Income-related Benefits (Subsidy to Authorities) (Temporary Accommodation) Amendment Order 2010
Lord Knight of Weymouth
That this House takes note of the Income-related Benefits (Subsidy to Authorities) (Temporary Accommodation) Amendment Order 2010 (SI 2010/2509).
Lord Knight of Weymouth
My Lords, I am pleased to see the Minister, the noble Lord, Lord Freud, in his place. Such is the generosity—indeed, the philanthropic nature—of the noble Lord, Lord Taylor of Holbeach, particularly with his time this week, that he has become a bit of a fixture on the Front Bench. I therefore thought that he may be replying to the Motion—perhaps he is—but we will wait and see.
The order builds on a scheme that my party introduced this year when in government to control the cost of housing benefit awarded to claimants living in temporary accommodation. The current scheme applies only to claimants in temporary accommodation that is leased or licensed by a local authority from a private landlord. The order that we are debating extends the scheme to accommodation where the landlord is a registered housing association. On that very narrow basis, I say at the outset that it is reasonable.
This Take Note Debate has been tabled better to understand the ever changing environment of housing benefit in which this order will operate from April next year. In particular, I am keen to understand how it relates to the statutory instruments that were published this week and reported on by the Social Security Advisory Committee: the Housing Benefit (Amendment) Regulations 2010 and the Rent Officers (Housing Benefit Functions) Amendment Order 2010. Like the order that we are debating today, they limit the amount of housing benefit that can be awarded under the local housing allowance arrangements from April next year by removing the five-bedroom local housing allowance rate so that the maximum level is for a four-bedroom house; by introducing absolute caps so that local housing allowance weekly rates cannot exceed £250 for a one-bedroom property, £290 for a two-bedroom property, £340 for a three-bedroom property and £400 for a four-bedroom property; by removing the £15 weekly housing benefit excess that some customers can receive under the local housing allowance arrangements; and by setting the local housing allowance rates at the 30th percentile of rents in each broad rental market area rather than the median.
These orders are extremely controversial, in stark contrast to the order that we are debating now. However, it is difficult to scrutinise today’s order properly without understanding the effect of these two later ones because, in essence, if the effect of the other housing benefit changes is as bad as some people fear, they will increase the pressure on temporary accommodation. This, in turn, is important, given what the Explanatory Memorandum to today’s order says about the consultation response. Paragraph 8.2 of the Explanatory Memorandum states:
“Concern was generally raised that local authorities would be required to find alternative accommodation for a number of households in more expensive areas or in larger properties”.
It goes on to say that,
“the extent to which private landlords will be willing to renegotiate lease payments downwards, thereby sustaining existing tenancies, is not clear at this stage. The National Housing Federation Practitioners Group estimated that up to a quarter of its members’ stock could be at risk”.
I note that at paragraph 7.4 of the Explanatory Memorandum, the Government say that fixing the level of subsidy to March 2013 will,
“help maintain the supply and quality of temporary accommodation”.
On that basis it is clear that the Government are also concerned about the supply of temporary accommodation. Therefore, I ask the Minister what the Government's own assessment of the effect of these changes is on the supply of temporary accommodation. Can he then tell us what additional demand he anticipates from the other changes to housing benefit that are being implemented through the other orders tabled this week? In doing so, he may also want to reflect on what the Social Security Advisory Committee said in its report on the changes. The document states at page 4:
“The Committee’s report recommends that the Government should not go ahead with the package of amendments proposed. The Committee raised a number of concerns about the scale and impact of the changes, and the serious effect this would have on customers claiming Housing Benefit who are living in the private rented sector, particularly those claiming according to Local Housing Allowance rules”.
On the same page, the document states:
“The Committee challenged the case for change that was put forward by the Department for Work and Pensions. They felt it was contradictory to suggest that Housing Benefit reform is needed to ensure the housing choices of benefit recipients are geared to a similar level that people in work are likely to achieve, as Housing Benefit is also available to people in work. In addition, the Committee found no evidence to suggest that the housing choices made by Housing Benefit customers are excessive, noting research which suggests that the Local Housing Allowance arrangements are not unduly favourable compared to low income working households”.
The document continues:
“The Committee commented on the Government’s increase in funding for Discretionary Housing Payments which they note represents around 4% of the total cash losses that will result from these measures. They believe this increase will be insufficient to allow local authorities to provide adequate support, even for vulnerable customers, to meet their rent or find suitable accommodation”.
I shall talk about vulnerable customers later.
Finally, the report states:
“The Committee concludes that the Housing Benefit measures represent a high risk approach to managing the cost of Local Housing Allowance cases”;
and states on page 26:
“Apart from the potential financial hardship, the human costs, the child poverty and other wider negative impacts of these proposed changes, we also see them as being out of step with the broader thrust of policies to incentivise work and to make work pay”.
The Minister may also want to reflect on what Shelter said this week. It stated:
“But this will not change the fact that when these changes will come into force, 134,000 households will be uprooted from their homes. It is extremely disappointing that the government has ignored the advice of both its own advisory committee and voices across the housing sector in ploughing ahead with these damaging proposals”.
The uprooting of 134,000 households means a massive new pressure on temporary accommodation. Will the changes in this order help or hinder in meeting those pressures?
Given that the Government’s own impact assessment on the high-level impact of the local housing allowance measures shows a staggering 936,960 household losers from these changes and that the average loss per household will be £12 per week, does the Minister agree that the Shelter estimate is probably quite cautious at 134,000 households? What is his analysis of the geography of this misery? The University of Cambridge study commissioned by Shelter shows a halving of the proportion of affordable neighbourhoods if these changes are implemented. This study suggests that there will be no affordable neighbourhoods in the City of London or Kensington and Chelsea, and less than 10 per cent in Hammersmith and Fulham, Islington and here in Westminster. It looks as though that will result in large numbers needing to use the time to readjust of up to nine months that is now generously offered by the Government, with large numbers needing to move out of the middle of the city to more suburban boroughs. Do the Government share this analysis, and is the Minister confident that this displacement will happen smoothly? Or should these authorities be trying urgently to increase the supply of temporary accommodation to meet their statutory responsibilities?
Does the Minister have any confidence that this temporary accommodation will be close to the schools for the children who are affected? Has he seen the article in today's Financial Times, which reports a shortage of 68,000 school places already, half of which are in London? The Government’s impact assessment on their housing benefit changes states:
“Children who experience disruption to their schooling, particularly in the run up to examinations may do less well than pupils who are otherwise similar”.
Is it not the case that unless the Minister is confident that he has enough supply of accommodation to avoid these effects, these poorest children will suffer this damage to their life chances? What is his estimate of the extra cost to families of children travelling long distances to school if they are from those 134,000 displaced households—if Shelter’s figures are correct?
My final question is on the impact on those with disabilities. The Government themselves state that some individuals may have to move out of the local authority area. They will be forced out of homes that have been adapted to meet their needs. Is this group not the most likely to be in need of temporary accommodation because of the need to wait for housing from the limited supply of stock that meets their individual needs to become available? Does the Minister truly have confidence about the supply of temporary accommodation that has the necessary adaptation for these vulnerable people?
I have raised a number of important questions. I know that some of this is complicated as we start to try to understand the consequences of the Government's changes to housing benefit, of which this order is an integral part. I look forward to some answers. I beg to move.
Lord Best
My Lords, I am grateful to the noble Lord, Lord Knight, for allowing us a chance to review some of these questions. Perhaps the position can be most simply expressed by recognising that the intention is to reduce the housing benefit bill by some £2.25 billion per annum by the end of this Parliament. That is £2.25 billion a year that will not be paid through housing benefit to landlords. There are only two parties from whom this money can come; one is the landlord by accepting a lower rent, and the other is the tenants by finding the balance from their own resources, including other benefits—since most are on benefits of different sorts, or pensions. Which of these two parties is more likely to take this very substantial £2-and-a-bit billion hit?
The first question is, I suppose, whether people can move to a different place where they can find accommodation for which the rent will be covered in full. The noble Lord, Lord Knight, looked at the numbers that may be involved, and it does not seem likely that if people move from central London they will find vacant properties in cheap areas on the scale that would be required. They are much more likely to have to stay put and face the eviction that may follow if they cannot pay their rent and all the hassle and trouble that that brings simply because there will not be places available in other areas. There are also social and welfare costs for the boroughs into which any large-scale movement of people would go. There are questions about school places and the other facilities that people will need and, if these are the poorest boroughs, the local authorities concerned are the least capable of finding the social and welfare resources to help those people.
Will landlords reduce their rents? Some landlords will reduce rents simply because the market served by local housing allowance claimants is so large that in some areas there will be nowhere else to go. These are areas with a high proportion of people in receipt of local housing allowances. They are areas of the lowest demand and there may be no work for people who move there. However, in great tracts of the country, landlords are not going to reduce their rents. I chair the Property Ombudsman service, which managing agents of private landlords sign up to to handle their complaints, and I have been talking with those agents about how they are approaching this issue. Their advice to their landlords will increasingly be not to let to those on benefit as they will not be able to pay their rent. Quite a few landlords will already not let to people on benefit, and I think it is quite likely that, as agents are telling me, more landlords will not only say that they will not reduce the rent, but that in future they will not have people on local housing allowance in their properties because they suspect that they will get into arrears and difficulties and that it is not worth the hassle. There are plenty of other people to whom those homes can be let, so when a shorthold tenancy expires, the next people will not be on benefit. The outcome will be a reduction in the amount of letting to those on local housing allowance because of the hassles that people are expecting.
This morning, I talked to the person who manages the rent guarantee scheme for a rather smart outer London borough. The local authority has produced a very good scheme that gives landlords a guarantee of the rent, provided they take people on housing benefit. Landlords have resisted taking people on housing benefit in many cases because rent is paid on a four-weekly basis instead of a monthly basis, because arrears may accrue or because the local authority’s administration may mean delays. In order to overcome this reluctance, this local authority and others elsewhere have a rent guarantee scheme so that if the landlord takes these people, the rent is guaranteed. Unfortunately, this officer working in the outer London borough tells me that landlords are already saying that although the borough will guarantee the rent, they will not carry on using the scheme because too many hassles and hazards have been introduced by the prospect of housing benefit cuts. This means that this unfortunate officer in that outer London borough is not able to house the people who he is mandated to look after, because the private sector will turn its back on them wherever it can. I know that in some areas it cannot, where the market is so weighted in favour of those on benefit and where there will have to be rent reductions. The trouble is that it may be found that those rent reductions are taken out on the tenant because the landlord who gets less rent in the lowest areas, where property quality is often lowest, may not put back much into their investment if they are getting a lower income from it. The deterioration of those properties may result from that.
Lord German
My Lords, I am relatively new to this House; it has been five months now. I mistakenly thought that when a debate is called on a particular order, we debated that order and that if noble Lords wanted to debate another order, they would put a Motion down about it. I was obviously mistaken as it seems to be the way of this House that if you can find one word in the title of the order, you work on that, so I may regard it as a fairly open season. If somebody can explain that method and the way that this House works, I would be pleased to hear it.
It seems to me that we have an order before us which has nothing to do with most of the statements made by the noble Lord, Lord Knight. I understand both the concerns that he wishes to raise and that he wants to talk about the other orders. I wonder why the Motion is therefore not about another order but, be that as it may, I wish to raise one question and one issue about this order and, since it is open season, I would like to make about three or four remarks about the order to which the noble Lord, Lord Knight, has referred.
The first question is about this order. Quite clearly, the burden of applying a new cap on temporary accommodation owned by registered social landlords is going to mean a new burden for them. Social landlords may or may not have to readjust their own rental levels with the people from whom they are actually renting the accommodation in the first place. Has an impact assessment been done of that and do we know whether much work is to be done in that area? If so, how do the Government propose to recompense registered social landlords for the extra work that they have to do? Just as, in its system, if local government is having to do extra work one would expect the extra burdens upon it to be recompensed with some funding, is there an extra burden on registered social landlords as a result of this order and, if there is, how are the Government going to recompense them?
On the other order—to which the noble Lords, Lord Knight and Lord Best, both addressed their remarks, which was perfectly reasonable—I have a couple of remarks and questions about issues that need to be raised. First, the noble Lord, Lord Knight, referred to the Social Security Advisory Committee report: but was it not the case, as I believe, that that report was written in advance of the orders to which he referred being laid? Can the Minister tell us whether they have taken account of the views of the SSAC in the orders that were laid, in which case there is another debate to be had that might be overtaken by the events to which the noble Lord, Lord Knight, referred?
Secondly, is it not a fact that we refer to movement in the private rented sector as being something which, one almost gets the impression, is unusual? However, do the figures not show that 40 per cent of tenants in the private rented sector move within a year? There are reasons for that happening and there is evidence of it. Do they not also show that 70 per cent—a huge number—of all tenants in the private sector move within three years? Therefore, mobility in the private rented sector is not unusual—it happens—and I do not necessarily believe that we should be worried about it if it already happens and is already a feature of that sector.
My second point of concern is that the housing benefit changes are often seen through the prism of London. People understand that there is a particular problem in London, which I admit there is, but it is often viewed as representing what is happening in the whole country. There are many areas in this country where the cap will not impact in the way that it will in London. We need to be careful that we do not see the nature of all change through the prism of London alone. There are specific circumstances in London that need to be adjusted and taken into account, and undoubtedly that is a debate to be moved forward.
The fundamental question, to which the noble Lord, Lord Best, referred, concerns the partnership between those who pay the rent and those who receive it. The question is how those who receive the rent can be incentivised to reduce the amount they charge. That is fundamental because, although an equation has only two sides to it, this one has a third, which is the housing stock and the number of houses that are available for social housing. However, I think that that, too, is the subject of another debate. In the equation between those who pay the rent and those who receive it, how is it intended that landlords be incentivised to move to the new levels that the Government will be providing? Perhaps in his reply the Minister can outline some of the ways in which that might happen. If it does happen, it might take away some of the evidence from those who say that landlords will not alter and will not move.
Lord McKenzie of Luton
My Lords, given the hour and the potentially challenging journeys that some of us will have in getting home tonight, I intend to speak only briefly, especially as I have an invite this evening to Luton’s Best. It is an award ceremony for community excellence, which shows that we were ahead of the game before David Cameron thought of the big society.
Luton has a direct relevance to this debate—particularly to the contribution of the noble Lord, Lord Best—because, taking all these housing benefit changes in aggregate, Luton is being affected at the moment. I am told that there is block-booking of bed and breakfast accommodation in Luton by London boroughs in anticipation of what all these changes will mean, and that has ramifications not only in relation to rent levels locally but in relation to the whole range of services provided by, for example, the local authority. Therefore, I say to the noble Lord, Lord German, that even the cap on its own has a spillover effect on other boroughs. Of course, the cap may be a particular issue for London but the other range of issues—the 30th percentile and the CPI—could also in due course have profound effects right across the country.
I also say to the noble Lord, Lord German, that he was a little harsh on my noble friend Lord Knight, who I thought gave a brilliant speech. He was dealing with the context in which this order has to be applied, and it is affected very profoundly by the new environment in which we find ourselves. This order follows on from one that came into effect in April, introduced by our Government. It related, as we have heard, to changing the basis on which subsidy was paid to local authorities from what was called the threshold and cap system, from which local authorities used to generate good revenues by charging at one level but paying rents at a different level. I have no doubt that those surplus revenues were put to good use, but it is right that that was changed. Moreover, as my noble friend said, the extension of the changed subsidy arrangements to housing association leasing systems is in principle a sensible thing to do.
The Explanatory Note for the order states that,
“some other leased accommodation not currently affected”,
is to be included. I hope that the Minister will be able to say what is encompassed within that. It would also be good to know what the implications of these changes to the subsidy system will mean to the resources of RSLs. I do not think that a detailed impact assessment has been produced, but understanding the impact would be helpful.
We are considering these changes in a substantially changed environment so far as housing benefit is concerned, but I am sure that we will have an opportunity to debate that not only today but on numerous occasions to come. We are dealing with a situation where actual rents are paid by local authorities and are then reimbursed through the subsidy system. I was interested in what the noble Lord, Lord Best, said about the impact of all these housing benefit changes on rent levels. He asked whether they would force rents down in some circumstances or have impacts in other ways. One of the changes to be introduced under the housing benefit changes will be the switch in 2013 to uprate local housing allowances by reference to the consumer prices index rather than, as now, by reference to actual rent movements. That inevitably means that there will be a widening gap between actual rents and local housing allowance levels. If the arrangements proposed in the order are to continue at that time, it means that local authorities may be at risk of having to bear the increased shortfall. The noble Lord, Lord German, asked whether these increased burdens are going to be reimbursed by the Government, which is a highly relevant question. I thought that, so far as local government is concerned, the Government had signed up to fund any increased burdens, so I shall be interested to hear from the Minister on that point.
This is not only a question of the eventual switch to the CPI because the switch to the 30th percentile will lower the housing allowance on which the subsidy is to be paid, even though we are dealing with a situation where it is actual rents that are being disbursed by housing associations or councils. This is yet another example of the Government placing on local authorities the responsibility to deal with what are effectively cuts in the system. In a sense, local authorities are the third party in addition to the two already identified by the noble Lord, Lord Best.
I have one further point. The package of housing benefit cuts and reduced investment in social housing along with cutbacks in support for mortgage interest will inevitably lead to increased homelessness. There is no other conclusion that one could possibly reach. That will lead to greater recourse to temporary and bed and breakfast accommodation, and therefore wider applications of the order before us, along with an increasing share of the costs imposed on local authorities. I want to ask a question on one particular point. One of the recommendations made in the SSAC report was to ensure that definitions of,
“‘intentionally homeless’, and associated guidance, is revised so as to ensure the position of households that fall into arrears because of changes to housing benefit entitlements are not excluded from the scope of the homeless provisions”.
I have not had a chance to peruse this in great depth and thus get behind the recommendation, but if there is a risk of people not being able to continue with their current tenancy because the level of their housing benefit puts it beyond their financial means, one would expect them to fall squarely within the definition of those who are homeless and have to be supported by local authorities.
I shall close with those brief comments, but this is just the start of a long journey of debate we need to have around the whole range of housing benefit regulation changes which I believe are deeply damaging and very misguided.
Lord Taylor of Holbeach
My Lords, I thank the noble Lord, Lord Knight, for asking us to take note. I had to check up on what he was asking us to take note of. I looked at the order of business for the day and discovered that it was the temporary accommodation housing allowance, but I understand that he wants a debate on housing allowances and the Government’s housing policy in general. Fortunately, my noble friend the Minister for Welfare Reform is sitting at my right hand. I know that he is looking forward to engaging in a broader debate with the noble Lord and other noble Lords who have participated in this debate. As was rightly pointed out, this is an important policy area, in which there has been a considerable policy change, and I think that noble Lords will want to be reassured about that.
I think that it would be reasonable if I were to start by addressing the subject on which I swotted up. I am used to having to have a certain amount of agility on my feet, but it is easier to be agile about some things than others. I shall begin by answering a few questions. My noble friend Lord German asked about the SSAC report. We have sought in the new orders to respond to that report and the issues that it raises. There will be a read-across from the report. That will not necessarily satisfy every point, but we have sought to respond. I confirm what he said about mobility issues. It is important to reflect on the fact that, in many cases, mobility is a built-in feature of the housing market. He asked how landlords might be incentivised to adapt to the new market conditions. One of the ways in which that can be done is through direct payments reflecting reduced levels.
The noble Lord, Lord McKenzie of Luton, asked what other leased accommodation is included. Leased accommodation in Wales and Scotland is not covered by the current scheme, but it will be included. This is accommodation that is leased for more than 10 years—this is not applicable for English local authorities—within the housing revenue account.
The noble Lord, Lord Knight, asked about the impact of LHA on homelessness; the noble Lord, Lord Best, was concerned about that, too. It is too soon to know how landlords will react to changes affecting local housing allowance rates for people in the private rented sector. However, we expect that many landlords will reduce their rents as a result of the LHA measures. There may be some increase in the number of tenants who need to find alternative accommodation, but that does not necessarily mean that they will experience—I am sorry, but I cannot find what I was looking for. I think that there is a joke about this: “Now you’re on your own”. I shall stop at that point.
The noble Lord, Lord Knight, asked about the impact on children’s schooling. We have discussed the possible impacts of the housing benefit changes with the Department for Education and the devolved Administrations. It is not possible to estimate how many households with children would move or where they would move to. Movement from one authority area to another may be more common in London, but schools in London have surpluses. Data show that 75 per cent of primary schools and 65 per cent of secondary schools in London have surplus places available. A transitional protection period will give parents more time to plan a school move if that is necessary.
The noble Lord, Lord Knight, suggested that discretionary housing payments are insufficient. We have trebled the amount available for DHPs; in addition, we have announced an extra £50 million funding to help local authorities to implement this change. So we are not asking local authorities to absorb all this on their own.
The noble Lord, Lord Knight, asked how LHA reform affected TA. Will customers in temporary accommodation be able to continue meeting their rent when the changes to LHA come into force? The vast majority of households living in temporary or short-term accommodation have as their immediate landlord a registered housing association or local authority. They will not, therefore, be affected by wider changes to housing benefit affecting those in the mainstream private sector.
If I have not covered all the questions that he raised, I shall write to the noble Lord. Indeed, my noble friend is looking forward to engaging on the whole issue of housing allowances at a debate in future.
As for the reforms themselves, this latest subsidy reform will help to control further the level of housing benefit expenditure for people placed into temporary accommodation by their local authority. It will extend the reach of a new subsidy scheme that was introduced in April this year. The intention of these further changes is to create a more level playing field to ensure that funding streams are equalised among different providers of temporary accommodation. First, I would like to acknowledge that the new subsidy scheme for people in temporary accommodation was developed and introduced under the previous Administration. It already appears to be an effective and well planned reform. Given that, I am sure that the noble Lord, Lord Knight, will wish to show his support for the latest set of changes, which continue from where his Administration left off.
Local authorities use various types of property to provide households in need with temporary accommodation, including their own stock, hostels and bed and breakfast hotels. However, most temporary accommodation is secured from the private rented sector, through some form of lease or licensing agreement with a private landlord. The order that came into force in April this year affected housing benefit subsidy for cases in private sector leased accommodation, but only those where the local authority is the claimant’s landlord. The changes due to come into force from April 2011, which we are discussing today, will extend the new subsidy rules to cases in leased accommodation where a registered housing association is the claimant’s landlord. These are known as Housing Association Leasing schemes, or HALs.
The main purpose of introducing the new subsidy scheme in temporary accommodation was to encourage more local authorities to charge reasonable rents. This does appear to be happening in many cases. Basically, the old scheme allowed too much subsidy to be paid on some properties because it took no account of their actual size or location. Housing benefit expenditure had increased in this area from around £250 million in 2002-03 to more than £640 million in 2007-08. The rate of increase in costs was unsustainable, and was disproportionate to increases in the case load, which peaked in early 2005 at around 110,000 households in Great Britain.
I should stress that, since then, local authorities have done a lot of good work on homelessness prevention that has helped to bring those numbers down considerably, but, although the temporary accommodation case load has been coming down, expenditure has been going up. In part, that was due to local authorities in London charging inflated rent levels. Those high rents—averaging £300 to £400 plus per week, even on small one or two-bedroom properties in parts of London—could be met by housing benefit, but such rent levels were very likely to deter people from working. The level of worklessness among households in temporary accommodation is high. Independent research published in 2008 suggests that the level is around 64 per cent but is possibly higher in some parts.
In addition, families living in temporary accommodation in London, where most of the case load is concentrated, often remain in such accommodation for lengthy periods. Despite its name, the average period spent in “temporary accommodation” in London is three years. It is clear that unnecessarily high rents, which often attract 100 per cent subsidy, are not good either for households living in temporary accommodation or for the taxpayer.
The new subsidy scheme that came into force in April this year, which is based on local housing allowance rates, ensures that the weekly amount of subsidy payable for these cases is based on market rates in the private rented sector. In other words, the amount of subsidy now relates to the size and location of the property used by the local authority. There are three elements to the subsidy formula: the rental element, which reflects the cost of leasing a property; an amount towards the management costs—the management costs element—involved in running these schemes; and, lastly, two upper cap limits, of £500 for properties in central and inner parts of London and £375 for properties located elsewhere.
For the rental element, we take the local housing allowance rate based on the size and location of the property and remove 10 per cent. The 10 per cent is a notional amount, which is taken off to reflect management costs that have already been factored into market rents. We then add back into the formula one of two separate amounts for the management costs of running private sector leasing schemes, such as maintenance and void costs. The amounts are £40 a week for authorities in London and £60 a week for other authorities. The lower amount for London authorities reflects their ability to achieve economies of scale. The actual amount of subsidy payable is the lowest of: the LHA-formula amount; the customer’s actual HB entitlement, if it is less than that; and the appropriate upper cap limit.
Returning to the rental element, I should advise that the LHA rates used in the formula for this financial year are those that were published in January 2010. Using a static rate provides more funding certainty for local authorities throughout the year. From April next year, the subsidy amounts will be based on the January 2011 LHA rates, which will still be set using the median of rents. Therefore, it is evident that the LHA changes announced in the emergency Budget for private rented sector claimants are entirely separate from the subsidy arrangements for people in temporary accommodation.
One of the key issues surrounding the new subsidy scheme’s introduction this year was whether to include the housing association leasing schemes—HAL schemes—that I mentioned earlier. At the time, there was no evidence of inflated rent levels among those schemes and, in most cases, rents still appear to be staggered appropriately to reflect different property sizes. However, the risk of having different subsidy rates for housing association and local authority-run leased accommodation is that it could lead authorities to shift from one type of scheme to another, depending upon which seems more generous. There would also be greater potential for private landlords to draw authorities and housing associations into procurement bidding contests, which would increase expenditure.
This latest amendment to the subsidy order—the Income-related Benefits (Subsidy to Authorities) (Temporary Accommodation) Amendment Order 2010 (SI 2010/2509), which is the subject of this debate—will extend the new subsidy scheme to include cases in housing association leased accommodation, as well as close off some other potential loopholes. It will ensure that there is no benefit for local authorities in switching between different schemes based on whichever attracts the most subsidy. It will create a level playing field for providers, who often compete to procure properties in similar locations.
Lord Knight of Weymouth
My Lords, I am most grateful to all noble Lords who have taken part in what has been a helpful debate. I am also grateful for the support that I have had from Shelter and the Chartered Institute of Housing. I am mindful of the challenging journey to Luton that awaits my noble friend Lord McKenzie and I wish him success in it, so I shall be brief. I simply say to the noble Lord, Lord German, and others who were worried that I might have strayed slightly from the job in hand, that I had a call from the office of the noble Lord, Lord Freud, to ask what my interest was. I said that I was interested more in the context than in the detail of the order, so I hope that what I have said today was no great surprise. We shall come back to the substance of these issues, on which I look forward to debate with noble Lord, Lord Freud. I am grateful to the noble Lord, Lord Taylor of Holbeach, for being able after a very long and arduous week to give us a very useful explanation of the order.