Bedroom Tax and Discretionary Housing Payments
On 7 May 2014 the Scottish Parliament heard the following statement on the Bedroom Tax and Discretionary Housing Payments.
“The next item of business is a statement by Nicola Sturgeon on the bedroom tax and discretionary housing payments. The Deputy First Minister will take questions at the end of her statement, so there should be no interventions or interruptions.
14:40
The Deputy First Minister and Cabinet Secretary for Infrastructure, Investment and Cities (Nicola Sturgeon): In the light of correspondence that I received from the United Kingdom Government on Friday, I wanted to take an early opportunity to update Parliament on the Scottish Government’s plans to mitigate fully the impacts of the bedroom tax on the 72,000 families across Scotland who are affected by it.
The Scottish Government has been consistent in our view that the only legal way to make regular and on-going payments directly to tenants to compensate them for the loss of housing benefit that has been suffered as a result of the bedroom tax is through discretionary housing payments that are administered by local authorities. We have also been clear that the cost of fully mitigating the bedroom tax would be up to £50 million a year.
As members are aware, councils will receive £15 million this year from the Department for Work and Pensions to spend on discretionary housing payments, which leaves a potential shortfall of £35 million in the funding that will be required to mitigate the bedroom tax fully. As members are also aware, John Swinney made that additional £35 million available in the Scottish Government’s budget for this year, with the express intention of fully mitigating the impact of that tax.
Some £20 million of that additional funding has already been allocated to councils. I can advise members that the distribution of that money among councils was agreed at the Convention of Scottish Local Authorities leaders meeting on 25 April. That agreement allows us to target the funding as much as possible according to need. I am happy to confirm that, as a result, 12 councils already have the funds that they need to mitigate fully the bedroom tax in their areas. The remaining 20 councils have been allocated funding up to the limit of the Westminster-imposed cap on how much each council is allowed to spend on discretionary housing payments. However, that still leaves them short of what they need to mitigate fully the bedroom tax.
The remaining £15 million that the Scottish Government has set aside is intended to make up that shortfall, but it cannot be provided to local authorities until the DHP cap is lifted. That is why, on 31 January, I wrote to the Secretary of State for Work and Pensions, Iain Duncan Smith, to ask him to lift the cap on DHPs. That move would cost the DWP absolutely nothing.
Since then, we have written on a further five occasions. I also raised the issue personally with the Deputy Prime Minister at the joint ministerial committee in London. I am grateful to the convener of the Welfare Reform Committee, who wrote to the DWP in similar terms, and to a number of organisations outside Parliament, including COSLA, that have made the same demand of the DWP.
It is fair to say that the delay in receiving a response from the UK Government has been deeply frustrating. Of course, while we have been pressing for an answer we have also been considering an alternative method of getting money to those who need it, but it has always been the case that DHPs are the best and most effective means of doing so. I was therefore pleased finally to receive a positive response from the Parliamentary Under-Secretary of State for Scotland, David Mundell, on Friday, in which he stated:
“I am aware that the Scottish Government has indicated that it would like to spend additional funds on DHPs in Scotland … I am writing to you today to offer to provide Scottish Ministers with a power to set the statutory cap in Scotland. I propose to do so using section 63 of the Scotland Act 1998.”
It is important to stress—as will be obvious from the quotation that I have just read out—that the UK Government has not agreed to lift the cap, but has agreed instead to transfer powers to the Scottish ministers to allow us to do so. I welcome that, but it means that the legal process to effect the transfer of power will have to be completed before the Scottish Government can lay an order to lift the cap. As members will appreciate, that two-stage process will take longer than would have been the case had the UK Government decided to lift the cap itself. It is therefore vital that we move to get the process under way and completed as soon as possible.
Section 63 of the Scotland Act 1998 provides an order-making power for the transfer of executive functions from UK ministers to the Scottish ministers. In this case, it is proposed to transfer to the Scottish Government executive responsibility for the exercise of the power that is contained in the Child Support, Pensions and Social Security Act 2000 to vary the DHP cap.
The procedure for making a section 63 order is set out in the Scotland Act 1998. First, the terms of a draft order require agreement between the Scottish and UK Governments. The order then requires to be laid before both Parliaments for agreement and, ultimately, it has to be considered and approved by the Privy Council. I have written to David Mundell accepting the UK Government’s offer to transfer the power and to say that my officials will work with UK Government officials on the detail of the order. I can also advise Parliament that I will meet David Mundell tomorrow to discuss the draft order and the timescales for agreeing the final terms for laying it before both Parliaments and for having it considered by the Privy Council.
I undertake to write to MSPs as soon as I can to provide an update on the likely timescales for each stage of that process, including—of course—the parliamentary scrutiny stage and, indeed, the timescale for completion of the process. When the section 63 order has taken effect, Scottish ministers will then be able to lay an order varying or lifting the cap on DHPs. We will ensure that the order allows utilisation of the entirety of the £50 million that is available. We will also ensure that the order is laid as quickly as possible.
Although there is, as I am sure members will appreciate, still much work to be done to ensure that the process is completed smoothly and quickly, it is important today to stress that local authorities should now plan on the basis that all losses of housing benefit that are incurred by social tenants because of the bedroom tax can be fully mitigated. As I said earlier, £35 million of the available funding has already been allocated and 12 councils already have sufficient funds to mitigate fully the bedroom tax in their areas; those that still have a shortfall can now plan on the basis that that shortfall will be met in full.
I will shortly respond to a letter from the president of COSLA and will give local authorities these reassurances in writing. I assure Parliament that we will start working with COSLA immediately to ensure that distribution of the remaining funds will get the money to where it is needed in order that the bedroom tax is fully mitigated in every local authority area in Scotland.
I want today to encourage local authorities to review their discretionary housing payment procedures to ensure that there are no unnecessary barriers to tenants applying for a DHP. The point about encouraging and enabling tenants to apply for DHPs is a very important one. The Scottish Government is able to mitigate the impact of the bedroom tax; unfortunately, however, we are not yet legally able to abolish it. That means that tenants are still legally responsible for the rent that is due as a result of the reduction in their housing benefit. It is important, therefore, to send this very clear message to social tenants today: If you are affected by the bedroom tax, help is available, but you must apply for this help. You must engage with your landlord and apply for a DHP as soon as possible to enable you to pay the shortfall in your rent, and you should do so even if you have been refused a DHP in the past.
Let me make it clear today that as a result of Scottish Government action, there will be no need for anyone to fall into rent arrears or to face eviction as a result of the bedroom tax. [Applause.] I hope that this statement has been helpful in setting out the steps that we now require to take to make good on our commitment to mitigate fully that iniquitous tax. I am proud that this Parliament has come together to protect the people who are affected by the bedroom tax, and I want to thank members in the chamber, including those on the Labour benches, who have worked with us to achieve that.
However, I will close with this reflection. There can surely be no better or stronger illustration of the need for this Parliament to have powers over welfare than the scandal of the bedroom tax. It simply cannot be right—it is not right—that a tax is imposed on Scotland against our will by a Westminster Government that we did not vote for, thereby forcing the Scottish Government and the Scottish Parliament to divert money from other devolved responsibilities in order to mitigate its impact, and then, to add insult to injury, for us to have to jump through legal hoops to be able to spend the money that we have set aside. That makes no sense whatsoever.
What would make sense is for this Parliament, rather than having to mitigate the bedroom tax, to instead have the power to ensure that we do not have a bedroom tax in the first place. With full powers over welfare and taxation, this Government and this Parliament will be able to make the right decisions for the people of Scotland on such vitally important matters. That will be a much better position for all of us.”
You can view the statement and the questions asked following this at http://www.scottish.parliament.uk/parliamentarybusiness/28862.aspx?r=9153&mode=html#iob_82573