Iain Duncan Smith accuses the last Government of not building enough houses and letting the private rented market balloon on the back of above inflation housing benefit increases

By Jonathan Isaby

Yesterday saw a debate initiated by the Opposition on the Government's proposals to housing benefit.

It was a heated debate and Work and Pensions Secretary Iain Duncan Smith took the opportunity to expose Labour's failings in the area. He told the Commons:

"My Department pays for 40% of all rental housing in Britain - we pay 40% of the total bills - and is the biggest purchaser. What we do therefore has a massive effect on the marketplace. This is the point that Labour Members missed out on when they were in government. Any change they made had a direct effect on the marketplace. My simple point to the right hon. Member for Paisley and Renfrewshire South [Shadow DWP Secretary Douglas Alexander] is that the change in local housing allowance, as we can see from the graphs, fuelled an immediate increase - it was not just down to the recession, but down to two particular factors. In getting the calculations wrong about the median line and the capping, they ended up allowing LHA [Local Housing Allowance] to rocket to provide landlords with excess amounts of money for providing housing that would have cost less."

"We know that for two good reasons. First, if we compare those who remained on what was there before - it did not change for them because it was new people who came on to LHA - we find that the differential between where they are now and where the LHA rate is amounts to 10%. LHA growth is thus 10% above where we might have been had the change not been made... That was one factor that fuelled the problem because it allowed landlords to push up to the 50% point, which is exactly what they did.

"The second point is that there are many things we can do. We now know that, according to the Office for National Statistics, the private marketplace in housing - Labour Members are completely wrong about this - fell by around 5% last year. At the same time, LHA rates, which the previous Government had set and left to us, had risen by 3%. There is thus a 7% gap with what is going on in the marketplace. What we want to do, by working with councils, is to drive those rents back down. The purpose of these changes is to give a real impetus to getting the rents down to make affordable housing more available in some areas."

He went on to expose Labour's inability to set out a viable alternative to the Government's proposals.

"There was nothing in the spending plans and Labour Members never had the courage to tell the general public what they were going to do... They fought an election on the false premise that somehow they were not going to have to make these changes and they were not going to be severe. Perhaps the right hon. Gentleman will now tell me by exactly how much they were planning to cut the housing budget; would he like me to give way so he can tell me that? He does not rise to his feet because he cannot argue that case; he is completely wrong. Labour says one thing to the public and something else in its private discussions.

"I want to make one other important point. I recently appeared before the Select Committee and an Opposition Member put it to me that one reason the local housing allowance figures had risen so much was that there was not enough social housing. I agree, but who do we have to blame for that over the past 10 years?"

"We must remember that the previous Government left us with a house building record that is the lowest since the early 1920s. Affordable housing supply as a whole was down by more than a third under the last Government. On average, 21,800 social rented homes were built each year, even lower than the figure - which they used to argue was too low - achieved by the previous Conservative Government, which was 39,000 a year.

"The reality is that Labour Members set a double whammy for themselves. They introduced an LHA which then rose because they did not build enough houses, and they allowed the whole private rented market to balloon, all because of their failure during their period in government. I hope they will apologise for that one day, but I suspect not."