have picked this time, face growing unemployment. No figures suggest any improvement.
The 16 and 17-year-olds will, for the first time, be expected to contribute to the rent of the household when they live at home. The 18 to 20-year olds will be expected to contribute at the full adult rate even though they receive wages that are only 60 per cent. of the average.
The final group that will suffer are the pensioners. If they have a private pension or private income that puts them just above the supplementary level, and they will suffer from the changes.
The Government have tried to mislead all of us by saying that the better off will pay for the changes. The list that I have cited are in no sense the better off as that phrase is understood by people in Britain. They are poor, and it is playing with words to describe them as the better off when billions of pounds are given away in mortgage tax relief.
I wish to cite some examples of the amounts of money about which we are talking. The Government like to deal in averages, and suggest that families will lose only marginal or small amounts. That is not the case, because some families will lose considerable amounts. Examples provided by SHAC illustrate the problems well. A family with two children, one at school and the other a 17-year old living at home, with a total income of £135 a week, paying £25 rent and £8 a week rates, will lose £8 a week. A low-paid family struggling to maintain themselves will lose as much as £8 a week.
A single parent with one child at school and a total income of £112 a week, paying £15 a week rent and £4.50 a week rates, will lose £4.10 a week. A pensioner couple with a 50 year old daughter living with them, with an income from pensions and savings of £4,500 a year—£105 a week—paying rent of £22.50 and rates of £12 a week, will lose £5.40. A single pensioner with a retirement and occupational pension totalling £4,000 a year —£76.92 a week—paying £18 a week rent and £5 rates, will lose £4.52 a week. I stress that those are not extreme examples but the amounts of money that the Government are planning to take from some of the poorest groups in our society.
I referred previously to the poverty trap, about which th Government claim to be concerned. I should like to make clear how serious this problem will be for low earning families. Ultimately, for every extra pound earned they will lose 79p through the withdrawal by Government of tax, national insurance and housing benefit alone. When such families claim family income supplement and other means-tested entitlements, such as free school meals, they stand to lose more than a pound in lost benefit for every extra pound they have earned. That is a total disincentive to work, if they are at all rational.
These grave cuts come on top of the cuts that were already imposed by the Government when the scheme was 189 originally introduced. The family with two children with one child at school and the other a 17-year-old, which lost £2.11 a week when the scheme was introduced, loses £10 a week because of these sets of changes. That is an enormously large sum of money to be taken from a family struggling to maintain itself in these difficult days.
I suggest that the proposed changes are disgraceful and unjustifiable. They make a small and unnecessary saving. The cuts in Government expenditure are not necessary and come on top of the mean-minded scheme that was introduced with great chaos throughout the land because the Government were not willing to be sufficiently generous in administrative resources and the amounts given out to reduce the complexity of the scheme. I suggest to the Minister that it is likely that the new set of changes will throw the whole system into further bureaucratic disorder and bring great suffering to many people, especially the old who become extremely depressed by facing rent arrears and who have tried proudly throughout their lives to pay their rent on time. The changes suggest that the Government have no concern for those who live in rented accommodation. The Government seek to suggest to the nation that the virtuous buy their houses and the rest can go to the wall. Those of us who live in the real world know that large parts of our population must live in rented accommodation — the young, the unemployed, single parents and pensioners. Those groups can never buy their houses. The Government are deliberately reducing the standard of living of those groups and pretending that they are an unworthy group who should be protected. This is a disgraceful set of proposals of which the Government should be deeply ashamed.
§ Mr. Allen McKay (Barnsley, West and Penistone)
I am grateful to my hon. Friend the Member for Birmingham, Ladywood (Ms. Short) for initiating this debate and for putting her finger on many of the points that arise on this iniquitous measure.
When I was young, it was drilled into me that if a person had a roof over his head he had a base from which to start. That was the main point irrespective of any problems that occurred. Successive Governments have recognised that by providing housing benefit, but this Government have decided deliberately and with forethought to cut that benefit, and therefore they have effectively started to deprive people of the roof over their heads.
That action has been taken by the Government on top of many other cuts in benefits, deprivations, increases in fuel costs, decreases in allowances and the severe problem of unemployment. People affected by those measures are often those who apply for housing benefit.
My local authority, of which I was once a member, is benevolent in its attitude to the provision of welfare benefits and in its approach to the problems caused by the Government. I therefore asked the people in that authority for their views, as they have to deal with the problems at the grass roots. They expressed great concern about a number of problems that have arisen and will continue to arise. They were especially concerned about the number of tenants potentially entitled to housing benefit supplement who did not claim it because of the complexity of the scheme and the lack of publicity about it.
190 The scheme was supposed to eliminate the problems of a dual benefit system in which the tenant had to choose which benefit to claim. To qualify for housing benefit supplement, however, the tenant still has to make a claim to the DHSS for supplementary benefit, together with a request for assessment of the excess income figure, as well as making a claim to the housing department for rent and rate rebate, so the need to go to two different offices has not been eliminated.
My local authority carried out a small survey of randomly selected pensioners, 60 per cent. of whom appeared to be potential housing benefit supplement recipients. This suggests that of the 8,750 pensioner standard rebate cases in the Barnsley metropolitan borough, 5,250 pensioner households may be entitled to housing benefit supplement but are not claiming it. The authority's research section is continuing its investigation of the problems.
The difficulties in administering the scheme arose from the sheer lack of publicity when it was introduced. This caused great confusion among tenants, and there is still a serious lack of explanatory leaflets on the subject. In addition to the difficulty of identifying potential claimants, the scheme itself is cumbersome and difficult to administer, the main problem being the excessive paperwork required and the constant revision of excess income figures, including backdated changes.
The calculation of the transitional safeguard further complicates an already complex calculation. It has proved extremely difficult to explain to tenants as well as to administer. The introduction of the modified non-dependant deduction after full implementation of the scheme meant that the publicity was crude and less clearly explained than it should have been. Many tenants whose rebate includes non-dependant deductions are going into arrears by that amount because the housing benefit department receives only £1.35 direct from the DHSS.
The Government never took into account the problems and expense that would be caused for local authorities. Circular HB(83)3 states thatwe said that further advice would be issued on how local authorities might identify claimants for standard housing benefit with potential entitlement to housing benefit supplement or supplementary benefit … and to give guidance on identifying entitlement in pensioner cases.Paragraph 10 of the circular continues:It is clear from the research data that the same formula would not be satisfactory for non-pensioner cases … This may enable a suitable alternative formula to be devised for these cases, and further guidance on this will be issued in due course.Rather than run through the same exercise twice, local authorities decided to wait on that further advice. On 22 September 1983, HB(83)11 was issued. The attached report suggested three primary reasons for the earlier formula's lack of success in non-pensioner cases. It also said that no suitable formula was yet available and thatthe Department does not consider that any is sufficiently accurate to recommend to authorities as a means of identifying entitled non-pensioners.The Government have introduced a scheme which is difficult to administer and they have failed to introduce guidance for local authorities. How many local authorities have completed the suggested review? How many have not yet started a review? When does the Minister expect all authorities to complete the review? What does he estimate the number of potential claimants involved to be? What, on average, is the estimated loss to the potential claimant? Does he intend to issue instructions through 191 DHSS offices to back-date claims for supplementary benefit and housing benefit supplement in view of the way in which the Government have cheated people out of money which is rightfully theirs because they have introduced complex legislation and failed to supply the necessary guidance?
I suspect that no local authority has completed the suggested review, as a formula on which to complete it in non-pensioner cases has not yet been devised. Meanwhile, thousands of people are losing either supplementary benefit or housing benefit supplement. We are discussing not small amounts of money but the loss of single payments for special needs and large sums of weekly benefit.
I should like to mention two cases which were given to me by Mr. Douglas Carr, who is a welfare rights officer for Barnsley metropolitan district. I am greatly indebted to him for information on housing benefit and on many other welfare problems. Mrs. J is a 76 year old pensioner who approached Mr. Can because of difficulty in paying fuel bills. The investigation revealed that she had been deprived of £5.91 a week in benefits since April. It is no wonder she could not keep warm when she had already lost £153.66. Mrs. M, a single unemployed person, went to see Mr. Can about money owed to her by her ex-employer. Mr. Can decided to check to see whether any extra benefits would be available to her. It was found that she had missed claiming supplementary benefit at a rate of £2 a week since last April. That had not been discovered by the Department of Employment or the housing benefit office.
The Chancellor of the Exchequer announced recently that the Government intended to make savings of £230 million on the housing benefit scheme by changing the formula for calculating rebate entitlements next April. What Opposition Members highlighted during debates on what is now the Social Security and Housing Benefit Act 1982, is now fully revealed by local housing benefit staff. The 1982 Act shuffled money around. Pensioners below the needs allowance received better benefits, but that money was taken from pensioners whose pensions were slightly above the level at which they would qualify for the needs allowance. That attack on what the Government call the richer members of the poor continues, but this time nobody but the Government benefit.
I shall quote more examples from the authority's files. Under the existing rules, a man, who has a wife and a 17 year old son in full-time work, and who is a tenant in receipt of £60.30 a week invalidity benefit and £20 a week superannuation, with housing costs of £15 in rent and £5 of rates per week, receives total rebate of £7.29. Under the new rules it will be £2.18. Therefore, he will lose £5.11 a week. In the case of a man and wife, both pensioners, with an income of £54.50 state retirement pension, £10.84 a week NCB pension, and £5 a week interest on savings, their rebate at the moment is £7.89, but under the new rules it will be £7.16. That will be a loss of only 73p, but to them that is a vast sum.
Let us take the case of a single parent with one dependent child, one son of 19 on unemployment benefit, and a daughter aged 17 in full-time work. The income of the tenant comes from a part-time job earning £35 gross, with child benefit of £6.50, one-parent benefit of £4.05, 192 and maintenance of £40 week. Under the existing rules the rent rebate is £8.26, but under the new rules it will be £2.48—a loss of £5.78.
Another example is that of a widow with a daughter aged 20 on sickness benefit, with a widow's pension of £34.05, industrial death benefit of £10.22, NCB pension of £7.50 and the interest on savings of £3.50. She gets £4.14. But under the new rules she will get nothing—a loss of £4.14 One can see how effectively the Government are depriving the lowest of our income groups of what should be their means to carry on with their housing.
The Guardian on 1 December said:More than five million people—one in 10 in Britain—face higher rent and rates bills from next April following a Cabinet decision to save £230 million on housing benefits.
The numbers caught by the rises is more than three times the figures MPs were given to expect when Mr. Nigel Lawson, the Chancellor, announced the housing benefit cuts last month.
The numbers include an estimated 1.75 million pensioners who will, on average, lose 80p a week … some council tenants will lose just over £64 a month. Those are the effects of the Government's legislation.
The Government issued a press release in August to try to put over their case and to overcome the problems, the difficulties and deficiencies of their policy. The press release said that once the initial difficult period was over the advantages of housing benefit would begin to be seen. We can now see what the Government call advantages. The advantages are all for the Government. How is it that the Government alone will benefit from their proposed cuts? What is wrong with their idea of shuffling into the housing benefit scheme other welfare schemes? They said then that that would bring together all the help under one roof, but this does not happen, because most claimants have to go to two offices.
The Government said that this scheme would get over the problems of claimants not knowing whether they were better off under one scheme or another. It does, if one can say that it is an advantage to be cheated out of the housing benefit like the 2 million people who will be cheated. They said that the scheme would make things more simple, particularly for local authority tenants on supplementary benefit and for elderly people who would no longer have to pay rent and rates themselves. That is true, except that the Government forgot that they were depriving the old people of the contact. As a result, isolation has increased and the person to whom they could report their housing problems has gone.
The Government also said that the scheme would help the local authorities to reduce rent arrears, but it has not, because rent arrears are increasing. How can it benefit local authorities when the Government are stopping this benefit for millions? They said that it would give benefit to over 1 million of the poorest pensioners, but the cases have not been identified because a formula has not yet been worked out for that. They claimed that it would also make new groups eligible for benefit and confers new rights not found in the old rebate scheme, such as the right to a review by local authority councillors. How many reviews have been done by local authority councillors, and how can one ask for a review of a case under a system which nobody understands?
The legislation was intended to be a unified housing benefit, but the word "unified" has casually and quietly been dropped. What was supposed to be a simplified scheme has caused nothing but upset and confusion. The DHSS staff have been reduced, decimated, demoralised 193 and overworked. Local authorities cannot spend money to provide a properly administered housing benefit scheme, because they face Government overspending penalties. The so-called Government saving is borne by the claimants—the poorest member of our society.
The Government admitted that 2 million people would be worse off under the scheme—and there could be millions more eventually. To add insult to injury, not only will those above the needs allowance suffer, but so will those below it. In reducing the above the needs allowance the Government have decided that unemployment and other benefits are the equivalent of working. All non-dependants above 17 years of age will now have to pay £7.09 a week towards housing costs, instead of the reduced £3.35.
What a mess. At the worst the Government stand accused of cheating and taking money from the poor, at the same time as giving £2.3 million in the 1983 Budget to people in the highest income brackets. At best, the situation is a result of sheer Government incompetence.
§ Mr. Simon Hughes (Southwark and Bermondsey)
The importance that the Government attach to the debate is clear from the fact that, if I am not mistaken, the only people on the Conservative Benches are the Minister, his PPS and a Whip. No Conservative Members are present —except, as it were, out of duty—to show the concern which is apparently only superficial about the fact that under discussion is an attack on the living standards of many people.
The hon. Member for Barnsley, West and Penistone (Mr. McKay) quoted from an article in The Guardian of 1 December — two weeks, more or less, after the announcement, not in a statement, but in a written answer, so that there was no opportunity to attack it, which is what it deserves—of the figures by the Secretary of State for Social Services, which we are discussing now and which will be implemented when regulations, if passed, are laid before the House.
The article appeared a day before the last day of the consultation period, during which objections to the proposals were to be lodged by the relevant bodies. Two weeks were allowed for objecting or making recommendations about a scheme which, as the two hon. Members who have spoken made clear, and as everyone knows, is one of enormous complexity, even in outline.
It was also clear by 1 December that there was concern and considerable doubt. The Minister had announced proposals that even his party—although not present for this debate — regarded as an embarrassment to the Government. No one thought that the idea of having benefit as it was conceived a couple of years ago, with all the flaws and defects that it clearly had, would lead to a tightening of the screw on the people whom the Government said that it was designed to help.
I attended a conference that was organised by Shelter at Nottingham a year and a half ago. Coincidentally, the hon. Member for Islington, South and Finsbury (Mr. Smith) was also there. We had a session on the new unified benefits system. The primary objection to the system was not its complexity, but the fact that it would reduce, on a daily or weekly basis, the ability of people to have in their hands and homes the money with which to order their budget. When one has little money, it helps to have something available to choose which bills to pay this week 194 and which to pay next week. It sometimes helps to postpone one bill until one has met more urgent debts and obligations.
One of the defects in the system is that by making a direct payment from a Government Department to a local authority—which is effectively acting as agent for the Government—we deprive people of the ability to make decisions about their spending and lives. It could be said that such a system removes the problem of how to manage budgets, but it does not. It is apparent that for millions of people the system has added to the problem of managing budgets. It has reduced the amount of money that they have to play with.
By the proposals, the Government are doing blatantly what they have been doing surreptitiously in previous years. By fiscal measures the Government are reducing the tax paid by the better off and penalising people who have no work or are unable to work. I refer to single parents, people who are ill, and pensioners who depend on the extra occupational pension or other income to which they are entitled because they have earned it. They will carry the burden of battening down the hatches, the hallmark of the Government's economic policy.
Let us examine the relative incomes of those who earn £80,000 a year. Under this Government they are thousands of pounds better off. The people who earn £60 a week, or £5,000 a year—well below the national average wage—should by any self-respecting society be protected against inefficient payment systems which give them no decent minimum wage. The House has debated that subject for 60 years and yet we have never been able to guarantee to people — who work because of self respect for a minimum wage — some proportion of the national average income. That also applies to pensioners.
The Government now say to such people, "You will give up out of what is left between £5 and £8 a week according to your family circumstances." Even only 73p a week is substantial for someone who has only £5 or £10 left to pay for all other expenses after paying for food.
That is why we are so angry about the proposals. The Government are saving £230 million. The hon. Member for Birmingham, Ladywood (Ms. Short) said that mortgage interest relief is a £5.5 billion Government subsidy to people with private homes.
The so-called saving is a pittance compared with what the Government could save elsewhere. It is a pittance saved only because it transfers jobs. It transfers the work to local authority staff and imposes on other parts of the national bureaucracy.
The system is complicated and disadvantageous. There will be complications. Calculations will be done by officials perhaps inaccurately because the system is behind in taking changed circumstances into account, because of errors in the calculations, because the computer is inadequate or because of insufficient co-ordination between officials in the DHSS and the local housing revenue department. As a result, people will suddenly he presented on their doorstep with enormous, unjustified rent bills and demands for payment.
Old people in my constituency and no doubt in every constituency have received demands that they cannot begin to comprehend. All they know is that they are terrified because they think they owe money. They may or may not owe it. If they do not owe it, eventually things may be sorted out after weeks and months of effort. People may owe money because, for example, there has not been 195 a declaration of a change of circumstances; a youngster, an 18-year-old, may earn a little more, which does not come to the notice of officials for three months, and then suddenly, retrospectively, there is a change which means that, what was thought to be the net family income after the payment, is reduced by £5 a week, which over three months is a considerable sum, approaching £100, to be found from nowhere because there may be nowhere to find it from.
The problem then becomes a practical problem of how one can remove the mesh that is gradually entwining the worst paid, the worst suffering and the most confused people in our society who are at the mercy of a system about which the Government have had to send out 10 different pieces of paper in the past year as explanation, a system so wonderful, so streamlined — that is the Government's word—and so straightforward that local authorities and the DHSS still cannot work it. The Association of Metropolitan Authorities has been to argue with the Minister and to say, "Please, give us a chance to get it sorted out; give us some more money for personnel and give us the administrative back-up that we need." We have heard nothing to suggest that the Minister has heeded any of their requests.
It is not as if now, in one single package, all the other systems have been incorporated. There are still applications for rent rebates and rate rebates. They still have to be made and processed. Officials must still deal with them. Where is this unified benefit system that the Government boast? It was introduced speedily, it has been changed regularly, and now it is about to be worsened fundamentally. I should like to know from the Minister two sets of information. What work was done by his Department —I know that he was not the responsible Minister at the time, but he is well briefed in these matters and he should have the answers—to ensure that local authorities and the DHSS did have the equipment, did have the personnel, did have ability and did have the funds to be able to deal with the system? Did the Minister's Department find out from them that they needed certain resources and then find that they were wrong in supplying the information, or did the Minister actually not give to those bodies the chance to equip themselves with the resources that they needed? Much more importantly—the second set of figures — what is the cost to the taxpayer in terms of the time as well as the effort, the wages as well as the tasks left undone elsewhere, the opportunity lost to the taxpayer of the time spent in trying to deal with all the queries, in trying to allay all the fears, in trying to put at rest the regular inquiries, the contested cases, the inquiries from lawyers as well as from individuals, the inquiries from local welfare rights organisations, the checking that people often need to ensure that they are not being deprived of the very little with which they are left once the system has worked its worst? What investigations, before the announcements, had the Department made? What had it done to ensure that the local authorities had sufficient personnel and sufficient additional income to pay for the personnel?
Does the Minister know what has been the total increase in the number of personnel in local authorities dealing with these inquiries? It was estimated that the DHSS would save 2,400 staff. How much in fact has it saved? And how many extra staff hours, net or gross, have been used by 196 local authorities? My authority has had a 92 per cent. increase in staff just to deal with the implementation of the benefits, and most authorities have had at least that proportionate burden placed on them.
We are not talking about just a few people. In a constituency such as mine — like in any inner city constituency—53 per cent. of public sector tenants, who represent 80 per cent. of my constituents, are on housing benefit. Of private sector tenants, another 5,000 to 6,000 are involved. That is about 40,000 people in one constituency. We are talking about half the people in the constituency—half the population in some parts of our cities—being affected by the Government's proposals. I urge the Minister to respond to these complaints, and say what the Government are doing to allay the concerns that have been expressed about the present system, before we try to amend it again.
A report will be debated in Southwark today, and I quote a few lines from it:The implementation of the benefits scheme has brought many problems of a serious nature … they are widespread … complexity of the scheme … short timescale of its implementation … Evidence that the DHSS officers do not know about the scheme in detail … inadequacies in administration … They give sometimes incorrect advice to claimants … They are sometimes not performing efficient liaison with the Local Housing Office … Insufficient staff in the new Housing Benefits Department … Problems with benefit certificates being marked 'Private' when they should be marked 'local authority tenants' … The same happening in reverse … Some certificates being sent to the wrong borough or the wrong place … Incorrect calculations being made on a regular basis.How are those problems being looked at by the Government? Where is there evidence that they are showing any concern about whether the system is working? Anybody who has spoken to the people who are trying to implement the system knows — and the Minister knows because they have come to see him and have told him about it in clear terms—that the scheme is not working. Not only are the so-called recipients of benefit suffering, but the administrators are suffering too.
About 10 per cent. of the amount that we are discussing is obtained from the rates, not from central Government funding, and there is a discretion in local authorities to allow certain amounts of benefit in certain cases, for example for the disabled. What guarantee can the Minister give tonight that that will not only not be reduced but will be increased? What guarantee is there that the necessary grant funding will be increased from 60 per cent., the capital funding that the Minister said would be guaranteed, to what it should be—namely, 100 per cent. —if the local authorities are agents, as they are, of central Government?
It is no good the Government saying that the taxpayer is being saved the cost when the cost is being put on the ratepayer. How will the proposals affect local government costs? The answer lies in the rate-capping measures about which we shall hear later today. Will the Bill, about which we shall hear later, exempt from rate-capping any moneys that are needed for housing benefit? We must have answers to these questions. The Government have simply said that the cuts that are required by the national economy will make the system less generous for those whom we already know are most in need.
For many years the Liberal party has held the clear view that the way to have a united system that does not allow the poverty trap to get greater is for the Government to 197 become brave and put taxation and benefits together. It will take a little time to get the taxation Departments of State and the benefit Departments of State to unite their two systems, but how much better it would be if we had a tax credit system, under which those above the median point paid into the Exchequer and those below it would be, to a greater or lesser extent, the recipients of credit.
At the moment there are about 44 different means-tested benefits, although people lose count of them. There are 44 different ways in which people have to apply, under different regulations, in different offices and on different forms, for the benefits to which they are entitled. That is no way to run a social security system. That is a social insecurity system. It is a system that misleads and confuses. The system used to be called national assistance, but it often does not assist at all. It is generally accepted as being misleading to all concerned.
There are backlogs in most authorities in dealing with housing benefit. In some authorities they amount to 20 per cent., and the average is about 10 per cent. In the housing districts in my constituency, there is a backlog of just under 10 per cent. There is no suggestion that the resources will ever be made available to allow those backlogs to be dealt with. The backlogs do not affect just the statisticians —the boffins in the Government's back rooms. They affect the entitlement to money of those at the bottom of the scale in terms of revenue, income and resources. They stop people getting what they deserve.
We thought originally that the regulations would be laid before the House before Christmas, but if the Government run into a bit of trouble there may be a delay. The Minister has a duty to reassure us that the delay will mean improvement. He has a duty to answer the questions and anxieties of the House. Even if Conservative Members are not here to voice the increasing upset that they have felt since they realised what a devastating blow to a decent welfare state the measures represent, the Minister has a duty to explain how he can justify implementing housing benefit proposals with the implications that have been spelt out in this debate. How can he justify implementing those proposals when the back-up and resources are lacking and —unless he has something new to tell us—are unlikely to be made available? The result will be that those coping with least ease today will be given the biggest burden tomorrow.
§ 5.8 am
§ Mr. Brian Sedgemore (Hackney, South and Shoreditch)
The Minister's problem in defending the Government is that he has been instructed to perform a dirty deed. The problem of Opposition Members is that there are no words in the English language adequate to express the pain and hurt that will be suffered by the victims in the inner cities as a result of the £230 million cut in housing benefit.
In Hackney, the poorest people in the poorest borough in the country will suffer the greatest hardship. For them, 1984 will be the Orwellian nightmare which some of them have been dreading. The Government's message to them is not one of seasonal greetings and good will for the new year. It is that in the mean, spiteful and competitive world which they call paradise, those who live in the inner cities are less equal than their richer fellow citizens outside the inner cities, and that those least able to defend themselves must expect to be, and will be, squeezed and squeezed again by the policies of the Government.
198 I spent this morning closeted with some of the senior financial advisers of Hackney borough council, studying the likely effects of the housing benefit cuts on local residents. It was a terrible morning. We discovered that in addition to the private tenants who will suffer — we cannot be certain how many there will be — 13,000 council tenants will be worse off as a result of the housing benefit cuts announced by the Minister recently. Of those 13,000, 1,430 are single parents with small children to look after; 5,590 are single people living alone; and 5,980 are married couples. On average, those 13,000 people will be £1.50 a week worse off; 3,000 will be between £1.50 and £3 worse off; hundreds will be £4 to £5 worse off, and many families will be £8 and more per week worse off.
It is worse than a catalogue of disaster, because those cuts must be seen in conjunction with the rate penalties which the Government have recently announced for Hackney borough council. On the most optimistic assumption, we find that in Hackney hundreds of farnilies —middle-aged people with non-dependent adults living with them—will have to add the £5 a week they will lose in housing benefit to the £5 per week rate increase. Next year they will be £10 to £11 worse off.
It is clear that the Government are doing more than simply causing hardship which will reduce some people to tears. They are pushing some people into a position where they will be unable to cope. When the oppression becomes so great that people wake shaking in the night and scream inwardly by day, the worst is bound to happen. When it does, let there be no doubt that the Government must accept responsibility.
It is ironic that the Government, who were first elected to abolish the rates, should be forcing local authorities to push them up. It is doubly ironic that a Government elected to abolish rates should now be reducing a benefit designed to ease the rate burden. It is cruel that so many more people in Hackney are being pushed into the poverty trap. It is doubly cruel that many more people who could have expected to receive benefit will not come into benefit as rents and rates rise and the economic position worsens.
In this inner city area, with all its acute problems, we see that the economy is once again being made to spiral downwards. That spiralling is caused by problems endemic to the inner city—low incomes, which are the direct result of Government policy.
Administratively we know that the introduction of the housing benefit scheme has been the kind of cock-up that one rarely meets in Government. I was a senior civil servant some years ago. 1 have never seen anything remotely approaching the kind of mess being introduced by some of the best paid people in the land. The Government have tried to penny pinch in their desperate attempts to shed over 2,000 jobs.
The Guardian does not support the Labour party—it supports the SDP six—but it contained an astonishing comment. When the scheme was first introduced, the person who wrote one of the editorials said:The scale of the housing benefit scandal must leave even the most cynical chronicler of bungling bureaucracy breathless with disbelief. It is quite simply the worst example of administrative chaos to have befallen the welfare state — a half cocked scheme administered to the detriment of some of the mom vulnerable people around.Would it not be in order for all Labour Members, with some of their Conservative counterparts, to get together and report the Secretary of State for Social Services to the 199 Parliamentary Commissioner for Administration and the Commissioner for Local Administration, because the administrative incompetence defies belief?
There is a certain malevolence in the way in which this scheme has been introduced which one can almost admire. Who will get the blame for most of the hardship that is caused? It is being done in such a way that it will not be the Government who are blamed, but local councils. The issue was summed up for me in a letter which I received this morning from the director of finance in Hackney, who said:It is also important to understand how people will perceive these changes. All they will take notice of will be the new label for their rent book which shows the new total amount payable. Very few people will bother or be able to attempt to break down the increase into its constituent elements. Therefore, it is Hackney council who will be blamed, not the Government. However well our campaigning develops, the perception of rent and rate bills will in the end damage our credibility.In other words, the council gets the blame and the Government make the savings.
I think that we are entitled to ask, in the name of reason or humanity, why these cuts are being made. The only serious answer is that the whole thing depends on bogus economic theories which even this week are being shown by the Bank of England to be fraudulent. The real guru behind these housing benefit cuts is not the Secretary of State for Social Services, but Professor Milton Friedman, the man who has provided the theoretical base for the Government's economic policies. This week, in a Bank of England document, Professor Hendry of the London School of Economics showed that almost every assertion in Professor Friedman's new book "Monetary Trends in the United States and United Kingdom" is false and that there has been incredible manipulation of the official statistics.
One of the reasons why the House is debating these appalling measures is that the whole theory rests on a mistake. As Professor Hendry said, the relationship between the money supply and total money spending and inflation varies so widely and is so unpredictable that it is random, and yet it is the whole basis of the economic theories which bring us into the House this morning.
Why should the poor people of Hackney have to suffer housing cuts because an economics professor from another country has made a fool of the Prime Minister and of the Chancellor of the Exchequer of this country, and because the Secretary of State for Social Services has neither the strength nor the nous to challenge those people? Why is it that the poor people of Hackney have to suffer these cuts in housing benefit? Professor Milton Friedman stands to economic theory rather in the same way as Professor Burt used to stand to theories of intelligence—a fraud and a cheat.
I make three final points to the Minister and ask for his comments. Surely it is time that the Minister, on behalf of the Government, gave us an apology for the giant fraud which has been perpetrated on our country these past six years of which these housing benefit cuts form a part? When the Minister does that, I hope that he can tell us that we are about to witness the resignation of the Chancellor of the Exchequer. I hope that he will be able to tell us also that the policies that have flowed from that enormous fraud will cease forthwith. Lastly, if he has any concept of fairness, humanity or justice, he will surely rise from his 200 seat in a few minutes' time and tell us that these housing benefit cuts, which are calculated and designed to damage the interest of the poorest people in the poorest cities of this country, will be withdrawn forthwith.
§ Mr. Chris Smith (Islington, South and Finsbury)
The debate so far has centred on the cuts that were announced by the Chancellor in the autumn statement and that have subsequently been explained in greater detail by his colleagues on the Government Front Bench. Those cuts must be seen against the background of the general chaos that has reigned since the housing benefits system was first introduced in part, a year ago and in full measure in April.
When the system was introduced, we were told that it would simplify matters. However, it has done precisely the opposite. Few people, especially those receiving housing benefit, understand how the system operates and what their rights are under it. A system that seeks to redress income deficiency should, from the outset, be understandable by those whom it is supposed to serve.
The complexity was intensified by several factors, the first of which was the completely inadequate period available to local authorities to prepare for its introduction. The second was the large amount of incorrect information passed to local authorities by the DHSS. My local authority, with which the Minister is familiar, conducted a random check of the first 1,000 passported cases that came from the DHSS, and found that more than 90 per cent. of the calculations were incorrect. The difficulties facing local authorities become very clear when one considers those problems, together with the inadequate time allowed and the complexity of the system.
Two further problems must be added to the catalogue. The first was the improper starting levels at which authorities were told to introduce the system. No doubt the Minister will tell us that the setting-up costs were met by the Government, but that statement will ignore the fact that authorities have many continuing costs in administering the housing benefit system. Those costs will count against their expenditure for penalty when the Secretary of State for the Environment decides the rate support grant settlements. Boroughs and districts have been understandably cautious—in my view, over-cautious—in staffing the relevant departments to administer the scheme.
The final nail in the coffin of implementation is that any responsible local authority, given the lack of staffing and time available in DHSS offices to provide advice to claimants, would have wished, not just to process claims, but to provide advice to claimants on which method of claiming would be most beneficial to them. However, that would require more time and staff, and would carry with it more penalties under the rate support grant settlement. The implementation of the scheme has been fraught with problems, and chaos has resulted.
Some districts and boroughs have fared better than others, but, as my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) said, the problems in inner cities are far more acute than they are anywhere else. Ministers may say that many district authorities around the country are succeeding more or less in getting matters right, but we must look at where the major problems lie in the inner city areas, where there are far more claimants and where, certainly in my borough, the 201 numbers far exceeded any that were expected either by the local authority or the DHSS before the scheme was implemented.
In Islington we have major problems of backlog in the processing of claims, particularly affecting and upsetting pensioners who have a small occupational pension. They are severely affected because they desperately want to pay their rent every week. I am sure that all hon. Members will realise and appreciate the desire of such people to keep up with their payments. Now, many of them find that almost impossible because the housing benefit claims have not yet been processed. In some cases the wait has been two, three or four months. I know of cases in my constituency when, no matter how much pleading there was by me, local councillors or housing officials that the pensioners should not pay the full rent, they still went ahead and paid it, going without food and heat as a result. That is the measure of the problem that this chaotic system, with its inadequate and unfortunate implementation, has left us with. It should not be shrugged off as if it does not matter. I hope that the Minister will not do so.
That is the background against which we now have the Lawson package of cuts. It is because that is the background that the cuts, which are bad enough in themselves, will be so much worse. Let us consider some of the problems that that package has imposed on us. The first is that there is wholly inadequate time for consultation. Letters went out to the various local authority associations on 22 November inviting their comments, as the Secretary of State is duty bound to do under the consultation duties laid upon him by the House. The final date specified for the receipt of comments was 12 December. There was a rider that, so that the social security advisory committee could consider the comments, it was advisable that they were received by 2 December if possible. The time scale from 22 November to 2 December in the first instance and to 12 December in the final instance is not, in anyone's reckoning, a sufficient time for proper consideration and consultation, especially bearing in mind the fact that some of the effects of the changes proposed in housing benefit are highly technical and complex, and need careful consideration to assess exactly what their impact will be.
Let us examine the effect of the proposals on the tapers. The subject is, I fear, somewhat technical, but crucially important to many persons. I shall examine the effect of the tapers on rent and rates. The Government have assumed, in adjusting the tapers, that the vast majority of persons in the country pay far more in rent than in rates. That is a correct assumption for many areas of the country, but not, I fear, for my constituency. In many parts of my constituency the amount that tenants pay in rates almost equals or equals their rent. The adjustment which the Government are proposing to carry out to the tapers acts powerfully to their disadvantage. The present tapers are based on a 3:1 ratio of rent to rates. The Government are proposing that there should be an effective ratio of 3.4:1 for those who are paying substantially more than the norm in rates as compared with rent. The move of 3:1 to 3.4:1 is a move in the wrong direction. The effect of the changes in ratio will be that rent rebates and allowances will be withdrawn more quickly than rate rebates, even though the amounts payable for rent and rates may be similar. Many of my constituents will suffer as a result.
A more serious feature of the Government's proposed changes to the tapers is the cumulative effect upon those 202 who have already been affected adversely by the introduction of housing benefits. Initial research carried out in my constituency shows that 23 per cent. of all housing benefit claimants will lose some benefit because of the proposed taper changes. A sample of 200 cases shows losses of up to £4 a week with 4.7 per cent of the sample losing their entire benefit. That fact occurs simply as a result of the taper changes, leaving aside any other changes proposed by the Government. The figures to which I have just referred reflect only the effect of the taper changes proposed for April 1984. Their effect is more severe if calculated cumulatively with the changes already made to the tapers under the initial introduction of housing benefit. The loss of benefit will be more noticeable in April 1984 because the timing of the new tapers will coincide with the final withdrawal of the transitional supplement which was introduced to try to tie in the initial introduction of housing benefit. Therefore, a triple blow has affected several of my constituents. They suffered originally from the introduction of tapers to the initial scheme, they will lose their transitional supplement in April 1984 and the tapers are rejigged to their disadvantage further in April 1984. The effect for some will be severe.
Other matters deal with the proposed changes, the most important of which relates to the tightening effect of the poverty trap on persons paying tax but in the low income brackets.
The net effect of some of the Government's changes will be that for some families, where one member is out at work and not earning a high income, that member will be better off not working. For a Government who are supposed to believe in financial incentives, that is a remarkable achievement. It is undoubtedly true that the changes that the Government are introducing will mean that for some people there will be a positive incentive to give up jobs. That will apply to low-income families and also to some hostel dwellers who are single and often earn only low incomes.
There are other changes, which my hon. Friend the Member for Bradford, West (Mr. Madden) may discuss more fully. For example, there is the increase in non-dependant deductions. Where a member of a family is a non-dependant and is earning, the deductions that will be assumed will be much greater. The degree of family strength that may be involved should not be underestimated.
The raising of minimum levels of benefit to £1 for rent and 50p for rates is, perhaps, in the Government's eyes only a marginal change, but for some it will mean that after April 1984 they will be deprived of cash.
There is the exclusion of some 50 per cent. of local authority areas for the current enhanced rent status. I do not know why the Government have decided to take that particular step. There is no sign that rents in those areas are going down or that inflation has necessarily gone racing forwards with rents lagging behind. I do not know why an area which in February 1984 can be regarded as a high rent area for rents for the private sector, should suddenly in May 1984 cease to be a high ranked area. It would be extremely useful if the Government could explain that.
The changes in the tapers and the cumulative effect of those changes, the tightening of the poverty trap on low— income families, the changes in non-dependant deductions, the raising of minimum levels of benefits, and 203 the abandonment of some 50 per cent. of enhanced rent areas are yet more pain and suffering being heaped on people. On top of that there is the final twist of the screw from the Government—all that must be implemented by April 1984.
I spoke earlier about the way in which the scheme was introduced in the first place, the difficulties that have been attendant upon its implementation and the chaos that still exists, especially in inner city areas, in its administration. If, on top of the financial disadvantage that the Government's proposals heap on some members of our communites, they heap a further dose of chaos and disaster in the changes that local authorities will have to introduce without any immediate influx of staffing, and with the same rate penalties on additional expenditure that existed before the Government decided to change the rules, the result will be further chaos and delays and further pain and suffering for large numbers of my constituents and the constituents of other hon. Members.
The effect of those changes will be severe, especially on pensioners with a small occupational pension and low income families where at least one member is employed. Other people will be badly affected as well. One can assume only that the Government in bringing in those changes wanted to bring in a measure that was fundamentally regressive, detrimental to many people and which would be confusing to those who were already confused by a complex and mystical system. One can believe that the Government wanted to be heartless in singling out this area of public expenditure as part of the Chancellor's autumn statement of cuts.
If any of us who have any heart for the least fortunate in our society had been given the task of selecting an area of public expenditure from which £230 million could be excised relatively painlessly from the public budgets, the housing benefit budget would have been the last place at which we would have looked. I hope that the Minister, who has had an unpleasant task imposed upon him by the Chancellor, will have the decency to admit that the changes will be difficult to administer and painful in their consequences.
§ Mr. Max Madden (Bradford, West)
More than a million low income families and more than a million pensioners will be extremely grateful to my hon. Friend the Member for Birmingham, Ladywood (Ms. Short) for initiating this debate and to my hon. Friends the Members for Islington, South and Finsbury (Mr. Smith), for Barnsley, West and Penistone (Mr. McKay) and for Hackney, South and Shoreditch (Mr. Sedgemore) for bringing to the House and the Minister authentic accounts of the chaos, complexity, confusion and outrage throughout the country about the problems arising from the housing benefit scheme.
During the past year, the London Housing Aid Centre —SHAC—and its director Nick Raynsford have been issuing regular reports on the progress of the housing benefit scheme. One report entitled "Housing Benefit: Lessons from the Disaster" dated July 1983 states:The one overriding and inescapable conclusion to be drawn three and a half months after the start date for the new Housing Benefit scheme is that its implementation has been disastrously bungled. There is stark and widespread evidence of confused claimants, large numbers of whom are still not receiving their 204 correct benefit; of harassed local authority officials desperately trying to get to grips with the requirements of the scheme and with the huge backlog of unprocessed applications; and of perplexed housing association staff wondering what to do about their escalating levels of rent arrears, caused because their tenants have not received enough or, in some instances, any money with which to pay the rent.This morning we meet only about a year after the first anniversary of the housing benefit scheme. I doubt whether any local authorities held parties to celebrate the first anniversary of the scheme, for the reasons described by my hon. Friends. From the comments published by SHAC in July, I doubt whether there has been any improvement in the operation of the scheme between then and now.
In the past year the DHSS has issued 12 circulars and numerous amendments to the scheme. In addition to the work necessary to cope with the November benefit uprating, the Government now want a further £230 million cut in the scheme to come into effect next April. Regulations were to be tabled before Christmas, but it is clear that they will not be available until January at the earliest. Local authorities have had desperately little time to implement the changes demanded by the Government and there will be even less time for them to implement the cuts for which the Government are now pressing.
The latest cuts sought by the Government could be called without exaggeration "the great housing benefit robbery" which will take money out of the pockets of 2.5 million households in this country. One in eight households in Britain will suffer financial loss as a result. The scheme has been an unmitigated disaster and if the Government have their way more than 2 million pensioners and low income families will now face further substantial losses. Some pensioners will lose up to £5 per week and some low income families up to £10 per week. The cuts will not fall on the relatively well off, as the Government claim, but on the poor—individuals and families whose incomes are well below average earnings.
Age Concern, like so many other voluntary organisations, is extremely concerned about the operation of the housing benefit scheme and has recently made it clear which pensioners will be hardest hit by the cuts that the Government seek. Leighton Andrews of Age Concern has recently wrote to all Members of Parliament saying:The kind of pensioners affected are those who have an occupational pension, an additional or graduated or incremented state pension, some part-time earnings or investment income.They are the very people who have tried to take advantage of the Government's incentives to work and provide for themselves in retirement. In particular, we should point out that some pensioners will be paid an enhanced pension through the State earnings-related scheme, and will be penalised by the State for this through the housing benefit scheme.It is curious that at the same time the Government is trying to assist occupational pensioners it should produce a proposal such as this which The Economist has rightly called 'one of the most effective disincentives … ever devised'. (The Economist, December 3rd 1983). It is a disincentive to obtain any additional pension, a disincentive to take any part-time work in retirement, and a disincentive to save.Not only have the cuts been condemned by The Economist and The Guardian. Even the Daily Telegraph has condemned them. Voluntary agencies such as SHAC and Age Concern, the Low Pay Unit and many other bodies have rightly expressed their dismay at the past operation of the scheme and are extremely fearful about the effects and social consequences that the proposed cuts will have on pensioners and the working poor.
205 We have heard today of the effects that the cuts will have in seriously intensifying the poverty trap. We have heard of marginal rates of tax of 80 per cent. For those who are also in receipt of family income supplement it rises to 109 per cent. The latest cuts sought by the Government will fall most heavily on the same people who suffered financially from the changes flowing from the introduction of the housing benefit scheme.
We have already heard of the changes that the Government want to make for those who live in high-rent areas. One half of the authorities which are authorised to operate an enhanced benefit scheme because of the high level of rents in their areas will lose that authorisation. I am surprised that more Conservative Members are not present, as they represent many of those areas. About 26 out of 46 local authorities will lose authorisation—17 will have no authorisation at all, and 9 will lose one of the authorisations which they had. A list of those authorities reads like a roll-call of Tory constituencies. From Bexley to Hove, they are the areas where pensioners and the working poor who have the misfortune to live in high-rent areas will be hit extremely hard.
Camden council's publicity office recently issued a press release which says that people in Camden will lose more money than almost anyone else—if, as expected, the Government's proposed changes to the existing Housing Benefits scheme takes place in April 1984.It gives many examples—as did my hon. Friend the Member for Ladywood—of the effects that that could have on some families. I shall give the example of just one. For a family with two children, one at school and the other aged 17 who lives at home, with a gross income —including the man's earnings and child benefit—of £135 a week, Camden's housing department estimates that, with rent of £25 a week and rates of £11 a week, a private tenant will lose £9.51 a week and a council tenant will lose £12.22 a week as a result of the Government's proposed cuts.
The House has also heard about the impact of the housing benefit scheme and of the Government's proposals with regard to housing associations. Such associations have already witnessed serious increases in rent arrears and forecast that arrears will worsen if the cuts go through. We have also heard of the impact of the changes on local authorities. They are deeply anxious about the impact of another major upheaval and especially about the serious financial losses that people in their areas will suffer.
The hon. Member of Southwark and Bermondsey (Mr. Hughes) asked the Minister whether he could give some idea of what the Government intend to do to cushion the cost to local authorities of the changes that they have already had to overcome and which are quite separate from the difficulties which they will face if the regulations are approved and implemented. I gather that, initially, the Government proposed that the setting-up costs would be about £8.5 million with an additional £16.7 million for operating costs in 1983–84. Those figures were found to be wholly unrealistic and the latest figures for 1983–84 show a total of £25 million for operating and administrative costs. However, the latest estimates on the basis of experience, especially in London, is that administrative costs could well be nearer £50 million—twice what the Government originally set aside for the operation of the scheme.
206 The Minister owes it to those hon. Members who have seen fit to be here to explain clearly what the Government's intentions for local authorities and the costs that they face are.
We have heard about the various detailed changes that the Government are proposing to make. I shall not dwell in detail on these changes. Suffice it to say that clearly the major consequences flow from the changes that are proposed to the tapers. It is estimated that about 600,000 households will lose benefit as a result of changes to the tapers, and losses will also be felt by 2.25 million households.
There are also significant effects from the deductions of benefit made where there are non-dependants in the household such as children who have left school, elderly relatives, or lodgers, where the deductions are being increased. It is estimated that about 700,000 households will lose as a result of these deductions. Minimum payments are being increased so that any entitlement below these levels will no longer be paid, and it is estimated that the changes in the minimum payments will contribute to increased losses among the 2.25 million who are losing as a result of the changes to the tapers.
Finally, changes are being proposed to the thresholds at which authorisation for the enhanced high rent area scheme is given. These are being increased, and will result in increased deductions of £16.09 to £17.43 for council tenants, and from £17.65 to £19.95 for private tenants. It is estimated that about 40,000 will suffer as a result of changes to the thresholds.
There are these four major changes. It is bad enough when pensioners or the working poor are affected by one or possibly two changes, but where they are affected by three or four the effects are serious. I cite the example of one family that is affected by all four changes. The family has three children, one aged 18 living at home, with a total income of £160 a week, living in an area with high rent authorisation, paying £36 a week rent and £12 a week in rates. It is estimated that that family will lose £13.75 a week.
While the Government are robbing the poor of help with their housing costs, they are helping the relatively well off with substantial mortgage tax subsidies. The Government have stripped the housing benefit scheme of £230 million, but, as the Low Pay Unit has reminded us, this saving needs to be seen in terms of the £5.5 billion worth of revenue that the Treasury estimates that it has forgone as a result of overall tax relief to owner-occupiers. Instead of cutting the housing benefit and hitting pensioners and the working poor, the Government could and should have the money that they want by following the recommendations of the all-party Treasury and Civil Service Select Committee, that mortgage interest allowance should be restricted to the standard rate of tax. That would have found the money for which they were looking and would have found it from the pockets of the relatively well off, rather than from the extremely arid relatively poor, who are facing the brunt of the Government's proposals.
The cuts in housing benefit will clobber the poor again and cause local authorities more administrative headaches. The Government should, as my hon. Friend the Member for Hackney, South and Shoreditch demanded, announce through the Minister that., in view of the social consequences of their proposals, and because of the enormous administrative problems that will be involved 207 for local authorities, they will cancel the cut announced at the end of November. The Government should announce tonight that they will ask the SSAC to review the operation of housing benefits before any more changes are made without proper consultation about their impact.
We heard that the SSAC was given just a few days to consider the cuts proposed by the Government. For a Government who so often say that they wish to consult, listen and to heed the views of the people, it is remarkable that they have denied their advisory body a reasonable opportunity to offer objective views on such swingeing proposals. We ask ourselves "Could it be that the Government did not want any views or consultations on these proposals, because they were determined, hell-bent, to get the cuts through?" Despite the views of independent voluntary agencies, Members of Parliament and the House of Commons, the Government wanted their £230 million from the working poor and the pensioners.
It is my view, and the view of my right hon. and hon. Friends, the SSAC should be asked by the Government to simplify housing benefits in ways that will not penalise claimants. We believe that further amending regulations should be halted. We certainly believe that no recovery of overpayments, resulting from official errors, should be made.
From all the criticisms that we have heard in this debate, it is clear that there should be an independent inquiry into the implementation of the scheme, because it has been a catastrophic disaster. We have seen the Minister's parliamentary private secretary losing a little weight scurrying backwards and forwards to civil servants to get advice on the queries that have been raised in the debate. We know that the Minister of State is a personable fellow, and that when he is in a tight corner, he does not come out fighting, but comes out with a few jokes in an effort to avoid answering the many questions that are put to him. I appeal to him not to adopt his normal Lancastrian knock-about turn but to address himself to the serious points that have been raised by the Opposition. He should not take the total absence of Conservative Members as a sign that they are not concerned about these matters.
We know that the leader of the Conservative party makes a point of not reading The Guardian. However, many of us read that paper regularly, and I am sure that the hon. Gentleman, he being a perceptive fellow, does so, and if we have been reading The Guardian recently we will know that many Conservative Members have been giving him a hard time about the lack of consultation. They have been surprised and dismayed at the financial consequences of those proposals on many of their constituents. They are dismayed at the way in which these cuts are to be steamrollered through the House of Commons.
I urge the Minister to counsel his Secretary of State on these matters. We have been told that the Secretary of State wishes to distance himself from these proposals and that he has left the Minister of State to stew in the difficulties. That may explain his predicament tonight. We urge him seriously to consider withdrawing these proposals. If the Government really want to help poor people, including pensioners, if they are serious about tackling the poverty trap, if they are serious about providing incentives to people to save and to secure proper or additional pension provision in their old age, and if they are serious about reducing the burdens on local 208 government and getting the Government off the back of local authorities, they have no alternative but to withdraw the proposals, think again, rethink the housing benefits scheme, and to have a thorough and independent inquiry into what has gone wrong.
Tonight the Minister has heard from my hon. Friends who represent constituencies in London, the midlands, and south and west Yorkshire that the scheme is a disaster and in chaos. I ask the Minister not to compound that chaos by adding his energies and voice to steamrollering the proposals through, because there is little prospect that local authorities will be in a position to implement them properly by next April.
If the Minister persists in his course he will cause still further hardship and difficulty to many working poor and pensioners who are in no position to withstand further pressures. He can help them by saying, at a stroke, that the Government will think again and withdraw the proposals. I hope that, if he cannot make such an announcement tonight, he will do so soon.
§ 6.5 am
§ The Minister for Social Security (Dr. Rhodes Boyson)
I cannot say that I looked forward to this debate, not because of the views expressed but because of the time. I recognise the concern expressed by hon. Members whose experience makes them take a keen interest in housing conditions in their constituencies.
The hon. Member for Birmingham, Ladywood (Ms. Short) is an ex-director of youth aid and connected with the unemployment unit. Her inner city constituency has problems of which I am aware and housing is a major factor. The same applies to constituency represented by the hon. Member for Barnsley, West and Penistone (Mr. McKay). Islington and Hackney are familiar to me because I spent 13 years in that area when I was involved with schools. I know from trudging the streets, not to collect votes, but visiting primary schools and parents with problems, that intense housing problems exist there. The same applies to Bermondsey. The area represented by the hon. Member for Bradford, West (Mr. Madden) also has problems.
Hon. Members who have taken part in the debate represent urban areas. We shall have to examine such areas in relation to housing benefit. Reference has been made to consultation. Contact with local authorities has been re-established. The urgency with which we acted did not give the authorities much time. Letters went out yesterday extending consultation to 3 January. That could be said to be an accident or good timing. I shall be seeing local authority representatives on 4 January. We must have the report from the Social Security Advisory Committee before regulations are laid.
I accept that the costs are more than we expected from the original local authority estimates. Difficulties in implementation have been encountered and more people than expected have applied for housing benefit. The Government spent a third of a million pounds between January and March advertising the scheme. Many local authorities, including London authorities, spent large sums and more people are now applying. The debate at least has made more people aware that there is such a thing as housing benefit for which they can apply. We have guaranteed within all reasonable levels the coverage of all 209 the costs of the introduction of the scheme. There has been an argument about the way it has been done but there has been no intention to penny pinch.
I should like to defend the Government's record on social security spending. We are spending 20 per cent. more in real terms than was spent by the Labour Government in 1978–79. The spring Budget put £744 million more on social security expenditure and the Autumn statement, after cuts had been put in, still put in £163 million more than was forecast in the rolling programme in the previous public expenditure White Paper.
§ Ms. Clare Short
The Minister should think twice before boasting about the increase in the Government's social security expenditure, which has been brought about by the disaster of their economic policies which have thrown people who prefer to work and be productive into poverty and on to benefit.
§ Dr. Boyson
I was not boasting. When I want to boast I speak as loudly as Opposition Members. I was stating facts and figures. We are spending 20 per cent. more in real terms—part of that is on unemployment, but part of it is on the increase in benefits. Long-term supplementary benefit for a couple was £31.55 in 1978. If it were indexed for inflation it would be £51.70 now, but it is actually £54.55. Short-term supplementary benefit in 1978 was £23.25. If it were indexed for inflation, it would now be £41.35, but we are now giving £43.50. If I want to boast, it is higher, and the hon. Lady who has genuine concern — I appreciate genuine concern from anyone in the House—should welcome the fact that while prices have increased by 69 per cent. since we have been in office, FIS has increased by 86 per cent. Child benefit and one-parent benefit are at the highest rate ever. No one can say that the Government have not been concerned. One can argue about instances of expenditure — indeed, many people would like more expenditure all the time — but our expenditure on the sick and disabled is up by 21 per cent. in real terms since we came to office. Practically all benefits are higher in real terms than when we came to office [HON. MEMBERS Hear, hear"] My hon. Friends are enthusiastically supporting me on those points, which will give pleasure all around the House.
We must accept at the same time that expenditure must be controlled, that if we can improve some areas and consolidate there, other areas will have to be looked at. This autumn, housing benefits were looked at. I should like to point out the great increase in housing benefits over the past five to 10 years. Standard benefits have more than doubled in real terms in 11 years. Indexed for inflation, they rose from £500 million in 1972–73 to £1,200 million this year. More than twice as much in real terms is going on standard benefits. The level of rebates as a percentage of earnings in the past five years — years of Conservative Government—has risen from 3.6 per cent. to 4.9 per cent. In the past five years the average rent rebate has increased in real terms from £5.60 to £8.25. Reference was made to council tenants and I realise that many of the hon. Members present have a high proportion of council tenants in their constituencies—I have quite a high proportion of council tenants in Wembley, in my constituency—but in the past five years the number of council house tenants in England and Wales on rebate has increased from 1 million to 1.4 million. The tax cost at 210 present of housing benefit is £4 per household per week and is approaching £4 billion, which is one ninth of all the social security benefit. The actual figure for housing benefits is £6.9 million. About one third of households in the country receive housing benefits.
This year we have uprated the needs allowance by 4 per cent. The cuts introduced in the autumn statement are a decrease of 5 per cent. in total expenditure. They concentrate the changes — Opposition Members have referred to this; I will not go through the tapers and so on —on those with incomes above the needs allowance or those who have working non-dependants in their households. The majority of households are unaffected. Two thirds of pensioners are unaffected.
I explained the position in a debate earlier in the session when more hon. Members were present. If we look at the increase last April, the latest uprating and the changes proposed for next April — if these proposals goes through exactly as they are 2.5 million of the 4 million pensioner households will be better off in housing benefit than they were before April of last year.
I appreciate that there is the question of higher tapers, minimum payments, non-dependant deductions and high rents which are the four areas affected. About 60 per cent. of those involved are affected by less than 75p a week, and only 15 per cent. by £2 or more. I do not doubt any of the instances that were cited by Opposition Members. As, hypothetically, one could have housing benefits rising to a tremendous level—according to the way in which they are calculated — there will obviously be cases where considerable sums are involved. Nevertheless, in only 15 per cent. of cases affected next April will there be a difference of £2 or more a week. One third of pensioners who lose actually lose less than 25p a week, 50 per cent. lose less than 50p a week and, as has been said, the average is 80p.
Obviously Opposition Members have done their homework in their constituencies, but it is interesting to note that a single pensioner paying £500 a year in rates will get help with an income worth three times the state retirement pension, under the changes that come in next April. Those unaffected include all pensioners on supplementary benefit and those who do not have more than £9.75 of income above the state retirement pension. Nor is any pensioner non-dependant affected.
About 500,000 families will gain £1 increase in needs allowance in March for each dependent child. That has been agreed and will be put into operation. In relation to the non-dependant additions. Opposition Members have referred to the possibility of tension being caused in the family. I suggest that members of families have a degree of responsibility to put something in the kitty. That was the arrangement with which I grew up in working class Lancashire and I am sure that in most areas families feel the same. Provided that they are able to do so, members of families put something in the kitty.
§ Mr. Simon Hughes
People who are not the tenants of the property in question — the young wage-earner, perhaps a 19-year-old bringing in some income—will not realise the effect on the tenant, the parent — probably a single parent—of any change in his or her circumstances and may not appreciate the responsibility to take that into account. Nor will the tenant, the parent, realise that he or she should be expecting more from the youngster. Even if the fact is realised, the necessary 211 increase may not be paid over. It is a practical fact of life that youngsters will not give more than they feel they should.
§ Dr. Boyson
If the hon. Gentleman feels that a better means of communication is required to bring the point home, I am prepared to discuss the issue with local authorities or anybody else. The average wage of male 16 to 17-year-olds is £61 a week, and for female 16 to 17-year-olds it is £55.70 a week. We are asking them to give £3.10. For those on the average wage—and there must be as many above and below it, as Opposition Members point out about so many things—it does not seem unreasonable to say that £3.10 should be given as a share towards the maintenance of the house. Presumably parents talk to their children about such matters. I found out today, to my surprise, that the average wage of the 18 to 19-year-olds was £95 for the males and £78.20 for the females. There we have asked for an increase of £2.65, making £8.20. That is still only about 6 or 7 per cent. of the average wage being brought in. It is a question of treating them as adults, as under the old benefits system which we inherited.
At least we have looked after the poor. We have been hammered from time to time by the Opposition about taking people out of the poverty trap and the tax trap, and I appreciate the fact that there are problems. But in the case of children on supplementary benefit, the parent will continue to receive the full money and the children will not be expected to contribute. That will also apply if the children are on the YTS or at school. The children will be expected to tip in only if they are on unemployment benefit, which is over £27, or if they are at work. We must be given credit for trying to look after those with the least income.
The Government cannot be attacked on the question of the overall balance of expenditure in real terms, compared with what we inherited, on the various social welfare benefits. I am referring not to minor points but to the overall picture.
The introduction of housing benefit was talked about for a long time and was recommended by David Donnison when he was on the Supplementary Benefits Commission. It became law in 1982. I have been asked when the regulations will be laid. I have not discussed that yet, but we may as well do some policy-making tonight on that point. The questions that I have been asked suggest that 212 hon. Members wish to do some policy-making. Although we could lay the regulations before Parliament resumes, we will not do so until I have met the local authority associations—that would show courtesy on both sides—and until I have heard from the Social Security Advisory Committee and received its recommendations.
I have been told that we did not listen to the local authorities, but that is not correct. I believe that it was in October that I met the local authority associations. They suggested many amendments, most of which we adopted, at a cost of about £3 million. That is not a huge sum of money, but it shows that the Government are willing to listen. We absorbed about eight out of 10 of the suggestions that were made, and the scheme became simpler and clearer as a result.
I have been asked one very straightforward question which will be easy to answer. It was about the number of reviews. The other day I answered a question put by the hon. Member for Gower (Mr. Wardell) on this point. On the information that we received from 1 April to 30 September—the information has not yet been brought up to date—6,232 reviews were carried out at official level and 303 cases referred to the review boards, which consist of the local councillors.
The Government followed the recommendations of the Supplementary Benefits Commission, chaired at the time by David Donnison. We agreed that the two systems did not work together and that people would find it easier to cope with one system. The legislation was enacted last year. The local authorities were given information for at least six months before they had to introduce the scheme. There are problems, of course. Some hon. Gentlemen know that there are problems, and that is why they are here. The fact that so many hon. Members are not present may mean that the housing benefit—
§ Dr. Boyson
They do care. We cannot set ourselves up as the goodies of society. Other people care as well. It shows me that the scheme has been introduced smoothly in many areas. My hon. Friends said that the scheme has worked smoothly in their areas.
Once the scheme works properly so that people have only one place to go to, and when the local social security officers have built up a relationship with the local authorities and they work more easily together, I believe that housing benefits will be of advantage. I have a feeling that this will not be the last time that we shall debate this subject.