HC Deb 23 January 1995 vol 253 cc8-10
12. Mr. Cohen

To ask the Secretary of State for Social Security what plans he has to place a cap on housing benefit for eligible tenants.

16. Mr. John Marshall

To ask the Secretary of State for Social Security if he will make a statement about spending on housing benefit.

Mr. Roger Evans

My right hon. Friend the Secretary of State announced measures to take effect from October 1995 in his uprating statement, which will limit housing benefit paid on private sector rents where they are above the average for the area.

Mr. Cohen

Is not Government policy on housing benefit a shambles, for which the Government look like making private tenants pay? The Government rely on the private sector for housing and have deregulated many private tenancies, but the Department of Social Security does not want to pick up the cost implications of that policy. If the Government are to change housing benefit, will they ensure that protection from eviction for tenants is included?

Mr. Evans

The hon. Gentleman's point is a gross exaggeration and, indeed, is simply untrue. To expect the British taxpayer to subsidise rents of several hundred pounds a week is simply unreasonable and would rightly cause public outrage. Even in the Greater London area, 95 per cent. of private sector rents are lower than £85 a week. The Government say that there must be some fair reciprocity between the burdens on taxpayers and the recipients. That is why there must be some cap based on the average rent for the area in which a person lives.

Mr. Marshall

Does my hon. Friend agree that housing benefit distorts the marketplace? Is he aware that, in my constituency, people may receive as much as £250 a week or £13,000 a year in benefits? Does not that cost taxpayers a lot of money and force up all rents in the private sector?

Mr. Evans

My hon. Friend is absolutely right. There is no doubt whatever that there is an incentive to distort the market. That is why housing benefit has doubled in cost since 1988 and will cost £10 billion in 1994–95. It is fair and reasonable that the rents that my hon. Friend mentioned should not be wholly subsidised by taxpayers when they are out of line with average rents for the area.

Mr. Frank Field

To what extent is the escalating housing benefit budget caused by landlords pushing up rents or making fraudulent claims?

Mr. Evans

The hon. Gentleman will appreciate that such an estimate is extremely difficult to make. On the first of his two causations, when taxpayers write an open blank cheque, which is the danger with the existing system, there is obviously an incentive for some people to take advantage of it. The policy has been successful in terms of stimulating the private rented sector, which had been in the doldrums since 1919, when the Labour party interfered with the free market in private rents, but there must be some control for the benefit of the taxpayer, which is why we are limiting benefit to the average rent for the area.

Mr. Congdon

Despite my hon. Friend's figures for average rents in London, does he agree that housing benefit has been used to subsidise rents to the tune of up to £350 week? Does he agree that taxpayers will welcome the decision to cap housing benefit as it will represent better value for taxpayers and ensure that they do not subsidise luxury rents?

Mr. Evans

My hon. Friend is right. The figures that he mentioned are generally believed to be far too high.

Ms Eagle

Will the Minister admit that that position has been caused by deregulation of the private rented sector, which his Government inaugurated in the first place? Private tenants are already being ripped off for below-standard accommodation in many instances. Instead of making them pay by possible eviction, why will not the Government regulate the private rented sector to save money for taxpayers, or, better still, have a proper housing policy so that we can house our people in affordable, decent homes?

Mr. Evans

The hon. Lady gives the game away if she really suggests that it is Labour party policy to re-impose some form of rent control in the private sector. [Interruption.] There is all the difference in the world between limiting a public subsidy and interfering with the free workings of the market. What the Government propose—

Mr. Battle

It is called subsidising landlords.

Mr. Evans

The elementary economic ignorance of Opposition Front-Bench spokesmen is palpable.