Thursday 1 May 2014
[Sir Roger Gale in the Chair]
Housing Benefit (Wales)
[Relevant documents: Second Report from the Welsh Affairs Committee, HC 159, and the Government response, HC 1012.]
Motion made, and Question proposed, That the sitting be now adjourned.—(Mark Lancaster.)
It is a pleasure to serve under your chairmanship, Sir Roger. We have worked together in another capacity in Europe, but it is good to be here with you this afternoon to discuss two important issues for the Select Committee on Welsh Affairs. The first is the impact of the changes to housing benefit within Wales. I welcome the Department for Work and Pensions Minister my hon. Friend the Member for Thornbury and Yate (Steve Webb), in whose constituency I once lived. I shall listen carefully to what he says at the end.
It will not come as news to hon. Members that I have strong views about this issue. During the last debate in which I spoke, one Opposition Member asked me whether I was speaking in a personal capacity or as the Chairman of the Select Committee. On that occasion, I was speaking in a personal capacity as the MP for Monmouth; on this occasion, I am speaking as the Chairman of the Select Committee, so I will stick closely to my notes, and try not to go off them.
It does hurt. However, I think the Select Committee worked well. The issue was potentially controversial, yet we managed to get a certain amount of agreement, some of which the Government will have to answer. I welcome the fact that the Select Committee, politically divided as it is, can work so well together, and I am grateful to the Committee members here today.
One thing that I think we can all agree on is that the cost of housing benefit is unsustainable at the moment and that changes must be made, although we may differ about how those changes should be made, what their impact will be and how people affected can be helped.
Does the hon. Gentleman accept that 70% of the growth in housing benefit costs, which have doubled to about £20 billion in the past 10 years, is due to private sector rents and that the strategic response should be house building rather than clubbing the poor?
I am trying to stick to the facts as I saw them on the Select Committee. To be fair, the first fact that the hon. Gentleman presented is correct. Personally, I agree with him that house building is one solution. In Wales, that is obviously a devolved responsibility for the Welsh Assembly. Hopefully, the hon. Gentleman and I agree that the Welsh Assembly could and should be doing a lot more to increase house building within Wales. The costs at the moment are about £25 billion a year. About 250,000 people in Wales receive housing benefit—about 8% of the population.
The Committee focused on two areas of Government policy. The first is the changes related to under-occupancy in the social rented sector, sometimes called the spare room subsidy and at other times referred to—incorrectly, in my view—as the bedroom tax. The other is the move towards direct payments, which also raised concerns across political parties. We took a lot of evidence from various witnesses, including the housing associations, representatives of landlords and the TaxPayers Alliance, which made an interesting contribution and which I hope is welcomed back to Select Committees in future.
The policy that we discussed came into force in April 2013, but it is probably worth mentioning that the same rules had been introduced for the private sector in 1989 and re-emphasised by changes made to housing allowances by the last Labour Government in 2008, so it was not as new as people might have thought. As all Members here will know, tenants had their housing benefit reduced by 14%, an average of about £12 a week in Wales, for having one extra bedroom, and by 25% for having two extra bedrooms.
At the time of the report, the Government estimated that 40,000 tenants in Wales lived in households with one or more excess rooms, representing 40% of those eligible to be affected. That was the highest proportion of any region in the United Kingdom, so we would like the Minister to provide us with any updated figures that he has on how many working-age tenants of social housing in Wales continue to live in properties with excess rooms and how many have been successful in downsizing.
I give way first to the hon. Member for Vale of Clwyd (Chris Ruane).
The national figure, as I understand it, is that only 6% of people have moved out of their properties and downsized into smaller ones.
Right. Did the hon. Member for Ogmore (Huw Irranca-Davies) want to intervene?
Lord Freud kindly appeared recently at a meeting of the all-party parliamentary group on housing. When he was asked by a number of south Wales visitors to the group about the singular impact on Wales of this measure, whatever we call it, his answer was interesting. He said that if there were evidence of what he termed in Latin an “in extensis” impact on a region, he would look at it again. I have heard nothing since. Does the hon. Gentleman agree that if there is a singular and extensive impact across Wales compared with other regions, the measure should be looked at again?
Order. The hon. Gentleman was invited to intervene, but that was a lengthy intervention. Please keep them short.
My Latin is not quite as good as my Welsh, but if the hon. Gentleman is suggesting that the impact will be greater in Wales than anywhere else, I accept that, because it already was. Yes, I absolutely think that the issue should be looked into. Also, if the figure cited by the hon. Member for Vale of Clwyd is correct and only 6% of those who wanted to downsize have been able to—no doubt we will hear it from the Minister—that is also clearly worrying.
Across the UK.
I had better not get into a conversation across the room about it, but that figure would certainly be worrying. It could be even worse in Wales, anyway.
As I am about to mention, one concern of ours was that Wales’s rurality and the lack of available housing there will make the issue much harder to deal with there than in London. Although personally, I absolutely support what the Government are doing, as I shall say at the end, I recognise that a tailored approach may be needed to the different problems that may arise in different areas.
The numbers are that some 40,000 people are affected in Wales, against about 400 units that can take just one person. In other words, this is not a strategy to help occupancy levels; it is simply an attack on the poor, who have nowhere to go.
I do not accept that it is an attack on the poor.
I think a lot of people who would consider themselves poor pay taxes and would rather resent the fact that some of their taxes are supporting people with excess bedrooms. However, I suspect that I am getting a little far from my role as Chairman of the Select Committee in reporting the facts. The hon. Member for Swansea West (Geraint Davies) is correct to say that 40,000 people within Wales were affected by the measure. I do not know what the updated figure is; it might be somewhat different now. I hope so. It worries me to hear evidence that some people would have to move 50 miles to find suitable accommodation in order to downsize, and I hope that the Minister will address that.
Due to the shortage of smaller-sized social housing, it is possible that benefits will have to move into the private rented sector. The Committee heard evidence that higher rates in the private rented sector compared with the social rented sector might lead to increased public expenditure, thus defeating one of the key purposes of the policy. As somebody who believes that we must reduce the deficit as much as possible, I would obviously be concerned about any policy that increased spending levels.
Is it not also the case that we heard evidence as a Committee that the housing market is dynamic in nature? As some people move from social housing into the private sector housing market, others will move from the private sector housing market into social housing freed up by the change.
My hon. Friend has made the point that I was about to come to. That supposition was put to us, very well, by one of the Ministers who gave evidence. I hope that today the Minister will be able to confirm that that is what has been happening.
The hon. Member for Ogmore raised the issue of housing. The Welsh Government estimate that about 14,200 homes need to be built each year until 2026. However, between 2005 and 2012 the average was only 7,200 houses—nowhere near the level that we will need to resolve the housing problem. Although the issue is devolved, I hope the Minister will do everything he can to encourage the Welsh Assembly to make greater efforts to ensure that the housing shortage in Wales is resolved.
Another issue of concern for the Committee was how to define bedroom size. We heard about people who had what were basically large cupboards or boxrooms that could end up being classed as bedrooms even though they were not big enough for anyone to sleep in. We suggested that the Minister might want to issue discretionary guidance to local authorities on what would constitute a room large enough to be counted as a bedroom, and I would be grateful for an update on that.
I turn now to something that was, frankly, an area of concern for me personally as well as for some—although not all—members of the Committee: direct payment of housing benefit under universal credit. I understand the reasons behind the policy, which I think are honourable. The aim is to ensure that people who have been on benefits long term get a sense of money management and responsibility; that was explained to me well by the Secretary of State. However, laudable though that is, I am still not entirely convinced that it is going to work. I have a fear about the policy, and the Committee expressed concerns—I should talk about the Committee’s view—based on evidence from housing associations.
In reality, the policy affects a lot of people who already have issues with money management and do not usually have large amounts of money anyway. If large sums are paid into their bank accounts, at the end of the month the money might not be paid on to the housing provider. In turn, that could have a big impact on housing providers that are dependent on money coming in to build further houses and to improve those that they have.
I congratulate the hon. Gentleman and the Welsh Affairs Committee on this detailed report on an important issue. He is making an important point, and I am sure that he and other hon. Members will join me in paying tribute to the advice agencies and local authorities in Wales that help and support individuals in the management of their funds. Direct payment does not in any way help the housing problem, which remains a big issue. As the hon. Gentleman comes to his conclusions, which may be different from those in the report, is he saying that we have to build housing to help people, or is he suggesting that we suspend the bedroom tax until such time as we have adequate housing?
I am certainly not suggesting that we suspend the bedroom tax—or spare room subsidy, or under-occupancy charge, or whatever it happens to be called. I am suggesting that there are widespread concerns about direct payments. Pilot studies set up in Torfaen—the right hon. Member for Torfaen (Paul Murphy) is in his place—suggested that debt grew when direct payment was put in place. There is great concern that some housing associations will struggle as a result of the policy. The Committee concluded that the financially sound decision would be to ensure that any tenants who have any problems at all with money management are able to continue under the old system. It may be laudable to encourage people to be given the money themselves to pay it on, but that will be impractical for a lot of people.
I suggest to the Chair of the Select Committee that the Minister should also look at what happened in the 1980s when the self-same policy was introduced under the Thatcher Government. I was a social worker in Bridgend at the time, and can tell him that it caused chaos. We were constantly writing to the benefits agency about people who had direct payment of benefits. The Government should go back and look at the disaster that was caused when they tried it before. Let us not make the same mistake again.
I am sure it could not have been that much of a disaster.
Well, the hon. Lady had 13 years, from 1997 onwards, to put things right.
It was repealed.
In actual fact, in 2008, further changes were made to how housing benefit was paid that kept in place the spare room subsidy rules for the private rented sector, so the principle seems to be widely accepted.
I am talking about direct payment—
Will the hon. Gentleman give way?
Yes, but one of the hon. Gentleman’s colleagues made the point earlier that everyone wanted to speak in the debate, and another dropped a hint about my concluding in a moment, which I was about to do. I will give way one last time, but then conclude, so that the hon. Gentleman and others can entertain us.
The point is consistently made, “Well, Labour did it in the private sector so why can’t we do it in the public sector?” The reality is that the market delivers a large number of flats for single people because there is a demand, but the public sector has been focused on units with two or three bedrooms for families with children. It is simply not appropriate to say that the measure should be force fed to the public sector. There is nowhere to move the people to.
I am not sure that I would accept that argument, but I am grateful that, in signing the report, the hon. Gentleman accepted the fact that the current situation is completely unsustainable. We cannot afford to go on doing what we have been doing. That was agreed by all members of the Committee in the report. He may have alternatives in mind, which he will want to put forward in a minute.
I thank the hon. Gentleman and all members of the Committee for the way in which we dealt with a potentially controversial issue and for coming up with a unanimous report. I look forward to the Minister furnishing us with answers. I should put on the record that I am not trying to duck any responsibility: speaking in a personal capacity, I support Government policy on this issue absolutely. I take full responsibility for the policy. I always believe that there is room for improvement in anything that any Government do and the points I have made should be seen in that light. But, personally, as Member of Parliament for Monmouth, I support the Government and look forward to the Minister’s response.
Several hon. Members
Order. Hon. Members will notice that a significant number of Members wish to speak. Two debates are to take place this afternoon within a three-hour period. The allocation of time is to some extent in the gift of the Chair, but at this stage I would urge a reasonable degree of caution on all hon. Members, to ensure that both subjects on the agenda are debated thoroughly. Clearly, if the first debate overruns, that will eat into the time available to debate the second report. That is a question of judgment for hon. Members.
Housing benefit is an important issue for people in Wales. Forty-six per cent. of tenants in social housing have been affected by the Government changes that we call the bedroom tax; of the 40,000 households affected, 25,000 contain a person who is disabled. It is a significant problem.
In response to the report, the Government have said that they will be monitoring movement into the private rented sector. Will the Minister tell us what monitoring has been done? In their response, the Government also say that there is “no evidence” of cost to the taxpayer, but that is probably largely due to the small numbers of people who have moved into the private rented sector. As has already been mentioned, we know that in Wales there is only one available one-bedroom property for every 100 families that need to move. That figure was produced by Rebecca Evans AM after she got in touch with a number of housing providers: some 20,800 families were looking to move but only 280 properties were available.
Another problem is that there are not huge numbers of people on the waiting list who would qualify for those three-bedroom properties that we have in Wales. A family qualify for three bedrooms if they have a girl and a boy over nine, but a family of two parents and two children of the same sex aged up to 16 qualify only for two bedrooms. In fact, the vast majority of applicants do not qualify for three bedrooms. That is one of the problems. Even if a property is vacated, there are no savings to be made by moving other families into it.
The problem in Wales is that the landscape is semi-rural and there are former mining communities where no one would have settled were it not for the mines. Some of the valley tops are great distances from available work and it is difficult to rehouse people and to keep them in their communities.
The hon. Lady will be aware that large tracts of Wales are very rural. She referred to distances, and the distances that people might be expected to move are unacceptable. As the Chairman of the Select Committee said, they could amount to 50 miles.
Absolutely. It is a considerable problem.
The Government state in their response that they will not consider a blanket ban on forcing people in adapted premises to move. When there has been investment to make properties suitable many housing authorities in Wales try to keep them available for disabled people. Not having a blanket ban on hitting disabled people with the bedroom tax is a short-sighted policy. Apart from the tremendous upset for the individual, it is not good use of public funds.
Will the hon. Lady say how she would define what “significantly adapted” is in practice?
I am sure we can all imagine major adaptations such as changes to bathrooms and additional rooms. The only one that might be considered less significant is a stair lift that could be put in or taken out, but any other form of adaptation should be taken into consideration. Further to that, it should be noted that legislation passed by the Welsh Government has enabled local authorities in Wales to desist from selling off some types of properties. They have largely chosen to keep in their stock properties such as those suitable for old people who downsize precisely because adaptations have been made that suit older people as they become less physically active.
Another point in the Government’s response is that the bedroom tax
“may encourage more claimants to move into work”.
That sounds like forcing people to look for work. People are already looking for work. People who have the capabilities are already looking for work. We must take into account the fact that some of them have significant disabilities and there are not many suitable jobs available.
Transport and child care are problems in rural areas, which are multiplied because of trying to fit in transport to work with picking up children and getting home from work. It is not easy to find jobs with hours that fit in.
I have taken issue with the Minister about the fact that the issue is not just a matter of obtaining a few extra hours. We all know that because of the complex way in which housing benefit is worked out people effectively lose around 60% of the benefit for additional earnings. The equation does not involve simply a few extra hours. The matter is much more complex. On tapering or claw back, I am extremely concerned about the proposals for universal credit because 76p in the pound of each tax credit will be clawed back when people take on more hours of work. The Centre for Social Justice suggested that it should be only 55%. That is another enormous hurdle for people taking on more work or going out to find work.
What progress has there been on collecting information and monitoring rental costs? That was promised in the Government’s response.
I turn to discretionary housing payments. The whole point about them is that they are discretionary, but they are imposing an enormous work load on local authorities because everyone on housing benefit is deemed to have insufficient funds to cover their rent. That was our definition of housing benefit. It was provided for people whose residual money after deducting various items was not sufficient to cover their rent, so it is inevitably massively oversubscribed.
The Government have said that they have provided extra money, but let us look at what that really means. I will use the example of Torfaen, which was given £193,000 of additional money for its discretionary housing payments but the shortfall in housing benefit is approximately £1 million, or five times the discretionary amount allocated. Torfaen was then told that it could spend up to £430,000, but that extra money must come from its own funds. In other words, it must make sweeping cuts elsewhere when it is already facing significant cuts.
The Welsh Government have provided £1.3 million of extra money throughout Wales to help with the additional administrative burden, but what a waste of money. If housing benefit was paid, none of that would be necessary. Having gone through the process once, it will have to be repeated because the whole point of discretionary housing payment is that it is supposed to be a temporary measure, as the Government noted, to tide people over. However, if there is nowhere for them to move to, the process will be repeated.
The officer in charge of housing benefit for Monmouth and Torfaen, Richard Davies, summed up the situation when he said that administering the huge demand for help has dramatically increased council work load and dealing with discretionary housing payment
“applications is like dealing with a totally separate benefit scheme. It’s shifted everything from statutory to discretionary”
“it’s a huge burden of administration.”
I am interested in the hon. Lady’s comments about Torfaen, but she could mention the situation in Denbighshire and Conwy where a report from Eryl Rowlands, who is responsible for the matter in both counties, makes it clear that the anticipated problems associated with the so-called bedroom tax have not come into play.
There may be differences in different areas because of the availability of different types of property and work. In my county, we are building bungalows in, for example, Seaside and Kidwelly, but we know perfectly well that the rate of building will not keep up with more than 1,000 households in Carmarthenshire that are waiting to be moved or to be given an alternative option to their present situation.
I want to respond to the criticism that the Welsh Government have not had a building programme during the past 15 years. Many properties have been built, especially adapted properties for disabled people and a range of supported housing and housing association housing. However, when we have small communities with a limited housing stock we need it to be as versatile as possible. It is always possible to put a small family unit in a three-bedroom house, but it is not possible to squash a large family unit into a one-bedroom flat. Our tradition in Wales, where land is relatively plentiful, has been to build houses rather than flats. That is the situation we find ourselves in. It is not the fault of tenants that they may have been allocated a two or three-bedroom property when under the bedroom tax theory they should have a one or two-bedroom property.
The Government must rethink their policy, particularly bearing in mind Lord Freud’s comments that there may be issues in particular areas. More than that, we would like them to monitor the situation. Many people are now finding it almost impossible to make ends meet, with arrears running at more than 50% in many areas, often involving people who have never been in debt in their lives.
On a slightly different note, landlords are also affected. One issue that has been raised again and again, and has not been terribly well answered by the Government, is direct payment to landlords. There has to be two months of being in arrears before it is possible to get somebody switched across to having a direct payment. That is causing us real problems, in terms of availability of property. Some whom we might call “amateur” landlords—people who have perhaps become landlords by accident, because they cannot sell a property—are now becoming very reluctant to rent out properties to people who are on housing benefit, whereas before they would have had a guaranteed cheque from the council. That is also affecting bigger landlords—the social housing providers. So will the Government take another look at the response they have made about those direct payments? I am not the only person to mention that; it has been mentioned very vigorously by lobbyists on behalf of landlords. On that note, I shall finish.
It is a privilege to serve under your chairmanship this afternoon, Sir Roger. Given the interest in the subject and the number of people here, I will be as brief as I can and focus my remarks on bedroom tax, or spare room subsidy—or whatever we choose to call it.
Before I start, it would be remiss of me as a member of the Welsh Affairs Committee not to congratulate my hon. Friend the Member for Monmouth (David T. C. Davies) on his chairmanship of the Committee. He is right to say that the subject matter was not without controversy. The debates were always going to be spirited and the deliberations could be lively at times. It is perhaps remarkable that we reached the point at which there is a report to discuss today, but we have, and that is in no small part due to his endeavours as our Chairman.
I want to focus my remarks on three areas: first, the application of the policy to rural areas such as mine; secondly, the policy’s application to the homes of disabled citizens; and thirdly, the increasing concern expressed by members of the veterans community in my area about the application of the policy.
As we have heard from everyone so far, 40,000 housing benefit claimants in Wales will be affected by the policy. That is about 46% of the working age social rented sector housing benefit claimants—the highest proportion of people affected among the regions and nations of the United Kingdom. On top of that, it is a plain fact that the amount of accommodation required to pursue the policy simply is not available. My particular concern is that the shortage has a disproportionate effect in rural areas, as my hon. Friend and the hon. Member for Llanelli (Nia Griffith) said, where the large distances between communities and the potentially available—potentially being the key point—housing stock are far greater.
We asked—I remember asking this in one of our hearings—whether we should be asking people to travel 40 miles each way, each day, for their jobs, so disrupting family networks and inconveniencing children and their schools in terms of their education, particularly in areas where transport links can be difficult, non-existent or disproportionately more costly. Should we put people in the position of having to consider such things in the first place?
The reality on the ground is that the required social housing stock is not available. That is compounded in my constituency by two university towns, which have a huge effect, making the private rented sector highly competitive in Lampeter and particularly in Aberystwyth. The challenge to provide accommodation was brought graphically to our attention in Aberystwyth recently, when a development of social housing flats, Plas Morolwg, managed by the Tai Cantref housing association, was closed due to storm damage. The occupants of the 40 flats had to be rehoused under emergency arrangements. That was just about achieved—only just. It would be a near impossibility for 40 families to be moved under any other guise. I cite that example because it illustrates that there is no slack in housing, which is why we are right to question the Labour Assembly Government about their plans and record of house building to date.
One recommendation of the report was about whether we should incentivise the over-60s with cash payments to move. I am very relieved that the over-60s—people of pensionable age—were not included in the provisions in the first place. A lot of misinformation was going around at one point that they were included. I am very glad that that was sat on. Again, even if we could offer people choices, suitable housing for pensioner couples and individual pensioners is simply not available.
Does the hon. Gentleman find in his area, as in mine, that pensioners are queuing up to have smaller properties if they become available and that they do not really need incentives because they are very keen to move?
We could well have attended the same surgeries. It is certainly my experience that I have had people willing to move, but there is simply nothing available for them.
I was born on a council estate and lived on one for 27 years. There, the council built new single-person bungalows for pensioners who were living in three-bedroom houses, locating them right next to that community, so that all their social ties were maintained. Is the answer to move people from larger premises when, and only when, smaller premises are available in that community?
I agree. The key point, as the hon. Gentleman said, is that the housing is in those communities. What we have in front of us, were the proposal to be actioned, is communities unfortunately being split up and disrupted, and that cannot be appropriate.
I have not had many people coming to my surgeries on the issue of overcrowding—I know that will not be the experience of other Members in the Chamber today. I have had some casework about that, but the more common concern is that there is no housing at all. I repeatedly have to tell constituents of mine in the Aberystwyth area that there are lists of up to 400 people waiting for suitable accommodation.
I move on to housing with disabled adaptations. I remember being told during the passage of the Welfare Reform Bill that the matter would be dealt with through funds made available to local authorities from discretionary housing payments. To be fair, that is true in part: some moneys have been made available. My challenge to the Government is that the sums are inadequate. When the challenge was made to colleagues in the Government about the difficulties in rural areas, again, the Government rose to those concerns and made additional funds available, and they are much appreciated. However, they are, in my view, inadequate, which makes the situation in some local authority areas a disgrace: there is still money left in discretionary housing payment budgets that is not being spent. I still maintain that the Government need to look at the moneys available to us.
I appreciate what my hon. Friend the Minister said—no doubt, he can see Wales from his constituency, and I am particularly glad that he is here—about the need to define what we mean by disabled housing adaptations, but a particular problem needs to be addressed and the policy has caused huge anxiety. For example, there is a couple in my constituency, on the Ceredigion-Pembrokeshire border. The husband’s medical condition has meant significant multiple adaptations to his house, where his principal carer is his wife, necessitating an extra available room. That room has been made available by the children now having flown the nest. Above all else, when huge sums of public money have been spent on adapting that property, we cannot expect that couple to move anywhere else, not only for the social reasons that we have discussed, but just for the cost.
I cite the work that the Wales and West Housing Association has undertaken on the issue. It estimates that about 3,500 disabled households across Wales could be affected, and that £25 million has been spent on adaptations and another £15 million would be needed to adapt new properties. When we talk about wastes of public money, let us be clear what we are potentially countenancing, were some families with disabled relatives to move.
I understand the principle by which the Government are operating, the principles behind discretionary housing payments. Matters are constantly referred back to local authorities to make the judgment, but the guidance is hugely open to interpretation. I support the Government’s localist agenda. I support the capacity of local authorities to make judgments that affect their areas as they see fit. However, the guidance on these issues needs to be much clearer and much more detailed; otherwise we run the risk of a postcode lottery.
The Select Committee report said a great deal about monitoring the policy’s effects, including those on disabled people and local authorities. That is good to hear. Any good Government will monitor the effectiveness of their policies, but I ask the Minister to outline the extent to which that monitoring is taking place and what outcomes we can expect from the monitoring. I am delighted to hear what Lord Freud has been saying, but could the Minister allude to the outcomes? Will there be more discretionary housing payments and more exemptions in the future? What will the monitoring mean on the ground to our constituents?
The hon. Gentleman has catalogued many of the defects of the legislation. In retrospect, does he regret having voted for it?
I did not vote for the legislation at the time. I am a very modest person, as friends will testify, but I had the foresight on these matters not to vote for it. I deeply regretted not supporting my hon. Friend the Minister, but I did not vote for it and I stand by the reason why I did not. I want amendments to be made now to remedy the problems of constituents in Ceredigion and elsewhere.
I want to draw the Minister’s attention to the concerns expressed by some friends of mine in the veterans community. Three armed forces community champions from Ceredigion, Carmarthenshire and Pembrokeshire, who met on 17 April to discuss the policy’s effects on the ground among the veterans whom they represent, highlighted the fact that the exemption clause for armed forces personnel exists for people only when they are on operational duty. They assert that that overlooks the needs of many veterans locally. We have to be careful about definitions. I appreciate that and I am not arguing for wholesale exemptions. I will just convey to the Minister one of the points that a friend of mine in the veterans community has made. Councillor Paul Hinge, who has been working with another councillor in my constituency, Councillor Paul James, says that
“what I and the three community covenant boards find so unpalatable is that all of this”—
“is contrary to the meaning and purpose of the armed forces covenant”.
That is a sweeping statement, but he is making the assertion that in many instances for the members of that community—people who are in work and having difficulties and people who are out of work and having difficulties—the legislation is seemingly contradictory to the principles of the community covenant. He says that it is
“contrary to the meaning and purpose of the armed forces covenant that this Government placed great force in by enshrining it in legislation.”
This is his assertion, not mine. He says:
“Quite frankly it becomes empty rhetoric if they cannot and will not fulfil the promise in that document.”
That in part is a responsibility of our county council and its community covenant, but it is also, I believe, a responsibility of the Government to look at all the interest groups in society that are being affected by their legislation and to act accordingly.
The hon. Member for Ynys Môn (Albert Owen) mentioned the effect that the legislation is having on the voluntary sector and advice giving. People need to have sound financial advice. We need to place on the record our appreciation of the work of citizens advice bureaux up and down the country. They have been giving a great deal of advice and are under huge pressures themselves. I hope that the Minister, as time progresses, will give some thought to some of the changes or the implied suggestions for change that the Select Committee has made in its report, so that life for many of our people can be all the more bearable.
Thank you, Sir Roger, for the opportunity to speak in the debate. I will be concentrating on the impact of the changes on my constituency of Swansea East and responding to some of the points that we made in the report. I have carefully considered the evidence in the report and tried to cross-reference it with how the changes are affecting people every day in my constituency.
We are clearly suffering in Swansea East. I do not think that it is too strong to talk about the vicious effect, or the pernicious effect, that the legislation is having in my constituency. We have heard the hon. Member for Ceredigion (Mr Williams) speak very eloquently about the effect that it is having on a rural community, but Swansea East is a typical city or urban constituency, with high demand for social housing in both the public and the private sectors. There are increasing levels of hardship in Swansea East. Most of the people affected are approaching the citizens advice bureau, ourselves and the local authority. Wave after wave of people are appearing on our doorsteps as their problems deepen and they become more concerned, and it is becoming increasingly difficult to help them or to point them in the right direction, because they are at the end of their tether, both figuratively and financially. I have spoken to many individuals who are currently struggling to balance the books—to meet their budgets—but the biggest cause of anxiety by far is the changes to housing benefit and the bedroom tax.
The amount of rent that people in the private sector can claim—their local housing allowance—has been cut back to 30% of the rental value that is available on the market. For many people, only the lowest-value properties are open to them within their already stretched budgets. That places a huge question mark over the suitability and quality of the properties that they can now access or afford. On a daily basis, I hear stories about tenants being housed in properties that are well below any acceptable standards, are too small for their needs and/or are lacking in what people would consider acceptable. Unfortunately, there is one key word that all those properties have in common. The Government would call them affordable; I call them cheap, and cheap usually means not a good enough standard.
That is the reality for far too many people in Wales. It is a sad indictment of the policy and doctrines of the current Government. Their short-sightedness is pushing many people ever closer to homelessness and possible destitution. These are not my words; they are the concerns of well regarded, well respected organisations, such as the Chartered Institute of Housing and Citizens Advice.
Those concerns were also highlighted in north Wales before the changes to the spare room subsidy were implemented, but the three largest social sector housing providers in Conwy and Denbighshire have seen their arrears either fall or remain static, so were the concerns exaggerated by those individuals and organisations?
I thank the hon. Gentleman for his intervention. He is very fortunate, because that is not the pattern that we are seeing in the urban areas, the cities, of south Wales. I will come to some figures later and try to demonstrate the effects that the policy is having on the local authority and the ever-increasing problems that the legislation is creating.
Already, 30,640 homes that are part of the available rented housing stock in Wales are beyond the reach of people on housing benefit. I got these figures from the Chartered Institute of Housing. It estimates that already more than 30,000 homes that are part of the available housing stock in Wales are outside the reach of people who are seeking other homes or cheaper homes or wanting to downsize because of the legislation. In fact, 89% of tenants in Wales will see their benefits cut, and the loss will be on average £8 a week or £416 a year—before we even take the bedroom tax into consideration. Significant amounts of money are disappearing from people’s daily budgets. I know that that is popular in some areas and will make many readers of certain tabloid newspapers feel better, but if they had to live with the reality of it all, they might feel differently about it.
The proposals make a complete travesty of the rented housing sector. We are constantly being told that they are justified and that the Government are attempting to encourage mobility in the social rented sector, strengthen work incentives and make better use of social housing. My response is that they are not doing any of the above, and I seriously doubt whether they ever will. The policies do not encourage mobility in the social rented sector; in fact, I believe that they are creating a dependency on the substandard lower end of the market, regardless of the condition of the homes available for rent at an affordable price. The policies certainly have not strengthened work incentives. Many tenants I come across are suffering from housing-related health problems and are so overwhelmed by their housing issues that seeking work is not an option. They are absolutely ground down into depression by the problems that they face.
It is worth pointing out that the social housing sector simply cannot meet the demand for good-quality, up-to-standard housing when there are insufficient numbers of smaller properties to move tenants into. The Government have wrongly assumed that moving tenants to smaller properties is an easy option. The reality in Wales is that a vast percentage of local authority housing stock consists of traditional three-bedroom properties. That is a direct result of the post-war boom in house building, when properties with three or more bedrooms were needed to accommodate families, which were traditionally larger than they are today. In the 21st century, families have changed, housing needs have changed and there is a clear shortage of smaller one or two-bedroom properties for families to move into. Even when smaller properties are available to rent, they may be unsuitable for the needs of those who seek homes.
I hope that the Minister can provide me with some figures on a matter that the city and county of Swansea has come across. For more than 20 years, its policy has been not to house children, disabled people or elderly people in flats on or above the second floor, for the good reason that there have been tragic accidents in the past, which have been frightening for tenants. It is not deemed proper to house those with mobility problems or children on upper floors, where they have to deal with stairs, balconies or windows at a height. Has the Minister looked at the issue, and can he tell us how many other local authorities are in a similar position? I applaud the city and county of Swansea, because the policy is an eminently sensible one. Obviously, however, it reduces the available housing stock.
A Labour party freedom of information request showed that councils will be unable to help 19 out of 20 families who are affected by the bedroom tax. The figures from the 37 local authorities that responded suggest that 96,000 families will be hit by the bedroom tax, but there are only 3,688 one or two-bedroom council properties available for families who wish to move to avoid the tax. The entire exercise is proving similar to moving the deckchairs around on the Titanic; it is not a good idea when many other more pressing issues need to be addressed. I would be happy to work with the Government on those more pressing issues in our communities. We seem to be pursuing the policy just for the sake of making things look better, and it is simply not working.
Benefit claimants are being treated as though they were part of some sort of social experiment that is being undertaken to appease certain sectors of the community. We already know the outcomes. The policies do not work. They punish and condemn those who are dependent on benefits, and they do not remotely encourage improvement or change for the better.
Before I finish, I want to touch quickly on discretionary housing benefit. We have heard about other local authorities that do not seem to be having a problem and that are quite happy with the situation, but we have a small shortfall in Swansea in the money that is coming in. Currently, the shortfall is some £1,200, which sounds great, but I am concerned that the combined funding from the Department for Work and Pensions and the Welsh Assembly Government is not enough. If the situation continues, we will see an ever-increasing burden on the local authority and its finances. In Swansea, there were 3,198 applications for discretionary housing payment in 2013-14. The local authority awarded 1,871 discretionary housing payments, but it refused 1,327. It is pretty clear that there is a funding gap. In addition, the discretionary housing payment is awarded only for a maximum of 52 weeks. I echo the request of the hon. Member for Ceredigion for further clarification on the future of the discretionary housing allowance.
The housing benefit changes have adversely affected almost all claimants in Wales.
My understanding of the overall figures—I do not know whether the Minister is interested in this—is that 40% of tenants in Swansea, or 1,949 people, will now have to pay the bedroom tax. I understand that 1,230, or 63%, of those people have gone into arrears since April.
I thank my hon. Friend and colleague in the city and county of Swansea for that contribution. We are in a horrendous situation, which has left those in our communities who are least able to defend themselves reeling. I have a horrible feeling that it is only the tip of the iceberg, and that other nasty policies will soon come along to make those people’s lives even more difficult than they are now.
Order. Several members of the Welsh Affairs Committee and one patient Privy Counsellor are still waiting to speak. I do not propose to impose any time constraint on speeches at this stage, because it strikes me that this report will probably take slightly longer to discuss than the following one. I mention that in case there is a rising tide of alarm. We will endeavour to accommodate everyone.
I intend to make a fairly short contribution. I want to speak not only from the perspective of the Committee’s report and work, but about the impact of the housing benefit changes on my constituency and how things have worked out in practice. I congratulate the Chair of the Committee, my hon. Friend the Member for Monmouth (David T. C. Davies). The Committee was dealing with an issue of some controversy and disagreement between the various political parties, and consummate skill was required on his part to prevent us from coming to blows and to produce an agreed report.
I think it is generally accepted that the cost of housing benefit had reached an unsustainable level, and the worrying trajectory of increase in that cost meant that we simply had to do something about it. Those who challenge what the coalition Government have done to try to restrain that increase should come up with alternative ways of limiting housing benefit increases and keeping the cost within affordable limits. If our debates are to be credible, we must consider such challenges.
Inevitably, when we face a change such as the under-occupancy policy, we will all have worries. I have worries about my constituency and the impact on my constituents. I had views on the matter as soon as I heard about the proposal. I thought that it should apply only to new tenants going into properties, and I thought it should apply to people of all ages rather than stopping at 65. I must admit—I am sure that the Minister will be quite amused by this—that my concerns were such that I felt I needed to attend at least two or three Westminster Hall debates in which he was responding, in order fully to understand the arguments. The Minister is a persuasive individual, as is the Chairman of the Select Committee, because I ended up convinced that the policy was right, and I have since been supportive of it.
It struck me that the voice that is not heard on this issue is that of those people who do not have a home at all and are on waiting lists. We talk about the impact on people currently in social housing, but a huge number of people do not have a property at all and are living in very cramped conditions. That is the other side of the debate.
Is that not the crux of the matter? There is a huge contradiction: on the one hand, the policy is designed to free up supply, but on the other it is designed to reduce the housing benefit bill. It cannot achieve both, because the only way that the policy makes money and therefore savings is if people stay and pay.
The hon. Gentleman makes a perfectly fair point, and I do not think that the policy can be freestanding. I wanted to discuss this later, but there must be a responsibility for extra provision, and we must also have policies that deliver that. It seems logical to the people who have raised the issue with me that the problem is that there are not sufficient properties for people to move into.
When my hon. Friend the Member for Aberconwy (Guto Bebb) spoke earlier, I was struck by the fact that it is important for us all to see how the policy works out in practice in our constituencies, because it is now in practice. I decided to write to the county council—the housing authority in my area—and the local housing association to ask how it had worked out. The senior officer in this policy area at Powys county council came to my office and we spent an hour going through it, and I must pay huge tribute to the council for the way in which it managed a difficult situation. But the reality is that it did manage the system. No one has been evicted and the arrears have not gone up. Nearly all the people affected have access to the discretionary fund.
I think that about 600 tenants in the Montgomeryshire local authority were affected, and about 570 or 580 of them had access to a discretionary grant payment. I must say that when I started asking questions about whether the discretionary payment was enough, I was anticipating having to write to the Minister to say, “It is not enough—we want some more.” However, I found that the local authority was advertising, putting out press releases begging people to put in applications because the money was not going to be spent. The discretionary budget dealt with almost all the issues that mattered in the constituency.
Inevitably, a certain proportion of households—I think about 40 or 50—have moved, and because of the housing availability in the authority, quite a number of them have moved to the private sector. That is another issue. The differentiation between the private sector on one side and Government social housing provision on the other is one that we need to soften a little. We need to see people moving to make the best use of the available housing.
I agree with my hon. Friend that the difference between the private and social sectors should be reduced. Nevertheless, my experience is that housing associations in the social sector seem to have been more willing to work together as a result of the policy than they were previously. Is that the experience in Powys?
I think that it is. It might not be the same in all local authorities—I can speak only for my own—but I must say that, on this issue, Powys county council has been brilliant. It knew that things would be difficult for some tenants—it is not an easy situation—but it employed three specialist officers to help everyone affected to deal with their situation by giving them the best advice, and they have done that. I pay continuous tribute to the work that Powys county council has done with a policy that it may well not have agreed with. It has delivered coalition Government policy and done a magnificent job.
Does the hon. Gentleman accept that there is a world of difference between local authorities in Wales, particularly between a large rural area such as the one he represents and a constituency such as mine that has a vast amount of former social housing? For example, there were 3,500 applications for discretionary payments in Torfaen in 2013-14, compared with only 700 the previous year.
The right hon. Gentleman makes a good point in that there are great differences between constituencies. He may well speak later in the debate and describe what has happened in his constituency, but when the policy was debated early on, a number of people said that it was going to hit rural areas harder—that was going to be the real problem. No area is more rural than my constituency, and the reality is that the commitment of the local authority and Mid-Wales Housing Association has made the policy work. I am not pretending that it has been easy, but they have made it work as well as possible.
The final issue I want to discuss is new housing, which is clearly needed for the policy to work well in the longer term. Housing deliverers did not respond to what they could have anticipated, perfectly reasonably, to be Government policy. To say that the policy was suddenly dropped on them, out of the blue, and that they need two years to deliver is, I think, a bit of an excuse. They could have anticipated that the policy would be introduced, but we are where we are.
We need the Welsh Government, as well as housing and planning authorities in Wales, to recognise that we need new properties. They should not be piling on extra costs. The Welsh Government have not delivered on new housing. We only need look at the figures to see that they have gone down. They have put on new costs. The planning authorities demand planning gain for this, that and the other, and make it almost impossible to build housing. The Welsh Government have put on the extra cost of sprinklers, which in themselves are fine—
Will the hon. Gentleman give way?
I will in a second—let me just finish the point, because I am getting warmed up. They put on all these extra costs, the consequence of which is that housing is not built. People might have some idealistic objective to deliver something of which they can stand up and say, “Isn’t it grand? We must do this,” but the reality is that builders moved out of Wales because they could not accommodate the extra costs. We need a positive attitude in Government and local authorities. In order to house the people of Wales affordably, both national and local government must ensure that housing is delivered and not start from a position of trying to stop people building.
I do not have much else to say, but I would like to allow the hon. Lady to intervene.
Will the hon. Gentleman explain how, with his Government cutting capital expenditure funding to the Welsh Government by half, he expects them to be able to build more houses? What progress is Montgomeryshire making on taking similar steps to Carmarthenshire county council, which has been able to borrow funds to build houses?
Again, we have a complete separation, as if the private sector is over here and the public sector is over there. The issue is not the funding of the public sector; we must allow the private sector to deliver the housing we want. The private sector will deliver what we want if we create a situation in which it can. For the past few years, all I have seen is local and national Government making it more difficult for people to deliver what the people of Wales want.
On that point, it is important to state that the provision of social housing in Wales fell dramatically throughout the early part of the noughties—2000 to 2007—under successive Labour Administrations in the Assembly. The problem is not recent; social housing provision in Wales has been an issue of concern over the past decade.
I have nothing more to do, Sir Roger, other than to thank you.
It is a pleasure to serve under your chairmanship, Sir Roger, as it is to speak in this debate. Indeed, it is a pleasure that the No. 1 conclusion in the report makes the case for rent controls in the private rented sector. That was an amendment that I suggested when we were deliberating over the report, and it received the support of the majority of the Select Committee, for which I am extremely grateful.
The under-occupation penalty for recipients of housing benefit in the social rented sector is the signature regressive social security policy of the current UK Government. Labelled the bedroom tax, in Welsh it is called the treth llofftydd—when there is a hashtag in Welsh on Twitter, we know we are in trouble.
The bedroom tax, as the Select Committee Chair, the hon. Member for Monmouth (David T. C. Davies), said, is part of the UK Government’s efforts to reduce the housing benefit bill. I, too, pay tribute to his chairmanship. It is a pleasure to be a member of the Committee and to work with him. He is extremely fair to me as the single Plaid Cymru member of the Committee. Despite his persona in the Chamber as a ferocious, right-wing beast, he is a very kind Chairman.
The UK Government, of course, have a three-prong strategy for reducing the housing benefit bill. First, there is a cap on benefits, which the official Opposition now support, with additional regional elements, should they form the next Government. Secondly, the annual uprating of welfare payments is pegged at 1%, which means that there are real-terms cuts to social security support every year. Thirdly, there is the bedroom tax, or under-occupancy penalty.
Despite all that, in its response to the 2014 Budget the OBR projected that housing benefit expenditure will increase by £1 billion by 2018-19. If they have time, I ask Members to read that report on their way back on the train this evening. Page 146 states:
“The largest driver of the rise in spending on housing benefit has been caseload growth in the private rented sector.”
The report goes on to say that the trend towards renting is driven primarily by the huge increase in house prices, which means that young people are unable to afford to purchase their own home. Only those who are supported by their parents are able to afford a deposit. The last bit of page 146 states:
“The rising proportion of the renting population claiming housing benefit may be related to the weakness of average wage growth relative to rent inflation. This explanation is supported by DWP data, which suggest that almost all the recent rise in the private-rented sector housing benefit caseload has been accounted for by people in employment.”
That makes my case for me. The key reason for the increase in the housing benefit bill, which we will see despite the regressive policies introduced by the UK Government, is spiralling rents in the private rented sector.
The Financial Times reported in 2012 that rents had increased by 37% since 2007, and it projected a 35% increase in rents over the following five years. That was before the housing bubble that we are now experiencing, with the OBR projecting that house prices will increase by 9.2% in the third quarter of 2014 alone. The OBR envisages a 30% increase in house prices over the next five years. When we couple those statistics with stagnant wages, it is unsurprising that more and more people in employment are falling into the trap of requiring housing benefit. Often when we discuss this issue, people miss that housing benefit is an in-work benefit; it is not for people who are unable to work but for people who are working now.
House prices are projected to reach 2008 pre-crash levels by 2019, which means we are in a greater boom and bust cycle than we were in 2008. As wages are stagnant, the bubble is being fuelled by increased debt. We are living in worrying times.
Will the hon. Gentleman acknowledge that bank lending to businesses is 30% down since 2008 but that bank lending for mortgages is beyond 2008 levels? House prices are going up, rent is going up but real wages are going down. When interest rates go up, we will have a sub-prime debt disaster on our hands.
The hon. Gentleman and I are singing from the same hymn sheet. We were promised a rebalancing of the economy and a move towards business investment and exports, but we are seeing the same old boom and bust policies that have been the hallmark of the UK economy for many decades. The danger is that the boom and bust on this occasion might be even more serious than that built up in 2008.
I hesitate to intervene, and I ask this question with some degree of uncertainty, but I am pretty sure that yesterday I read a report saying that house prices have actually fallen in Wales in the last 12 months. They have gone up substantially across Britain, particularly in London, but across Wales I do not think they have risen in the last 12 months.
I did not read that report, but it makes a point about the unbalanced nature of economic growth across Britain. I am referring to the rising housing benefit bill in the UK context. The statistics I have cited do not refer to Welsh house prices in particular.
The Committee’s report found that Wales is being hit hardest by the lack of single social properties in the social rented sector. Wales is therefore being hit by a policy designed to address the public expenditure implications of the dysfunctional London economy. As I have consistently argued, we need a range of reforms. Before becoming an MP, I was heavily influenced by the reforms in the Republic of Ireland. I used to be a policy officer for the citizens advice movement in Wales, and some of these issues were prevalent then. The 2004 reforms in the Republic of Ireland were welcome. The Residential Tenancies Act 2004 achieved a number of objectives. First, it set up a private residential tenancies board. Secondly, it regulated the private rented sector, with an extension of tenancies to a more European model of longer-term tenancies. Defined rights and obligations were provided for both tenants and landlords, and access was provided to an inexpensive dispute resolution system. The bonds that individuals who rent often have to pay were safeguarded—unfortunately, on too many occasions people lose those bonds—and rents were capped, which is a policy that exists across the world. There are rent caps in New York, the home of global capitalism, so it is difficult to define them as some sort of socialist trap.
I do think that rent caps are a socialist trap. The fact that they are supported by the Committee’s Labour members, Liberal member and Plaid member is unfortunate because, in Wales, many people who have invested in buy-to-let properties have done so because of the previous Labour Government’s anti-pension policies. For many of those people, their private rented property is their pension provision. I find the attack on those individuals, who are trying to take care of their own situation in retirement, unfortunate to say the least.
The point I am trying to make is that if the Government are serious about bringing down the housing benefit bill, the only way to do it is to cap the cost of rents in the private rented sector. That is what all the OBR projections indicate. It is interesting that the Select Committee Chair referred to the evidence of the TaxPayers Alliance. When I gave the alliance a choice of either reducing the housing benefit bill or preserving free markets, it said that it preferred preserving free markets, which is more important to the TaxPayers Alliance than the Government’s tax liabilities. Perhaps it should change its name to the Free Market Alliance.
I think it has already been accepted in this debate that there is a link between private sector provision of housing and social sector provision of housing. Would rent controls result in any increase in private sector provision of social housing? If not, how will it help anyone looking for rented housing in Wales?
My point is that the OBR’s figures indicate that the Government will not achieve their objectives with the bedroom tax. If the objective is to bring down the housing benefit bill, the only way to do that is via rent control in the private rented sector. I welcome the fact that the leader of the Labour party made a case overnight for some of the reforms for which I have been making a case for a number of years. Rent caps would drive down artificially high rental costs, and they would also curb boom and bust property speculation, which is a cycle we have seen far too often in the UK economy in recent decades. Rent caps would also help working people to remain in the cities, rather than being forced out, as they are in inner London. They would also stop the current policy’s social cleansing, through which people are forced to move from where they have lived for many years.
[Mr Clive Betts in the Chair]
We also need to consider supply issues, which many Members have highlighted. The recovery of the 1930s following the great depression was largely driven by a massive public housing building programme. Rents paid for public housing provide a steady stream of revenue, so it is an ideal vehicle for drawing down private sector funds to deliver economic growth and address some of the social problems that we face.
I will now quickly return to the local indicators in Carmarthenshire, and I will finish on this point. Applications for discretionary housing payments have rocketed in south-west Wales. Between 2012-13 and 2013-14, the budget increased by 64% in Carmarthenshire, by 106% in Pembrokeshire and by 118% in Swansea. There were only 327 discretionary housing application payments in Carmarthenshire in 2012-13, but between April and May 2013 there were 534 applications. That is a 63% increase in the first two months of that year, compared with the whole of the previous year.
Nearly 2,000 people have had changes to their housing benefit entitlements in Carmarthenshire since this policy was introduced. As I mentioned, this policy only makes savings if people stay and pay.
I finish on a point made by my colleague, the hon. Member for Ceredigion (Mr Williams). He mentioned the work of Paul James, a Plaid Cymru councillor for Llanbadarn Fawr, a veteran of the UK Army and also a servant of the French Foreign Legion, so he is not a man to be messed about with—[Interruption.] He has the Minister’s number! He is upset about the impact of the bedroom tax on veterans and their families, who were under the impression that veterans would be exempt full stop from it. Yet it appears that only people on active service are exempt. If that is the case, obviously, military personnel from Wales in barracks or in training would be outside Wales and not exempt, because our regiments are not held domestically. Our servicemen are not home-based; they go to barracks in England. Yet their families are being hit by the bedroom tax. The Minister must look at that. I should be grateful to hear his remarks at the end of the debate.
I agree with other Committee members, who were kind of schmoozing the hon. Member for Monmouth (David T. C. Davies), congratulating him on how he chaired the inquiry. I should mention, in fairness to him, the lovely, careful, measured way in which he spoke today, in his capacity as Chair of the Welsh Affairs Committee—apart from the end part of his speech.
A year on from the bedroom tax, which is what I will mostly be talking about, this is a welcome opportunity to consider whether that controversial policy, which has caused so much hardship among my constituents, is working out. I am aware that I have a Privy Counsellor next to me, lining up to speak, and that we do not have much time. This is an important opportunity that allows us as much time as possible to press the Minister on how many of our report’s recommendations he has followed through—few, I suspect, if not none, but I will welcome being corrected at the end if I am wrong.
We need to know more about how the Government are monitoring this measure and how it is working in practice. Although I know, anecdotally, that housing associations, tenants, constituents and tenants associations are struggling, it is important that we hear from the Government what they are doing to monitor the situation.
The situation is different in various parts of Wales. The hon. Member for Montgomeryshire (Glyn Davies) said that 600 households in his constituency were affected. In Newport, the figure is more than 2,000. In my part of the Monmouth council area, which I share with the hon. Member for Monmouth, I suspect that a higher proportion of people are affected by the bedroom tax than in his area. It is hitting my constituents harder.
It is worth labouring the point and saying that we, as a Committee, decided to consider this matter because Wales is hit hardest. We heard earlier that more than 40,000 tenants could be affected—46% of working age tenants in Wales, the highest proportion of any region in Great Britain, where the average is 31%. The evidence that we heard in the inquiry, as most hon. Members have mentioned, was that, because our housing stock is different, there would be a lack of sufficient one and two-bedroom homes available in Wales to ensure that everyone who wanted to be re-housed could be.
Obviously, the Government’s two stated aims were to save money and to make the most efficient use of housing stock. In the numerous debates that we have had on this subject in the past year, we Opposition Members have mentioned real, hard cases, showing how the bedroom tax has hit disabled people who have had adaptations done to their homes, divorced parents who have their children to stay at the weekend and want to maintain that relationship, and people who just cannot afford to stay in their home and community, because they cannot afford to pay extra.
Clearly, the Government ignore the real impacts of these cases that we have repeatedly raised with them and always respond with the usual battery of figures. I make no apology for talking about just a few cases that have been brought to me, because, after all, if we do not know what is happening on the ground, we do not know how this policy is panning out.
In one case recently, a mother and her 30-year-old disabled son were desperate for him to be able develop his independence. An appropriate adapted property was being found for him, but the mother would then have been hit by the bedroom tax. She had no means of paying the extra money and no hope of moving to a smaller property.
I have seen numerous divorced parents at my constituency surgery, whose kids come to stay with them on weekends and during the holidays. Recently, a man had been laid off from his job, with no ability to pay the extra money involved. He was aghast that he should take in a lodger, as the Government suggested, because that would mean that his children would have nowhere to sleep when they came to stay. A woman called up, horrified, when she realised that she and her 11-year-old son who has severe autism would be penalised for the sensory room, recommended by the paediatrician, that was essential for him.
It is no surprise that Newport and Caldicot citizens advice bureaux, which I visited over Easter, and the food banks, report that the benefits changes, including the bedroom tax, are the biggest issues that people want help with. Are people moving to smaller properties and is that leading to a greater use of housing stock? No. As my hon. Friend the Member for Vale of Clwyd (Chris Ruane) mentioned, according to figures obtained by the BBC, only 6% of tenants affected have moved. As has been mentioned, we identified in our report that a lack of sufficient one and two-bedroom properties is a particular issue in Wales. The Joseph Rowntree Foundation found that, by November last year, 22% of those still affected by the legislation remained registered for a transfer or mutual exchange.
Housing associations are being creative. Newport City Homes is trying to be innovative. It has been forced to change its policy for housing previously designated for over-60s. That has had a knock-on effect, causing anxiety among elderly residents in settled communities. It is a difficult change.
What is happening to those who cannot move? The National Housing Federation has found that two thirds of households affected cannot find the money to pay up and arrears are stacking up. Last year, I researched housing associations in Wales and discovered that there had been a 51% increase in rent arrears for those affected by the bedroom tax. Figures from the Community Housing Cymru sector survey show that the bedroom tax has led to rent arrears of more than £2 million. It estimates that that means that the financial capacity to build 1,000 affordable homes has been lost in Wales.
Bron Afon housing association—I apologise to my right hon. Friend the Member for Torfaen (Paul Murphy) for always mentioning that housing association in his constituency—said that coping measures to deal with this will
“eat into money that would otherwise be used to build houses”
and that housing associations will have to
“divert more money to survive rather than develop”.
Wales and West Housing Association has conducted research into the impact on disabled people and the cost of adaptations. It says that it would cost the public purse some £40 million to adapt smaller properties and that that
“makes no financial sense whatsoever as it could wipe out the potential savings in housing benefit for many years”.
The Committee heard evidence that people’s moving to the private rented sector would be a more expensive option in many areas. According to the Library, the amount of housing benefit paid to private landlords would rise from £7.9 billion to £9.4 billion.
I know first hand that tenants and housing associations are struggling. I should like the Minister to explain how he has addressed the recommendations in our report: specifically, whether and how he has monitored how hard it is for local authorities and housing associations to find smaller accommodation; how the Government have monitored the cost of accommodation in the private rented sector, as we asked in the report, following the introduction of this policy; how he has monitored the impact on disabled people and the cost of their adaptations; and how direct payments, which no hon. Members in this debate have had much time to touch on, are monitored.
I hope that, given the time available, there is a chance for the Government to provide us with a substantive response on these issues.
Order. We are constrained for time. We need to get to the end of this debate by 3.30 pm and four Opposition Members want to speak: Paul Murphy, Madeleine Moon, Geraint Davies and Huw Irranca-Davies. The Front-Bench spokesmen need 10 minutes each, so there is 10 minutes for the four of you. That is not very much time, but if you can manage that between you it would help to let everybody in.
On a point of order, Mr Betts. Other Members have told me that they would be quite relaxed if the second debate was cut short. I am clearly in the hands of Labour Members, but as Chair of the Select Committee I would be perfectly relaxed if the first debate ran on a bit and the second was cut a bit. I would not want to impose, but I believe that that is the general view of Committee members.
That is helpful. If that is the general feeling of the Select Committee, I am more than happy to reflect that. If we take another 10 minutes off the other debate, that gives us five minutes for each of the four speakers.
I congratulate the Chair of the Select Committee on his Committee’s work. I thought that the impartial way in which he spoke was exemplary; I expect nothing less of my neighbour. I do not agree, of course, with what is the worst development in benefits in my 50 years of holding elected positions. There is no question but that we can rightly call the bedroom tax a wicked tax. Like many of my colleagues, I absolutely oppose it.
The report states:
“Under-occupation arises where a household lives in a property that is assessed to be too large for its needs. It is usually defined in terms of excess bedrooms.”
That definition is totally at odds with what public rented accommodation has traditionally and historically been about. Whether a person’s home is rented or owned makes no difference to where that home is. Until right to buy came about, my constituency, which has been much cited today, had the highest proportion of so-called social rented accommodation in the whole of Wales. That was mainly because it was a new town. A lot of that accommodation has been sold off, but the proportion is still very high.
The philosophy of the new towns, which has been totally ignored by the Government, was that people could live in rented accommodation, whether public or private—the latter is a small proportion in our areas—or in owner-occupied housing, without distinction. People would not know by looking at the door of a house whether the people living there had bought it or were renting it. The bedroom tax has dug a deep division between those who rent and those who own their homes.
The distinction in much of Wales between private and public rented accommodation is very different from elsewhere in the UK. Often in Wales, people see private rented accommodation as more temporary, and council housing, as it used to be called, as their home and much more permanent. In my constituency, the bedroom tax has been an unmitigated disaster and a failure. It has hit 18.3% of housing benefit claimants in Torfaen. Bron Afon, the social housing provider, estimates that more than £62,000 of arrears are attributable to the bedroom tax, with 268 tenants in arrears who have never before in their lives been in that situation. They see their dignity as being attacked by this appalling policy that is forcing them into arrears.
The reduction of income due to the bedroom tax in Torfaen is almost £1 million, the highest in the whole of Wales. People have £1 million less in their pockets because of the wretched policy. As everyone knows, the availability of smaller houses is very limited in Wales. In Blaenavon in my constituency, it would take 17 years to re-house the tenants suffering from the bedroom tax in smaller accommodation.
The Government say that the situation can be helped by discretionary housing payments, but that is a fudge. Yes, the money to local authorities has been increased to help them out, but most people do not know that the bulk of money that local authorities use for discretionary housing payments is their own. My authority spends to the maximum, with a bit more as well, of all local authorities in Wales. It is complete nonsense and deceptive to say that the payments are there by virtue of a benign Government. It is nothing of the sort; the councils have to take it out of their coffers.
The increase in demand for discretionary payments has been alarming. In 2012-13, there were 700 applications for payments, and in 2013-14 there were 3,500. The main reason given for the tax being brought in was that it would save money on the housing benefit bill, but it is doing nothing of the sort.
The cost of discretionary housing payments and top-up subsidies from local authorities, the increased cost of rent recovery by social landlords, the rent loss and turnaround cost of increased void properties, and the cost of additional health services through additional stress and depression are costing more than the so-called savings from the bedroom tax. Those facts alone justify Labour’s view that as soon as we are in government, out it will go—and with that, one of the worst taxes we have seen in a generation will finally disappear.
I must apologise, Mr Betts, that because of the late running of the debate, I will not be able to stay until the end. I have a pre-booked ticket to get me back to Wales that, because of the Independent Parliamentary Standards Authority’s rules, I will not be able to change.
The bedroom tax, as every speaker has said, has had a disproportionate impact in Wales. I want to address how it has affected the county borough of Bridgend in particular. It has had a massive impact, because of a lack of one and two-bedroom homes. As of March 2014, Bridgend county borough council had 1,393 homes where over-accommodation was a problem because of the bedroom tax. Of those, 1,094 were over-accommodated by one room. Only 7% of those 1,396 affected have been able to move into smaller properties. That demonstrates the huge problem that we have with the lack of smaller properties: many constituents cannot move. We have already heard that if they moved into the private rented sector, where rents are on average 37% higher, it would not save any money for the Government. The individuals, as well as having been clobbered by the bedroom tax, would somehow have to find the costs of removal, plus the cost of new carpets, new curtains and everything else. People are trapped in a financial spiral of debt through no fault of their own, and they cannot escape.
The increase in the discretionary housing payment does not cover the funding needed for the number of people in Bridgend who are financially affected. As of April 2014, 16% of the social tenancies in Bridgend were affected by the bedroom tax. Of those, 50% are in arrears. I stress the emotional impact on those people. As Members have said, people who have never in their life been in debt are struggling, facing debt and the horror of possibly losing their home.
I saw the local impact of the direct payment of housing benefits in the 1980s, when I was a social worker. We spent a totally disproportionate amount of our time having to visit families in debt who were about to lose their properties. We would write letters to the Department for Work and Pensions saying, “This person must no longer receive the benefit directly to them. It must go directly to the landlord.” That was the only way that people could get back to their rent payments going directly to the landlord. That cost a fortune. If the Minister looks at what happened in the 1980s, he will learn that we must avoid that disaster happening again.
We also need to recognise the bedroom tax’s impact on our housing associations. They are facing increased debt among their tenants and have difficulty in securing loans for improvements, because they do not have a guaranteed income to show the banks. Some of them have financial viability issues, and they are having to face court costs in taking tenants to court to get possessions. Housing allocations are no longer based on need, but on property size and the sex, age and number of children that applicants have. We are not fitting people into homes because of need; we are fitting people into homes because their family composition fits the size needed to not get into housing benefit arrears.
The Shelter website says:
“The vast majority of housing benefit claimants are either pensioners, disabled people, those caring for a relative or hardworking people on low incomes, and only 1 in 8 people who receive housing benefit is unemployed.”
More than 90% of new housing benefit claims over the past two years are for people in work. Wales is a low-wage economy and we are disproportionately affected. We do not have the properties that would enable people to move. Our people are being persecuted because of the Government’s fantasy about the availability of housing stock in Wales. The benefit change should not be imposed as it has been in Wales. I, too, completely endorse the Labour party’s policy to rid us, as one of its first steps in government, of the pernicious attack that is being made on people in Wales.
I thank the hon. Member for Monmouth (David T. C. Davies), the Select Committee Chair, and I feel that it is a great shame that the Minister, who is a Liberal Democrat, supports a pernicious and wicked policy.
The two grounds on which that policy has been proposed are under-occupancy and housing benefit. As for under-occupancy, only 10% of housing in the social sector is under-occupied. In the private rented sector the figure is 15%, and in the owner-occupied sector it is 49%. There is no case. The reason why occupancy levels in the public sector are so efficient is that, after tenants die, the housing is recycled. The tax is punishment for families whose children have grown up and left the house. Two and three-bedroom houses are rightly provided for families in need with children, not for single people. When the children grow up and leave for college or wherever, the family is then punished and asked to move—but where? Nowhere. We know the figures. There are 40,000 affected households in Wales and 400 units to move to, so those people have no choices. The rule is just a tax on the very poorest who are already on housing benefit.
The average cost is £728 per household. The Labour party goes on and on about the average household in Britain losing £1,600 under the Tories, but we do not make much mention of the fact that it is the poorest who have been clubbed the hardest, because that £728 is being taken from the very poorest. It is no surprise that, as I mentioned with reference to Swansea, 40% of people are being hit by the rule, and 60% of those are already in arrears. People are being moved from poverty to destitution, and that is a disgrace. The occupancy case does not stand up: there is not a problem and there is nowhere to move to.
The housing benefit case does not stand up either. Housing benefit has doubled from £10 billion to £20 billion in the past 10 years, and 70% of that increase is simply due to private sector rents, because not enough housing is being built. If we move people—I am referring to Swansea figures again—from a three-bedroom home to a two-bedroom one and from the public to the private sector, the rent goes up 50%, so the housing benefit goes up: it is counterproductive. The rule is a mean, wicked attempt to recover from the poorest some of the deficit that was caused by the failure of the bankers. It is a nasty, unpleasant Tory tax, and the accomplices, including the Minister, are the Liberals. It is disgraceful.
People are being pushed into the hands of payday loan sharks. Wonga has given £800,000 to the Tories. It absolutely stinks. I know that people are being kind and saying, “This is not working properly; don’t you realise what is happening here?” My view—it is clear from the evidence—is that all the rule was about, all along, was hitting the poorest hardest, to be able to afford making the rich better off.
The other evidence is the fact that pensioners have been let off the hook. Why? Because they vote, and it would be politically unacceptable to do otherwise, although the under-occupancy rate is obviously higher among the very old. I am not promoting the idea that the bedroom tax should be applied to pensioners, because the whole thing is pernicious and awful; but why was it choreographed in that way? The answer is obvious.
As for universal credit, there are three huge computer systems—for HMRC, the Department for Work and Pensions with Jobcentre Plus, and local authorities—being crushed together. As for the idea that that will not generate the inevitable catastrophe that always happens in public sector IT, the cost will be picked up by the most vulnerable people, at greatest risk, who rely on meagre benefits and will then have to go to food banks. This is a disaster waiting to happen. Do the Tories and Lib Dems care? No, they do not. It is a complete disaster and disgrace, and I look forward to the day when we can vote it down for ever.
It is great to serve under your stewardship this afternoon, Mr Betts. I commend the way that the debate was introduced by the hon. Member for Monmouth (David T. C. Davies), the Chair of the Welsh Affairs Committee, as well as the speeches that have been made and the work that the Committee does. I will add only a few points.
In my constituency, the policy is about as popular as the poll tax was. There is a march today in Bridgend. I would love to be there, but like my hon. Friend the Member for Bridgend (Mrs Moon), I am speaking up in Parliament on behalf of constituents; otherwise we would be there. I have spoken on platforms in Cardiff and elsewhere in direct opposition to the rule. The Minister will have heard repeated, emphatic and passionate accounts of the impact of the policy on individuals. Undoubtedly, many people are being pushed below the UN definition of poverty. The situation in the Bridgend area that my hon. Friend and I represent—the local authority area covers two parliamentary constituencies—is not unrelated to what one report says is a tenfold increase in the number of people seeking debt advice after getting payday loans. Those matters are related.
The present state of affairs is not distant from the fact that the Government’s report on food aid that came out after a year’s delay showed that the reason for the number of people being driven to use food banks is not increased publicity about food banks, as the Prime Minister said at Prime Minister’s questions the other day. There are three factors, and two are directly related to Government policy. One is benefit changes, and the second is delays in benefits. I could give the Minister the third, which is also related to the Government, but I will leave it at those two. Those things are tied in, and are part and parcel of the issue.
My right hon. Friend the Member for Torfaen (Paul Murphy) rightly said that there is a complete failure of understanding about the importance of social housing in parts of Wales—particularly south Wales. That housing is regarded not as a unit of accommodation but as a lifetime home. People have long aspired to be in their home, and not to be in private rented accommodation, which may well be the aspiration in—I do not know—Belgravia or somewhere. They aspire to be in either council accommodation or social housing through a housing association. That is why people have really been angered.
My hon. Friend the Member for Bridgend produced a plethora of data, and they apply to my constituency as well as hers. Within the past few months, Community Housing Cymru has produced an analysis showing that 78% of its members—35 housing association members in Wales provide 156,000 homes to 10% of the Welsh population—have seen a rise in rent arrears. The analysis showed 855 larger properties lying empty and that figure was expected to increase in the next 12 months. It showed that only 3% of tenants downsize, and I can confirm that that is true of my constituency: something like 25 people from about 1,000 properties have downsized. Also, members will deliver more than 1,200 fewer affordable homes, because they will be servicing a £40 million debt as a result of the policy.
We can have a debate about whether the policy is callous and cruel, which I think it is, but we need to debate the fact that it was dumped into areas such as mine overnight, without foresight or planning to enable alternative properties to be provided. The ineptitude of the decision, which means that housing associations will convert and build fewer properties, is causing misery. I ask the Minister to act according to the word and the spirit of what Lord Freud said when he spoke to the all-party group on housing, about evidence of “in extensis” impact on areas. There undoubtedly is one. I can see the Minister smiling. There is an impact—not just on my constituents, but on housing associations in my constituency. Will the Minister accept a delegation of not simply tenants but housing associations and local authorities from south Wales to talk about what “in extensis” means and how we can avoid the impacts being prolonged any further?
We move on to the Front-Bench spokesmen, who have 10 minutes each.
I am also delighted to serve under your chairmanship, Mr Betts. I congratulate the Welsh Affairs Committee on its report and its Chair, the hon. Member for Monmouth (David T. C. Davies), on the position that he has taken in the debate.
It is no surprise that, as we have heard, the Government’s housing benefit changes have hit the least well-off the hardest. My hon. Friend the Member for Llanelli (Nia Griffith) was among those who made the point effectively that a greater proportion of housing benefit claimants have been hit by the bedroom tax in Wales than elsewhere. My right hon. Friend the Member for Torfaen (Paul Murphy) said that this is a “wicked” measure. I, and I think many who have contributed to the debate, share that view. The bedroom tax is certainly the most hated of all the Government’s changes.
The Minister might not be inclined to take as much notice as he should of the representations made by my hon. Friends the Members for Ogmore (Huw Irranca-Davies) and for Bridgend (Mrs Moon), but I hope that he will at least take notice of the views of the Social Liberal Forum, an organisation that he has been associated with. It says that the bedroom tax is
“easily the most disgraceful of all the Government’s welfare reforms.”
The Minister who, when in opposition, espoused a progressive position on social security will, in a few minutes, endeavour to defend this most regressive of changes, which is making a big contribution to the cost of living crisis being suffered by people in Wales.
My hon. Friend the Member for Swansea West (Geraint Davies) reminded the Committee that the Minister is a Liberal Democrat. I wonder whether the Minister can help us resolve a puzzle. It would be helpful to know what his party’s policy is on the bedroom tax, as that is a bit of a mystery. The president of the Liberal Democrats, the hon. Member for Westmorland and Lonsdale (Tim Farron), spelt out a clear position in Inside Housing in February. He said that his party will be opposing the bedroom tax at the next election. He explained why:
“It’s creating more hardship, it’s wrong and unnecessary…it’s impacting on people and the most vulnerable. It’s also having an impact on housing associations—it means that they have less to invest in social housing.”
He is absolutely right about that and that is why, no doubt, the Minister’s party conference voted overwhelmingly against the bedroom tax last September in a motion that condemned it as discriminating against the most vulnerable in society. The hon. Member for Ceredigion (Mr Williams) said that he has voted against the policy in the past. It would therefore be helpful if the Minister could tell us what his party’s position is on the bedroom tax. It rather looks at though it opposes it, but it does not vote against it. I hope that he can shed some light on that in this welcome debate.
The uniquely dreadful feature of the measure is that it cuts the income of people who are already hard up without giving them any options for making up the loss. We have heard in the debate that only 6% of those affected throughout the UK have been able to move; 94% are taking the hit. We pointed out in debates in the Welfare Reform Bill Committee three years ago that smaller homes for rent are simply not available in many areas. The Committee drew attention in the report, as its Chair did in his speech, to the particular difficulties in rural areas, with people reported as having to move 50 miles or so. Most people have therefore just taken the hit. Many of whom, as we have heard, are now in arrears and some who simply cannot afford the extra and—like the great majority—cannot find somewhere smaller to move will, in due course, lose their homes.
In Wales, the bedroom tax affects a larger proportion of claimants than in any other region and the Select Committee is right to draw that point to our attention. It affects 40,000 households, 62.5% of which are households with a disability. Some of the homes we are talking about have been specifically adapted to support their tenants’ needs. We argued, again in the Welfare Reform Bill Committee, that this pernicious measure should not apply to such homes to avoid the problem identified in Bron Afon Community Housing’s evidence, which is in the document before us today. Unfortunately, the Government rejected our proposed change and again rejected the idea of an exemption in response to the report. The Minister, in his intervention, at least hinted at some sympathy for that case and that, for homes with perhaps major adaptations, there should be some exemption. If he is able to encourage us that he might take that thought further, that would be welcome.
The Select Committee told us that local authorities have been asked to report on
“the number of awards that have been made to help with ongoing rental costs for disabled people in adapted accommodation.”
Will we be told how many disabled people in adapted accommodation will be refused discretionary housing awards? Can the Minister offer any reassurance to those affected?
We have heard about the survey undertaken by Rebecca Evans, the Member of the Welsh Assembly who has established that, in a survey of housing providers, the number of one-bedroom properties available was about 1% of those needed. The bedroom tax is simply a tax on people who are hard-up.
In some areas, larger properties are being left empty because smaller households cannot afford to live in them. That is another aspect of the waste being caused by this tax: good homes are being left empty. On Tuesday, my hon. Friend the Member for Plymouth, Moor View (Alison Seabeck) brought another aspect to the House’s attention: panic rooms, which have been installed in some homes, reflecting the serious domestic violence problems that some people face. Such rooms are not exempted from the bedroom tax either. Surely it makes no sense to force people in that position to move, even if there was anywhere for them to move to.
For many, the bedroom tax has proved a hit too far on their household budgets. It has been one of the major drivers of the extraordinary increase we have seen in demand for food banks in Wales, as my hon. Friend the Member for Newport East (Jessica Morden) rightly pointed out. Her survey showed powerfully just what a big increase there has been in the number of housing association tenants in rent arrears because of the introduction of this tax. She also calculated the loss to housing associations as a result of that.
In January, a loophole was discovered in the bedroom tax legislation that, in effect, exempted those who had held the same tenancy since 1996. This is a mess. The Government claim that only 3,000 to 5,000 people are eligible for a refund of their bedroom tax payments, but freedom of information requests to local authorities have already identified 23,000 who are affected and at least 1,800 of those live in Welsh local authority areas. Can the Minister give us an estimate of the cost of reimbursing tenants affected in Wales? That is, however, another reason why my right hon. Friend the Member for Torfaen said that it is likely that this measure will end up costing more than it was ever likely to save.
Labour’s policy, and I think the Liberal Democrats’ policy—it was at least its policy at its conference—is that the bedroom tax should be scrapped. We will continue to press the Government to scrap it and, if they do not, the next Labour Government certainly will.
It is a pleasure to serve under your chairmanship, Mr Betts. I join in the congratulations to the Chairman of the Welsh Affairs Committee, the hon. Member for Monmouth (David T. C. Davies). I congratulate him on enabling the Committee to come up with a unanimous report. All of us who believe in the Select Committee system agree that Committees are at their strongest when they can be unanimous. He asked some specific questions for factual information, but in 10 minutes I will be trying to respond to two hours of contributions, so I apologise in advance if I miss one or two points.
I will concentrate on the spare room issue, but one or two hon. Members mentioned direct payment. As the Chairman of the Select Committee said, the philosophy of universal credit is to mirror in out-of-work benefits what happens when people are in work, so that if they make a transition from being out of work to in work, they will not have the sudden shock of having to budget from a wage and pay all of their bills, because they have been used to budgeting from the whole of their income for all of their outgoings. We want to improve that transition from out of work to in work.
The Government accept that direct payment will be difficult or not appropriate for a minority of people—that is not in dispute. Instead of having a system geared around the assumption that most people cannot cope, however, we are twisting that around and saying, “No, actually most people can.” Indeed, we pay housing benefit in the private rented sector direct to tenants, and most people cope. We should not patronise social tenants with the presumption that they cannot cope; we should presume that they can, but then identify the most vulnerable, who will have problems.
Will the Minister give way?
No, I will not give way, because I have a whole lot of questions which have already been asked that I want to answer.
In response to the question of whether we simply let eight weeks go by, let two months of arrears accumulate and only then start thinking about doing something, the answer is no, we do not. The alternative payment arrangements of universal credit include an assessment of the likelihood that someone will struggle at the outset; we do not simply wait until eight weeks of arrears have arisen. Eight weeks of arrears may be a trigger in a case where we thought someone could cope, but things did not work. If someone is assessed as likely to struggle right at the beginning, however, we can go straight to direct payment to the landlord, if necessary.
The House wants me to focus my remarks on the spare room issue, which is what I will now do. On a matter of fact and numbers, and because the Chair of the Committee asked me for an update, our estimate in May 2013 of the number of Welsh claimants with a spare room with a reduction was 36,000; our most recent estimate is that that figure had fallen to around 32,000 in November 2013. At this stage, we are not able to identify how far that was due to trading down or taking a job and not needing benefit, and so on. Those figures, however, give an order of magnitude.
The issue of what the thing is called is not simply semantics. Whether it is a reduction in a subsidy or a tax gets to the heart of what the thing is. I want to compare three people: a person who is buying a house; a person who is renting on benefit from a private landlord; and a person who is renting on benefit from a social landlord. Two of those three people pay for the size of the house that they live in; the third does not.
The right hon. Member for Torfaen (Paul Murphy) said, “Hang on, we are introducing this new divide between people who rent and people who buy,” but in actual fact we are treating people in those different tenancies in a parallel manner. If people are thinking of buying a house in Wales and want an extra bedroom, they can have an extra bedroom and pay for it. If people rent from a private landlord, are on benefit and want an extra bedroom, they can have an extra bedroom and pay for it. Until now, however, people who were social tenants in Wales and had an extra bedroom did not pay for it. That is why our measure is the removal of a subsidy; it is not a tax.
Will the Minister give way?
No. For example, when the Labour Government introduced the principle that private sector tenants with a spare room should have to pay for it, they did not describe the measure as a bedroom tax, so I do not see why a similar one for a social tenant should be.
Will the Minister give way?
No, I will not, because I have two hours of questions to answer, and I want to answer them.
On the role of discretionary housing payments, several speakers, including the hon. Members for Newport East (Jessica Morden), for Llanelli (Nia Griffith) and for Swansea East (Mrs James), mentioned the pressures in their area on the DHP budget. Let us go through the facts, because people might be thinking, “This is terrible. The Government have been withholding funds for local authorities.” Let me make it clear what has happened.
At the start of 2013-14, the figure for DHPs in Wales was £6.9 million; at the start of 2014-15, it was £7.9 million. All of us accept that those are substantial sums of money. We did not leave it at that, however, and one of the themes of the debate is whether we are monitoring and listening and then refining the policy. We listened in two important areas.
We first listened to the position of Welsh and Scottish—mainly—local authorities. We accepted the point also made by my hon. Friends the Members for Ceredigion (Mr Williams) and for Montgomeryshire (Glyn Davies) and others that remote rural areas have particular issues. We therefore allocated additional funding. In Wales, that was £143,000 to Ceredigion, £449,000 to Gwynedd and £387,000 to Powys. Interestingly, my hon. Friend the Member for Montgomeryshire said what a good job Powys had done as a local authority—I pay tribute to it—and one of the reasons it could do so is because the Government had recognised the additional pressures on remote rural areas and come up with the funding. He can therefore report back to the House that it was not largely an issue in his area, because we had monitored what was happening, responded and dealt with it.
We did not leave matters there. We had a national or GB-wide allocation and a remote rural areas allocation, but there might still be acute local circumstances requiring still more funding, so we came up with an additional £20 million pot and invited bids for funding from it. Three Welsh local authorities applied and were given money: Cardiff, Conwy and Caerphilly. No other local authority in Wales asked us for a penny. We cannot simultaneously say that there is unmet need in Newport, Swansea and other areas, and that local authorities are having to turn needy people away, when those authorities did not ask us for the money to top up their DHP budget to such an extent that central Government had unspent additional DHP pot still available for local authorities to claim.
What are those authorities doing? I have no reason to doubt the hon. Members who spoke, but if it is the case that they have constituents for whom the impact of the change has been inappropriate, harsh or unfair—many words have been used—what were their local authorities doing not drawing down the additional money that was available and that was not contingent on matched funding? We did not say to local authorities, “Ask us for more money—but only if you put more in”; we simply said, “Do you need more money?”, and only three Welsh local authorities asked for it.
A number of other issues were raised during the debate and I will respond to one or two. We are being told that allocations are now not based on need. Why is it appropriate to say to private tenants, “Your housing benefit may only cover a house of the size you need,” but not to say the same to social tenants? Why should we not say it to both? When I have challenged the Opposition about when Labour introduced what they now describe as a bedroom tax, but for private tenancies, they say it was for future tenancies and so it was fine. When we intervene on them and ask whether the policy would be fine for future social tenants, Labour Members mumble and go quiet, because they have no answer.
Will the Minister give way?
No, I will not. Labour cannot explain why it is right to say that private tenants have to pay for the size of the house that they live in, but that social tenants should not have to. Some suggestions were made about our views on excluding pensioners from the measure. They are generally excluded because, for example, expecting them to take work would be unrealistic. We have excluded pensioners for that reason, but it is pretty obvious why the Labour party wants to exclude social tenants, but not private tenants.
Someone said during the debate that we cannot both save money and make better use of the housing stock, but we are doing both of those things. The original estimated savings from the measure for the whole country of some £0.5 billion remains our expected order of magnitude. In addition, some people are moving to more suitable accommodation and freeing up accommodation for the people whose voice never gets heard—as has been said in the debate.
Will the Minister give way?
No—I have only one and a quarter minutes left. Why did we not hear about the 13,000 people in Wales living in overcrowded social sector accommodation? Where was their voice in the debate? What about the people living in overcrowded private sector accommodation, or the 90,000 people on housing waiting lists?
There is a whole set of unmet housing need while we have people under-occupying social rented accommodation —through no fault of their own, so it is not a criticism of them, but it is a fact. The hon. Member for Swansea West (Geraint Davies) said that when people’s kids grow up, they should go on being able to live in a big family house, but what about the people who would love a big family house, but cannot get it because it is under-occupied? We have to help people with the transition, but that is why substantial additional DHPs have been found.
Finally, on the specific issue of adapted accommodation. We would have loved it had we been able to write a law in Whitehall that said, “This is adapted; this isn’t. Here is how we define it in an Act of Parliament or a statutory instrument. We will have a blanket exemption.” That would have been great. We looked hard, but we could not think of a national and consistent way of defining what it was. We therefore found the money instead—£25 million across Great Britain, which was our estimate of the cost of buying out the impact on substantially adapted properties. No one in the country living in a substantially adapted property who goes to a local authority should be turned away because there is not the money for DHP. We have given the local authorities the money, and that should not need to happen.
There is lots more that I would love to say, but I am constrained by time. I hope that I have been able to give some responses to the questions asked by the Chairman of the Committee.
I will ask the Chairman of the Select Committee to respond briefly to this debate and then to introduce the second debate, which is on the Work programme in Wales. While that is happening, will hon. Members who want to speak in that debate indicate that to me? It will be helpful in apportioning the time.
May I say how impressed I was by that speech from the Liberal Democrat Minister? It was enough to make me turn quite yellow listening to it, which might come as a shock to him. He has answered many of my questions. There may be some more, and we may want to return to the issue at a subsequent date.
I am conscious of time, but I want to put it on the record that although I accept that some people will have lost out, I personally strongly support the policy. I think all of us, if we are realistic, are aware that we had to do something to reduce the deficit; I think hon. Members accept that, although they were not so keen to discuss how they would have dealt with the problem.
Any policy that we introduce will affect some people, perhaps a little unfairly. I was brought face to face with people confronting the changes resulting from the policy, some of whom I had a lot of sympathy with, although I had less sympathy with others. I always feel that it is important, where we can, to help those who may have been unfairly affected by any policy we introduce, including this one.
Work Programme (Wales)
[Relevant documents: Third Report from the Welsh Affairs Committee, HC 264, and the Government response, HC 1035.]
I will make my remarks as short as I can. This is a far less controversial issue than the changes to under-occupancy policy. Clearly, all of us want as many people as possible to be in employment, and all of us support the Government in introducing schemes to help those who face significant challenges in finding work and who have been out of work for a long time. This Government have introduced a scheme that basically builds on work done by the previous Government. One thing that we could not do in the report was make comparisons with the previous scheme, because this one is run differently. None the less, it is fair to say that the previous scheme had not been working as well as all Members of Parliament wanted. I do not allocate any particular blame for that; in fact, we did not even look at that issue.
The current Work programme offers consolidated support for numerous people, including those with significant problems getting into the workplace. It differs from previous schemes in that it was designed to allow the providers greater freedom to choose how best to support unemployed people without prescription from the Government. It also differed in how payments were made; they were paid out after people had been put into work for a given period.
One problem that we highlighted, though, was that Wales seemed to be doing far worse than other areas of the United Kingdom. At the time of the report in 2013, we had the lowest success rate in the UK. We found that 10.8% of people referred to the Work programme in Wales found sustained employment, against an average of 12.8% across the rest of the United Kingdom.
The Department for Work and Pensions prefers to consider eligible referrals—in other words, the proportion of people who have been on the Work programme for at least 13 to 26 weeks, long enough to have achieved sustained employment. Using that measure, 14.7% of people on the Work programme in Wales found sustained employment. Although that is higher as a proportion, it is still lower than anywhere else in the United Kingdom.
We identified that performance was improving over time both in Wales and in the rest of the United Kingdom, and there have been changes since the report was published. I have been given updated figures that take us up to December 2013, showing that in Wales, 15.1% of Work programme participants have now found sustained employment—a good increase on 10.8%. Again, however, those proportions reflect what is going on in the rest of the United Kingdom, and Wales is still the lowest-performing region in the United Kingdom.
Why should that be? During our inquiry, we heard a range of reasons. We heard that Wales has fewer jobs, especially permanent and full-time jobs. It has a skills shortage, and there are challenges relating to the rural nature of Wales—transport, for instance. It was suggested that the two providers operating in Wales need to raise their game a little, and it seems that they have performed poorly relative to other operators in the rest of the United Kingdom. I am aware that the Minister keeps a close eye on the issue; I believe that she has terminated one contract already in Yorkshire, and others have been put on an enhanced performance regime, whatever that means. I suspect that it means she is keeping an even closer eye on them than she otherwise would.
However, I do not want to lay all the blame on Welsh providers, because the people at the ones I visited with other Committee members—in Pontypridd, for example—seemed to be working hard to help get people into employment. One worrying thing that we heard from a number of people was the difficulty caused by a decision by the Welsh Government’s European Funding Office that Work programme participants in Wales cannot access training courses that receive funding from the European social fund, due to the view that that would constitute double funding. It is a little complicated, but we basically have a situation in Wales that is different from the situation in England, where customers are able to access Skills Agency funding programmes that are part-funded by the ESF.
As far as I or any of us can see, officials in England and Wales have both considered the issue and come up with different rules on the legality of funding job creation schemes and training using ESF money. Of course, it has been done in a way more beneficial to people in England than in Wales. Again, we did not want to allocate blame for that, but we urged the Minister to work with the Welsh Assembly Government to overcome the problem. Hopefully she will update us on any discussions that she has had.
We were also slightly concerned about the outcomes for lone parents. The statistics suggest that 11.8% of lone parents found sustained work through the Work programme, compared with the British average of 15.3%. The latest statistics show an improvement in that respect. In Wales, 15.3% of lone parents are now securing sustained employment, compared with 11.8% at the time of the report, but there is still a gap between that and the British average, which is now 18.6%. Although we are not the lowest-performing area in that respect, we are below the British average and far behind some of the best-performing areas of Devon, Cornwall, Dorset and Somerset, where 24.2% of lone parents secure sustained employment.
We also heard that there was an absence of personalised support on the Work programme for lone parents, nearly all of whom are women, and that some providers failed to recognise lone parents’ care responsibilities. We are grateful for the responses that we have had from the Minister and the Department so far, and we hope that the good news, which has come along in slightly small increments until now, will continue, because things seem to be going in the right direction.
Several hon. Members
Order. I will call Nick Smith next, and then Guto Bebb. I will allow them six minutes each to speak, as they did not speak during the previous debate. For the other three speakers, I will cut the time down to four minutes to get the Front-Bench speakers in, although I will have to squeeze them a bit as well, if that is okay.
I am pleased to be able to speak in this debate, Mr Betts. Well done to the Select Committee on Welsh Affairs for its report, and to its Chair for presenting the report.
Unemployment in Blaenau Gwent remains stubbornly high. In March, adult unemployment was 8% and youth unemployment was 11.8%, nearly double the Wales average of 6.4%. As a member of the Public Accounts Committee, I have become only too familiar with the hapless track record of the Department for Work and Pensions in recent months. It has botched the introduction of the new personal independence payment and the management of its flagship universal credit system has been wasteful, with at least £140 million written off. When the Public Accounts Committee reviewed the Work programme last year, we found extremely poor performance. Only 3.6% of people referred to it moved off benefit and into work—less than a third of the Department’s target. None of the providers managed to meet their minimum performance targets: the best provider moved just 5% of people off benefit and into work, while the worst managed a miserly 2%.
The Public Accounts Committee found that the Work programme was failing young people in particular. The Welsh Affairs Committee has said the Work programme’s success in helping those with the most severe barriers to employment has “yet to be proven.” I therefore hope that the DWP will look seriously at how we can help young people and those with complex needs in a valleys employment market where jobs are scarce.
To be fair, the Welsh Affairs Committee is
“broadly encouraged that the Work programme’s performance has been improving over time, both in Wales and Great Britain.”
Although I understand that this is a difficult agenda, given that the programme’s first year performance was actually worse than the Department’s own expectations, the only way is up, is it not?
To give a tangible example, one employer contacted me with concerns about his Work programme employee. The employer had spoken to the employee’s Work programme adviser regarding help with the cost of travel to work and of work clothing and equipment. The employer understood that four weeks of travel costs and full work equipment costs would be met. In the event, the travel costs were capped at £50 per week and the work equipment costs were capped at £300, although the total cost was £450.
The employer was clear: the Work programme provider failed to give accurate and unambiguous advice to its client. The employer thinks the Work programme provider is preventing a young man from moving forward in his line of work and hindering his future work. I share that view. It is living in cloud cuckoo land to expect the young unemployed to pay up front for the tools they may need for a placement.
The Welsh Affairs Committee found that both Working Links Wales and Rehab JobFit were near the bottom of performance tables when compared with the other 38 providers across Great Britain. I hope that the Minister will look carefully at how their performance can be improved to meet the needs of the unemployed in Wales, as the Chair of the Welsh Affairs Committee said.
The Work programme will not anyway work in isolation. Other important measures are needed in the eastern valleys of south Wales. Our train infrastructure needs electrifying. Good public service jobs need to be based in the borough of Blaenau Gwent, and educational attainment must be improved in the round. We know that the Work programme in Wales is failing to deliver, so tackling long-term unemployment will be a top priority for the next Labour Government. As we know from the 1980s, long-term unemployment has a scarring effect on individuals and communities. It damages our economy and society, and builds up long-term costs for the taxpayer. Before those things happen, the Government must do better.
I am pleased to contribute to the part of the debate I intended to speak in. It is a pleasure to follow the hon. Member for Blaenau Gwent (Nick Smith), who is my colleague on the Public Accounts Committee. I acknowledge that the report that we produced on the Work programme was disappointing, but it is fair to say that in that report we acknowledged that it was early days for the programme.
I am encouraged by my recent meetings with providers working for the Work programme, and the statistics show that performances are now significantly improved. Most importantly, the figures will show that the value for money being derived for the taxpayer is significantly better than under those programmes superseded by the Work programme. As we move forward, we have a success story on our hands. It is delivering both for people who need support and for the taxpayer, by delivering jobs at a lower cost.
I turn now to the report by the Welsh Affairs Committee. It is a genuinely constructive report that highlights some of our concerns at the time of writing. The performance of the Work programme in Wales has improved since the report was published—certainly, the figures from my own constituency indicate that—and we are now working against a background of a much stronger employment situation in Wales. We have seen unemployment fall. It is fair to say that the unemployment rate in Wales is now lower than the average for the UK, and I welcome that. In my own constituency, unemployment has fallen significantly and is well below the figure that we inherited in 2010. There is good news on employment.
My specific experience of the Work programme is of a committed work force working for Work programme providers in my patch, who are attempting to make sure that they give full support to individuals who want to get back into the workplace. One example I can offer is of a young lady from the village of Llanfairfechan in my constituency, who had her transport costs paid for the first month of employment, to allow her to work, and also had costs paid to allow her to go to an interview—indeed, the provider supplied the young lady in question with a new outfit for the interview. She was successful and is now working in continued employment. I can certainly offer examples—I accept they are anecdotes—from my own constituency that are different from the examples I have heard from other parts of Wales and are generally very positive.
The Minister visited Merit Motors, an employer in my constituency that has taken on not one, not two, but three individuals on the Work programme, and has described them as the best prepared individuals they had ever had the pleasure of working with. Those individuals are three young lads between the age of 18 and 24, who are now working in Llandudno Junction as a result of the support they have had from the Work programme and of the willingness of a local employer to take a chance on young employees.
I should also say that we cannot leave the whole issue to the Work programme. MPs should become active on this issue. I have written to all employers in my constituency not just to raise the prospect of the support available to employ people through the Work programme but to highlight the support available to employ young people. I have even highlighted the programmes available from the Welsh Government. As a local MP, I want to see increased employment and employment opportunities in my patch. I take very seriously my responsibility to work with providers, employers and the unemployed to make sure those employment opportunities are there.
Indeed, I would recommend that all hon. Members in Wales hold job fairs. I did. We got the local paper involved, and had pictures of people on the front page of the Weekly News under the headline “We want to work”, dispelling the myth that the unemployed do not want to work. The story I want to put out is that we have people who want to work and we have a support structure in place to make sure that they have the opportunity to. The Work programme is part of that success.
I do not want to be negative, but I have to reiterate the concerns expressed by the Chair of the Welsh Affairs Committee about the way in which the Work programme interacts with Government programmes in Wales financed by the European social fund. We highlighted that in a report agreed unanimously on a cross-party basis, but I have not seen any progress since then. Unfortunately, the issue is becoming more and more problematic. On a recent visit to a charity in my constituency, I was told categorically that they were now having difficulty recruiting people because individuals were being referred from the jobcentre to the Work programme and then were not being referred back to the charity because it was partially funded from ESF funding. That is a huge problem.
That charity highlighted another issue, which I think is shameful. Work programme representatives take the view that we need to make sure that youth offenders and prisoners are put on the Work programme before they leave prison. That is a fantastic initiative—we are trying to make sure that those people do not end up not having a support structure when they leave prison. But, lo and behold, if they go on to a Work programme provided in Wales and it is highlighted that they need numeracy or literacy support, there is no such support available in the Welsh context because of decisions taken by the Welsh European Funding Office.
Frankly, the situation is unacceptable. We are damaging the prospects of individuals, whether they be former prisoners, youth offenders or people who need support to get back into the workplace, simply because we are failing to knock heads together and get some common sense from the Welsh European Funding Office.
When asked about this issue by the hon. Member for Llanelli (Nia Griffith) during our inquiry, the then Minister, my hon. Friend the Member for Fareham (Mr Hoban), made it clear that the problem was primarily in Cardiff Bay. I have seen no evidence to contradict that, yet a year after the publication of the report we are still seeing Work programme providers in Wales underperforming, mainly because they do not have the support structure in place in the rest of the United Kingdom.
If anything comes out of the debate today, it should be a strong message from all members of the Welsh Affairs Committee and all Welsh Members of Parliament that the Welsh Government need to work with, not against, the Work programme to serve the unemployed of Wales.
Several hon. Members
Order. The time limit is now four minutes for the remaining Members who wish to speak.
As hon. Members have said, evidence to the Welsh Affairs Committee on the Work programme highlighted that it is clearly underperforming in Wales. The first figures show that just one in nine or 10.8% of those going on to the programme obtain sustainable employment. In their response, the Government said that the figures were from June 2013 and that it was too early to judge the newer entrants—those who had been on the programme for between three and six months.
However, the latest figures show that, six months on, Wales is still bottom according to the Library and data derived from the Department for Work and Pensions. In December 2013, the UK average was 18.7% and Wales was still behind at 16.7%—the lowest for any area of the country. We know there are particular challenges in Wales, but it would be good to hear from the Minister today what we can do to help with the challenges.
Among other things, the report expressed concern about the two prime providers in Wales. My hon. Friend the Member for Blaenau Gwent (Nick Smith) said that, as of December 2013, Working Links Wales was in the middle of the performance table, and Rehab JobFit was second from the bottom compared with other providers throughout the country. The former Minister, the hon. Member for Fareham (Mr Hoban), said in evidence to the Committee that he would “badger them to improve”, and it would be helpful to know how that is going.
As the hon. Member for Monmouth (David T. C. Davies) said, our report also highlighted that the programme’s success in helping those with the most severe barriers to employment was yet to be proven. The ambition is worthy, but how successful is the Work programme in that respect and for those who come off it? Will the Minister explain what more is being done with that group, and how the Help to Work scheme will work now that it has been implemented in Wales? I hope that it will help people and not penalise them with an excessive sanction regime if they cannot find work. In particular, it would be helpful to hear what more we can do about lone parents, particularly women. Again, Wales is underperforming on that.
On a positive note, some subcontractors out there are doing particularly well. Labour-controlled Newport city council is the subcontractor to Working Links Wales in my area and has one of the best performances in Wales. I have seen its work first hand, as has the Under-Secretary of State for Wales, the hon. Member for Preseli Pembrokeshire (Stephen Crabb); in fact, we both took part in a session with Work programme participants.
It would be worth the Department’s while to look at the fact that a Labour-controlled council is, thankfully, bucking the performance trend. When compared with Wales-wide figures, its performance outcomes are much higher. For example, for jobseeker’s allowance claimants aged 25 and over, the outcome rate for Rehab JobFit and Working Links Wales in year 2 was 16% and 15.5% respectively, but Newport city council’s was 28.3%. For JSA claimants aged between 18 and 24, the rate for Rehab JobFit and Working Links Wales was 26.6% and 24.5% respectively, but Newport city council outperformed that by quite a margin, with 51% of referrals ending with a job outcome. For all payment groups, the council’s outcome rate was 33%, with the Wales-wide figure at around 17%.
I could go on, but I think the message is clear. Newport city council is the best performing Working Links Wales subcontractor in Wales, and it shows that despite all the challenges and the Work programme, jobseekers can be helped back to work by people who know the community, care about it and the people who live within it, and have the determination to deliver for them.
It is also worth looking at Jobs Growth Wales. According to the Welsh Government, its success rate so far is 40% in employment and 20% in apprenticeships after completing the programme. In Newport, 620 job opportunities have been created and 546 of them were filled. That is a success rate of about 88%.
We all want to help people back to work. The Work programme in Wales has not had the best start and the Committee’s report reflects that. It would be helpful to have from the Minister an update on where we are and how we can help to make it work as it is being rolled out.
I, too, congratulate the Select Committee Chair on his excellent management of the inquiry and the report.
I want to mention briefly the poor level of performance by Working Links Wales and Rehab JobFit in Wales. We know that there are examples of subcontractors doing very good work, but overall it has been recognised that their performance does not compare well with other providers throughout the UK. In their response, the Government said that they will continue to take action where performance does not meet expectation.
What has the Minister been able to do so far and what does she intend to do about those two providers? What monitoring has been carried out—not just counting outcomes, but examining how they operate? The providers have bid for contracts and been awarded them, and the Government should hold them to account for the job of finding work. Considerable public money has been invested, and it should be looked at carefully. What is the providers’ percentage cut for management? What is their engagement with employers? Do they give the right incentives to employers to take part? Who provides training and is it sufficiently linked to the local job market?
Considerable money is at stake—nearly £14,000 for some employment and support allowance claimants—so there must be value for money. There have been instances of poor practice when people have been sent for interviews for unsuitable jobs, have travelled to turn up for non-existent jobs or have had to report repeatedly to centres away from the main areas where they could be looking for work. That happens in my constituency; people have to come to Llanelli when they live in Tumble and should be looking for work in somewhere like Cross Hands.
The report mentions evaluation of the impact of the Work programme. What progress has been made on that? It also mentions Andrew Sells reporting back in the spring on how to roll out good practice in respect of lone parents. What progress is being made on that?
I turn to the community work placement scheme, which is a continuation of the Work programme. I note that only two providers have bid for that in Wales and that they are the same two that are underperforming on the Work programme. Will the Minister look carefully at that and consider inviting further bids? The scheme involves £30 million of public funds.
On the potential overlap or conflict with Welsh Government programmes, we all understand why the Government do not want to double-fund people and pay out twice. This week, Ken Skates, the deputy Minister for Skills and Technology in the Welsh Government, made a clear statement detailing much of the work that has been going on between him and the Minister. I am glad that they are working together to try to sort the matter out.
As the hon. Member for Aberconwy (Guto Bebb) highlighted, people coming out of prison are immediately put on the Work programme. There should be a mechanism to exit from that if it is more suitable for them to be on a Jobs Growth Wales scheme or another one. Funding should be managed so that there is no double-funding and that funding is shared if there is going to be more than one provider. I do not see why it is not practical to sort that out so that we do not end up paying twice, but we get the best outcome for the people concerned. I would like an update on progress from the Minister on holding people to account and ensuring that we get the very best value for money for people in Wales.
The Work programme in Wales does not, as has been mentioned, do as well as elsewhere, but my primary point is that it is costing between £3 billion and £5 billion and that there is a programme that works six times as well—Jobs Growth Wales. According to the latest updated report, the Work programme’s success rate has moved from 11% to 15%. At the 11% point, Jobs Growth Wales is getting 40% of people into permanent jobs, 19% into apprenticeships and 3% into other education, which is a 62% success rate. Will the Minister say why, even if it costs more—if not six times more—we do not adopt it if it works, instead of being prejudiced?
I want to ask about sanctions. In Swansea, 65% of people on jobseeker’s allowance have been sanctioned and their jobseeker’s money taken away for four weeks, 13 weeks or 15 weeks because they failed to turn up to some sort of Work programme appointment—often because the letter arrived after the appointment. In other words, there was an administrative error. Bearing in mind that someone on jobseeker’s allowance is on just £71.80 a week, they have £10 a day to live on. If they do not get to an appointment they did not know about, they lose all their money for four weeks and as they can go to the food bank only three times, they are thrust into the hands of loan sharks. People’s desperation is appalling.
What is also happening—I do not want to mix up things—is that extremely vulnerable people are going to Atos. A person called Michael Rainey met me recently; he has a condition called pericarditis, which is the lining of the heart expanding and contracting due to anxiety, and he also has rheumatoid arthritis. He went to Atos and got zero points for his chronic conditions, and because he was forced into work, he was rushed into hospital and nearly died. He has since been sanctioned, so he has no money either.
We have a situation in which people on sanctions are not counted in the job figures, so suddenly they are not unemployed any more. We are also saving money because we are taking away their meagre benefits. Rather than messing around with statistics and claiming that something like half a million people on zero-hours contracts really do have jobs, we should ensure that if, for example, Jobs Growth Wales works, it applies more broadly across Britain and gives people the jobs they need. People want to work, but they are being starved into desperation by this strange system of sanctions and by being made to turn up to jobs that do not really exist.
Finally, I have been involved in this issue, so I know that the number of people going to counsellors and psychotherapists, often because of anxiety due to austerity and these draconian measures, has gone up from about 300,000 in 2010 to 1 million people a year. People are having mental health problems and going for advice—again, that is a knock-on cost to the health service. We really want to deliver proper jobs and proper work schemes. There is best practice at hand, in particular in Wales, and we should notice and take a lead from that.
Several hon. Members
Order. The Front-Bench Members have eight minutes each, leaving a couple of minutes for the Chair of the Select Committee to sum up at the end.
After three years of virtually no growth in the British economy after the general election, we are now finally seeing a recovery taking shape, which is very welcome. We all hope that the recovery will be sustained. The central labour market challenge now is that, following that period, we have unprecedentedly high numbers of people who have suffered unemployment in the long term. That needs to be at the centre of policy over the period ahead.
Tackling long-term unemployment is very urgent. As the Welsh Affairs Committee has pointed out, the Work programme is not up to that task. In fact, long-term unemployment rose inexorably to the highest level for 20 years in the two years after the Work programme was introduced. We need to do much better.
The facts about the Work programme’s performance in Wales have been set out fully in the report. The Government’s response says, “Well, it is not quite as bad as it looks, because 14.7% of those who started on the Work programme in Wales have achieved a sustained job outcome.” The Chair of the Select Committee said that it had gone up a bit to 15.1%, and I think that is right, on the most recent data. However, 85% of those who went on to the programme have therefore not achieved a sustained job outcome. It is very difficult to see how 15.1% can be regarded as good performance, and we should bear in mind that people have spent two years on the Work programme and that they have already been out of work for a year, usually, when they start on it. We are therefore talking about people who have had three years out of work, and it looks as though 85% of those who started on the Work programme do not have the sustained job outcome that is the purpose of being there. That looks pretty disappointing to me.
As my hon. Friend the Member for Blaenau Gwent (Nick Smith) rightly said, the policy has been particularly disappointing for young people. The youth contract has been a serious damp squib. Wage subsidies provided under that have had minimal take-up. I understand that Ministers have now given up on achieving the take-up that they initially forecast, and it is expected that spending on the youth contract will be much less than was originally thought. If the Minister could tell us her current expectations about that, it would be helpful.
It is true in Wales, as it is elsewhere, that the Work programme has been terrible for people who are out of work on health grounds and in receipt of employment and support allowance. Only 5% of them across the UK have secured a sustained job outcome after two years, so the failure rate has been 95%. If I am reading the Committee’s report correctly, at table 4, the proportion in Wales is less than 3%. Again, those people have spent two years on the Work programme, but it appears that less than 3% of them have a sustained job outcome. The Work programme has been very disappointing for jobseekers generally; for that particular group, it has been terrible. The report tells us that 2,630 former recipients of incapacity benefit were referred to the Work programme in its first two years. Of that 2,630, 10 secured a sustained job outcome.
We were told at the outset that the design of the Work programme would enable extra support for those facing the greatest barriers. In fact, many of those with the greatest barriers—such as people with health problems—have simply been parked by the Work programme and have not had any serious help to get back into work.
The report refers to alignment between programmes in Wales and in the whole UK. As my hon. Friend the Member for Llanelli (Nia Griffith) pointed out, the Welsh deputy Minister for Skills and Technology, Ken Skates, who I think is doing a fantastic job, made a statement on Tuesday about his discussions with the Minister. I hope that she will be able to tell us something from her perspective about the progress of those discussions.
Inspired by the success of the future jobs fund, which was in place across the UK before the election, the Welsh Assembly Government have established Jobs Growth Wales, which my hon. Friend the Member for Newport East (Jessica Morden) drew to our attention and the report mentioned. By contrast to the disappointment of the Work programme, my hon. Friend the Member for Swansea West (Geraint Davies) was absolutely right that Jobs Growth Wales has delivered for young people in Wales.
The shadow Secretary of State for Work and Pensions, my hon. Friend the Member for Leeds West (Rachel Reeves), and I visited Cardiff last month to find out more about how that success has been achieved. We visited a rapidly growing software company employing 150 people in Cardiff. It has taken on young people through Jobs Growth Wales. It told us that it took on 12 young people last year. The company is Israeli-owned, and it had quite a tough job making a pitch to the board in Israel that it should take on those 12 people. It was able to win that argument only because of the wage subsidy from Jobs Growth Wales, but having taken on those 12 young people, 11 have now become permanent employees. The 12th was not kept on, but that young person has gone on to get a job in another firm. We met four of the recruits at the company’s offices in Swansea. They all told us that they had found it extremely difficult to find a job. One told us they had applied for hundreds of jobs; it was Jobs Growth Wales that gave them a break.
As my hon. Friends have said, the performance figures from Jobs Growth Wales are very impressive. The most recent figures that I have seen suggest that of those who have completed the Jobs Growth Wales programme up to 10 April, 45% continued in employment after their six-month job subsidy ended with the same employer. Another 8% were able to get work with another employer and 26% went on to an apprenticeship. Most of the employers recruiting under Jobs Growth Wales are small and medium-sized enterprises. The programme has very strong support from the Federation of Small Businesses and, as my hon. Friend the Member for Swansea West said absolutely rightly, the lessons from that success should be applied right across the UK, and that is precisely what Labour’s compulsory jobs guarantee will do. We want to guarantee a choice of job offers to 18 to 24-year-olds who have been in receipt of jobseeker’s allowance for a year and—this is different from what is happening in Wales—to over 25-year-olds who have been in receipt of jobseeker’s allowance for two years. Every European Union member state, except for the UK, is now introducing a youth jobs guarantee. We should do so as well, and I very much commend what is being delivered in Wales.
The Select Committee was right to point out the extent of the disappointment in Wales about how the Work programme has done so far—less well than elsewhere, and it has been rather disappointing elsewhere, too. It has been at its worst in Wales. Jobs Growth Wales, by contrast, has established a much more encouraging record. In our view, the lessons from that need to be applied in a compulsory jobs guarantee in every part of the UK.
It is a pleasure to serve under your chairmanship, Mr Betts. I thank everyone who has taken part in the debate and the Chair of the Select Committee for forcing an issue, raising a point and ensuring that both Governments work together on an important issue. We all want to see more people in work, particularly people who have been long-term unemployed. What specific support do we give them? I think that it is key that we compare like with like. We are looking at people who have been long-term unemployed and the support that we are giving them. It is a fake comparison that is being made with Jobs Growth Wales, because that deals with people who are entitled to get the support from day one when they are claiming, not a set of people who have to have been long-term unemployed.
If we look at the journey of an individual who ends up on the Work programme, we see that they have been unemployed for a year, whereas 90% of people would have got a job or stopped claiming JSA within a year. What we are considering today is the 10% of people who are the most difficult to get into work and what tailored support we need to give them. A fake comparison is being made between the two. It is not correct, because what we are seeing, particularly with young people who have been on JSA, is that more than 90% would have got a job anyway. I think that not comparing the two is key. We are talking today about the long-term unemployed and how we get the extra support to them.
Quite correctly, it has been said today that what has happened in Wales has not been as good as what has been happening in the rest of the country. Why is that? What issues have been hampering the support that needs to go to the long-term unemployed there? That has been the difference between national schemes and devolved schemes. How do we get better alignment of those? What has Wales decided to prioritise that has not worked as well as what has been happening in the rest of the UK?
I am pleased to say—the Welsh Affairs Committee has to take great credit for this—that we are working together. The report was published in November, and I met Ken Skates in November and January. The DWP is working with the Welsh Government now. We straight away set up a working group and are taking that forward. In the letter that came to me from Ken Skates and in the statement that came out, he sets out the key points. He says straight away that there must be better alignment and better use of what is coming through the skills funding. How do we do that? I understand his concern that funding must not be duplicated, but how is it then that we manage to utilise the ESF funding so that there is no duplication and, as is the case in the UK, it can be used in the way intended?
Those are the key things that we are working on together now, and we want the same outcome. We have a team working on it. The key priorities are ensuring that Work programme participants can access apprenticeship opportunities, to ensure that we get the essential skills provision that is there and that we manage to support these long-term unemployed people. That is what we have been aiming at for a long time, and that is what they are now doing. A pilot scheme is in place to utilise what we are doing in the UK to ensure that it happens in Wales. In only a few months, we have come a significant way, and all credit has to go to Ken and his team for that.
When I look at the numbers for the long-term unemployed, I see that they are coming down. When we look at the job statistics across the UK and in Wales, we see that we have very good employment figures at the moment. We are at record highs for the number of people in employment. I do not think that we can run that down. It is happening nationally and also in Wales. Let us look at what is happening in Wales. Employment in Wales is up by 41,000 over the past year. Unemployment in Wales is down by 19,000 over the last year and down by 6,000 in the last quarter. The long-term claimant count in Wales is down by 2,600 in the last year, too. When I look at the figures for the various seats, I see that in Llanelli long-term unemployment is down by 13% in the past year. Long-term youth unemployment is down by 35%. When I look across to Newport East, I see that, again, the figures are down. That is what we are all aiming for; it is what we want to see.
Does the Minister accept that 85% of people on the Work programme are not getting into work?
We can look at it that way. We know that we are getting 20-odd per cent. into work. We can put either a negative slant on it, as the hon. Gentleman does, or a positive slant on it, as I would. These are people who are very long-term unemployed. Some of them could have been unemployed for 10 years. The journey that they are embarking on is massive. Some of the people are not measured on getting a job. It is about their journey to getting closer to getting a job, and what a journey some of the people I read about have gone on! They have had severe depression and anxiety and have not worked for 10 years. They have lost their confidence and self-esteem. Then I see that at the end of the day they have got a job. That is incredible not only for them, but for their families and communities. For some people, I am afraid to say, that journey will be longer. We hoped that it would be shorter, but what they have done in the two years is significant. That is why there is Help to Work afterwards, to say, “How can we help you even more?” We are starting to get to know these people now and know what their issues and concerns are. Do they need more numeracy skills; do they need more literacy skills; or is it about confidence and health issues? How do we deal with those and take people forward?
I see that time is tight and I want to talk about what we have specifically been doing in Wales and how we have got continuous improvement. We have set up a best practice group. What is working? How do we take that forward? How do we align things? How do we ensure that people are doing the best in their area? Let me mention some of the things. A Welsh provider, Rehab JobFit, has created an additional specialist fund of £160,000 to better support claimants with more complex needs, increasing the use of the specialist provision within its supply chain. It is also rolling out a programme of pre-employment training that will be helpful in supporting some of its hardest-to-help claimants in north Wales. Working Links has taken on new specialist consultants, who are working with employers to promote the benefits of taking on Work programme claimants. That has increased job opportunities and allowed the building of strong and meaningful relationships with employers in getting the right people into work. Yes, we are monitoring them very closely. Yes, we are saying, “What is working in other parts of the country? How can you do the same thing?” Fundamentally, what was hampering the Work programme in Wales was the inability to get on to the skills funding. What we are doing now is aligning things. Our DWP team are working with the Wales Office to understand what is additionality, how people there can do what the UK is doing and how it will not impinge on their funding. I think that that is key.
When we are talking about youth employment, I have to say that I cannot agree with what the right hon. Member for East Ham (Stephen Timms) said. We see that the claimant count for young unemployed people has gone down for 22 months in a row and that youth unemployment has gone down for seven consecutive months. When we see the figures, we see that his portrayal of them is incorrect, because now there are fewer young people unemployed than there were at the time of the general election. I hope that I have answered some of the points that were made. I will now give the floor to the Chair of the Select Committee, who has done such a tremendous job.
I can only say that I am delighted that there are lots more jobs out there at the moment. I see the evidence of that. Many more people are in work at the moment. Some people have been out of work for a long time and are very hard to place in jobs, but already we have managed to find work for 15% of them, and we will keep on going forward with the other 85%. I believe that the Minister will not give up on anyone. She will do her utmost to ensure that everyone can get a job in this country, no matter how challenging they may find it. I very much look forward to dealing with further aspects of this matter. The Welsh Affairs Committee will continue to monitor what is going on but looks forward to those results coming to fruition.
Question put and agreed to.