Benefit Cap (Housing Benefit) Regulations 2012

Tuesday 6th November 2012 Grand Committee

Considered in Grand Committee

15:30

Moved By

[Lord Freud]

That the Grand Committee do report to the House that it has considered the Benefit Cap (Housing Benefit) Regulations 2012.

Relevant documents: 7th Report from the Joint Committee on Statutory Instruments, 10th Report from the Secondary Legislation Scrutiny Committee.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, these regulations will allow for the introduction of a benefit cap, as set out in Sections 96 and 97 of the Welfare Reform Act 2012. From October 2013, the benefit cap will form a key part of our plans for universal credit and we will shortly be bringing regulations to the House to support the introduction of this. However, we do not believe that it is right to wait until all existing claimants have migrated to universal credit before taking action. We are, therefore, bringing these regulations forward now, which will enable us to introduce the benefit cap from April 2013 by working with local authorities to reduce the amount of housing benefit in payment. The regulations are regarded as being compatible with rights under the European Convention on Human Rights.

The regulations set out the detail of the cap, including the level that it will be set at; how we will calculate a household’s overall entitlement to welfare benefits for the purpose of applying the cap; what benefits will be taken into account; how any reduction will be applied; exemptions from the cap; the relationship between the cap and benefit sanctions and other deductions; and rules on decision-making and appeals.

The level of the benefit cap will be set with reference to average earnings for working families. On its introduction in 2013, the cap will be set at £500 per week for couples and single parent households and £350 per week for single adult households. For couples and lone parents, that is a weekly income from benefits equivalent to earnings of £26,000 a year net or £35,000 gross. Exempting those entitled to working tax credit and setting the level on an earnings basis ensures that we incentivise work even further by not including in-work benefits in the cap.

This policy was debated at length during the passage of the Welfare Reform Act. On top of that, many noble Lords came to the briefing session that I ran for MPs and Peers before the Summer Recess. I am grateful for their input. Noble Lords will by now be well aware of the Government’s reasons for introducing a benefit cap. It is about incentivising work and promoting fairness. As it is currently designed, we know that we pay some claimants more money when they are out of work than they could reasonably expect to earn from working full time, making it hard for people to see that they are better off in work. We are trying to tackle this with the introduction of universal credit and, alongside it, the benefit cap. The core principle is that the state should not pay more in benefits than the average family earns from work.

We have said from the start that there are certain groups to whom it would not be appropriate to apply the cap. We are exempting households which are in receipt of disability living allowance, personal independence payment, attendance allowance and the support component of employment and support allowance, as well as households entitled to working tax credit and war widows and war widowers. Since the debate on the Welfare Reform Bill, the Government have announced some additional easements: namely, those relating to industrial injuries benefits and war disablement pensions and their equivalents under the Armed Forces Compensation Scheme.

We do not want to penalise those who have recently found themselves out of work and are doing the right thing to find new employment. Therefore, we have put in place a 39-week grace period for those who have been in work for the 12 months previous to losing their job. This will allow people time to find alternative employment or consider alternative options in order to avoid the cap. Following the point raised very helpfully by the noble Lord, Lord McKenzie, during the Welfare Reform Bill debates, we have made sure that this grace period will run from whenever a person’s job comes to an end, whether or not the job finished before or after the introduction of the cap. We have consulted with stakeholders and the Social Security Advisory Committee, which considered the regulations and subsequently consulted on the impact of the cap. This has informed our plans for evaluation. We have already announced that we will publish a review after the first year of operation.

It was inevitable that our proposal for a cap would raise concerns about how it would be delivered and the impacts it might have. Many of the concerns that have arisen around the cap are based on an assumption that people will not change their circumstances. We do not believe that this is right, although sometimes people will need help and encouragement to make these changes. In the run-up to April 2013 we are working with claimants who may be affected by the cap to do exactly that.

Since May this year, those households which may be affected by the cap have been offered support from Jobcentre Plus. To date we have written to over 85,000 claimants potentially affected by the cap. We have followed this up with over 150,000 phone calls to make sure that claimants understand what the benefit cap means for them and to offer them the opportunity to work with Jobcentre Plus for employment support or to speak to their local authority for housing advice. We are also engaging across government and with local authorities to ensure that households are given the assistance they need to avoid the cap or mitigate its impact.

This Government firmly believe that those in the local area are in the best position to make decisions which impact people in their locality. That is why we are providing up to an additional £75 million for discretionary housing payments in 2013-14 and up to a further £45 million in 2014-15. This will be divided among local areas based on which has the greatest need. It will be used by local authorities to support those claimants affected by the benefit cap who, as a result of a number of complex challenges, cannot immediately move into work or more affordable accommodation, providing support to those who need it most, such as those fleeing domestic violence, and to prevent homelessness.

Finally, the Government firmly believe that there has to be a limit on the overall levels of benefit it is appropriate for the state to provide to those who are not working. The benefit cap aims to encourage long-term positive behavioural effects through changed attitudes to welfare, responsible life choices and strong work incentives. I commend these regulations to the Committee.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for the way in which he introduced these regulations. They will inflict profound hardship on many households—according to the department’s own impact assessment, nearly 60,000 households, including 80,000 adults and 190,000 children. Next year the average reduction in benefit is estimated to be some £91 a week. Our opposition to these regulations should be clear from consideration which took place just this morning in another place. It is clear, and has been since our debates on the Welfare Reform Bill, that a one-size cap never fits all—we believe that people should be better off in work than on benefit, but these regulations are flawed and likely, in our view, to increase homelessness with a likelihood also of the cap costing more than it would save.

Having said that, we welcome the commitment to the 2014 review and, as far as they go, to the categories of persons who are exempt from these and the limited DHP top-up—the loaves and fishes as they will for ever be known as a result of my noble friend Lady Lister. The Minister’s department says that it is giving early notice to all claimants who could be affected by the cap. We have heard that 85,000 claimants have been contacted, with 150,000 phone calls made, so that they can change their circumstances and perhaps move into work. In addressing the inequities of the underoccupation provisions, the Government expect households to cope with this loss of income by starting work, reducing non-rent expenditure, using other income and moving to cheaper accommodation or a cheaper area. Given the work which the department has done to identify those households affected, can the Minister tell us how many households have other income to ameliorate the effect of the cap, what types of income are involved and what the average amounts involved are?

Some 64% of those affected are claiming either ESA or income support; that is, they are not required to be available for or seeking work. Some 50% of the households likely to be affected are lone parents. The criteria under which people are characterised at the moment under the welfare system are stringent. They are not spurious, so on what basis is the department seeking to override these designations? Is the department seeking to differentiate between individuals for this purpose and, if so, on what basis? We know that some 5,200 affected by the cap are in receipt of carer’s allowance because the qualification for carer’s allowance depends, among other things, on a person not being gainfully employed. What advice would the Minister give to these households and what is their route to avoiding the impact of this cap?

So far as reducing non-rent expenditure is concerned, can the Minister tell us what the department’s detailed engagement with those affected has concluded to date? How many households has it assessed as having scope to reduce non-rent expenditure and what are the main types of expenditure involved? So far as moving to cheaper accommodation is concerned, we note that nearly half of the households affected—46%—are in the social rented sector. What cheaper accommodation does the Minister think can be accessed and how does he consider that local authority allocation policies, which would typically have a local connection requirement, will assist in these circumstances? As for uprooting and going to other areas, has any assessment of the impact of this on families been made, especially the consequences of fracturing local support arrangements with the impact on health and educational outcomes? From the work undertaken to identify those families currently likely to be affected by the cap, how many such households have someone with a mental health condition and how many occupy housing that has been the subject of a disabled facilities grant?

We are indebted to the National Housing Federation for its briefing notes and the points that it raises, which I would like to go over. So far as discretionary housing payments are concerned, it says that the announced increase to help people hit by the cap after losing their jobs is welcome but that it is not appropriate to rely upon a discretionary, time-limited scheme to cover ongoing and legitimate higher housing costs. Concerns have also been raised about the levels of DHP available. In its report on the impact of housing benefit changes, published this month, the NAO said:

“It is not clear how the current level of funding for Discretionary Housing Payments has been determined or whether it is likely to be sufficient for local authorities in tackling the impacts of reform”.

Perhaps the Minister can therefore give us a breakdown of those calculations and the assessment.

The issue of temporary accommodation has, I think, exercised a lot of people. The National Housing Federation says:

“Temporary accommodation is a vital part of the homelessness safety net. It saves money by minimising the need for more costly emergency interventions such as housing families in Bed and Breakfast accommodation. However, it is more expensive to procure and manage than mainstream private sector accommodation.

It is for this reason that the Federation has argued for it to be exempted from the benefit cap. Due to these additional costs, without an exemption from the cap, many families will find themselves unable to meet their rent.

Households are placed in temporary accommodation by local authorities and as a result will have little scope to move to reduce their housing costs. These families, who have been made homeless through no fault of their own, could be forced to move long distances or cut back on essentials in order to pay for accommodation which they themselves have not chosen”.

How does the Minister respond to that point? The federation goes on to say:

“The cost of exempting temporary accommodation from the cap is £30 million—a small proportion of the estimated £270 million savings expected to be gained from the imposition of the benefit cap itself”.

What is the Minister’s response to that? It continues:

“While Government has said that under Universal Credit it will fund the management costs, if not the housing costs, of temporary accommodation outside the benefits system—helping some families avoid the cap—this will not protect claimants before they transfer to Universal Credit”.

15:45

Concern has also been expressed about supported housing. The federation says:

“Supported housing provides … preventative services for vulnerable people, helping hundreds of thousands to live independently and rebuild their lives. The Government recognises that there are legitimate extra housing costs for people living in supported accommodation. However, the regulations … do not exempt supported housing from the benefit cap, despite the fact that the higher cost could mean that many will be hit by it”.

Perhaps the Government could respond to that assertion.

The Minister will no doubt have seen Monday’s Guardian about reports of London councils sending current tenants far and wide across the country, to Wales and all over the place. How far do the Government consider it reasonable for a council to relocate somebody away from their home base in order to comply with the consequences of these regulations?

The housing benefit caps—it is asserted—have contributed directly to the rise in homelessness and the surge in the use of bed and breakfast accommodation, which these regulations will intensify. Westminster Council says:

“The current reports on reasons for (homelessness) applications during September support this showing that at least 59% of applications coming from households in the private rented sector, with 35% being specifically because of a shortfall with housing benefit. We continue to work to secure additional rented accommodation both in and outside of Westminster. The difficulties remain in procuring sufficient numbers to meet increased demand and as a result emergency accommodation numbers remain high”.

Will the Minister confirm that if a household loses its ability to maintain its tenancy the local authority will in each case retain the legal duty to house it as homeless? If the local authority assumes the legal duty to house a household that has lost its home because of the benefit cap, and it must find accommodation somewhere cheaper to bring it under the cap, does this not conflict with the commitment given by the DCLG Housing Minister not to see households move hundreds of miles away? Can we have an assurance that DCLG’s position on this is one which will be preserved?

If a family loses all or most of its housing benefit from April, which will not be unusual in London, but still has some time on its lease, should it pay its rent or should it seek to survive? If the tenants do not pay their rent, whose responsibility are the arrears—the tenants’, leaving them in debt and potentially with a negative reference affecting their ability to get another tenancy, or the landlord’s?

The department maintains that it has data to identify the households which are currently likely to be affected by this, but will the Minister explain how it is all going to work going forward? Local authorities do not have to apply the cap until notified by the Secretary of State that it may apply, although local authorities can apply the cap if they have information suggesting that it should apply. Will the Minister let us know the systems by which DWP will, on an ongoing basis, accumulate details of the varying benefits which will go into the equation? How will it all be kept up to date? From the NAO report issued on 1 November, it appears that the ATLAS system will be used. Perhaps the Minister will say whether the capacity of this has had to be enhanced to cover the relevant details.

The NAO report refers to local authorities already receiving around 20 million notifications a year about changes of circumstances and entitlement. With whom will the formal responsibility lie to assess whether individuals are subject to the cap? What assessment has been made of the capacity of local authorities to cope with all this when there is an increasing take-up of universal credit and a diminishing application of housing benefit? Will funding be available to local authorities over this period to enable them to sustain their role?

The Minister will note that some of the benefits included in the cap—child benefit and guardian’s allowance, for example—are not currently taken into account in the housing benefit calculations. There will be a requirement for additional information therefore to flow to local authorities if they are to do the calculation about the application of the cap. How is this to be accomplished? Do local authorities have their systems in place? What happens if there is some claw-back of welfare benefit which reduces or eliminates the operation of the cap? Will local authorities have to reimburse the claimants with extra housing benefit on a backdated basis? What happens if a local authority has not been notified of the possible application of the cap but has information suggesting that it might apply, yet it fails to take any action?

What is the position if the local authority treats individuals differently in this regard? Does it have to have a policy which covers all people in that situation? If a claimant is subject to a benefit sanction, is it the net amount which will go into the calculation or the actual benefit paid plus the sanction? What happens where backdating or a successful appeal leads to the potential application of the cap? Will there be a claw-back of housing benefit which the local authority will have to apply? What if the housing benefit is paid directly to the landlord?

Noble Lords will be pleased to see the period of grace for nine months where someone has previously been in work for 12 months. Will the Minister say how that will apply where someone has previously been in work and entitled to working tax credit but remains in work and falls out of entitlement to working tax credit—that is, they fall within the benefit cap? The Minister will also be aware of concerns that the rules relating to the period of grace are too draconian in requiring someone to be in work for 50 out of the 52 weeks. The CAB, for example, posed the question of an individual being sick and on statutory sick pay during the 52-week period. Would this preclude the period of grace from operating? If it is the case, perhaps the Minister will confirm that the self-employed are being excluded from the benefit of the period of grace. There is a range of exemptions for those in receipt of various benefits, including DLA. The Minister said that they include the PIP. I expected to see the PIP there, although I could not spot it in the regulations. Perhaps he might give me a reference in due course. That probably will be dealt with satisfactorily.

On the impact on children, the Children’s Society suggests that 200,000 children will be affected by the cap, which is close to the department’s own assessment, but with them being around nine times more likely than an adult to be affected. What role will the Social Mobility and Child Poverty Commission have in monitoring the impact? Will the monitoring allow Ministers to intervene sooner if it quickly becomes apparent that there are significant negative effects on child welfare occurring as a consequence of the cap? Where does the cap apply to a household with children under the age of five when they are otherwise exempted from work-search requirements? Will the Minister guarantee that affordable childcare will always be available to households in this situation so that it will always pay to be able to go to work?

These are some of the question that we have arising from these regulations and the cap. We believe that they are ill-thought through and should be withdrawn for further consideration.

[Lord German]

My Lords, I want to examine the two areas of change which took place during the final days of the passage of the Welfare Reform Act. These were, of course, the extra £120 million of discretionary housing payment and the nine-month grace period. However, I start by saying that my party opposes regional pay in this country—as does the Labour Party in Wales—very strongly indeed. Ipso facto, for the same reasons we oppose regional benefits. The reason given by the Welsh Labour Party for the opposition to regional benefits is that they trap people in poverty. In this case, we in my party find ourselves on a similar message: having uniformity of these issues around the country helps to encourage prosperity across the country. I hope that that message will be borne out. However, I recognise that the major difficulties of the benefit cap relate to London, as the impact assessment clearly states.

I do not wish to add to the huge array of all very valuable questions that the noble Lord, Lord McKenzie, has just outlined. However, it is very important that the guidance for local authorities and customers is made available in as open and detailed a manner as possible. I note the very friendly document titled Benefit Cap—Frequently Asked Questions for Local Authorities, in which local authorities would expect to find answers to some of these questions. Nowhere in this document does the DWP reference any information about the discretionary housing payment. Will my noble friend tell me where, when and in what format that detailed guidance to local authorities is going to appear, so that people can be aware of the answers to some of these questions? Perhaps the issue of distribution of discretionary housing payment needs to be well known as well. I presume—although I have not been able to find the exact percentages and figures given—that it is related to the impact of the cap on housing benefit in each local borough and local authority. Perhaps my noble friend could clarify that.

I further note from the impact assessment that the figure of 56,000—considerably less, of course, than the number we were led to believe would be affected by the cap from the earlier impact assessment—takes no account of behavioural change. Could my noble friend tell me how, in his expectation, that behavioural change is likely to play out? Is it likely to reduce the numbers substantially, or just in a minor way? Has any work has been done by the department on that change?

One key issue that my noble friend mentioned was the ability to exempt oneself from the cap by making oneself available for working tax credit. There is always a process in getting oneself into work and into a working tax credit position. I wonder whether that period of transition, which may not take place until such time as the cap actually hits, will be taken into account through some support process by the department. Could my noble friend explain that?

I am also interested in the impact upon London. I would not want to say that it is a very strange place, but it is a very different place in terms of housing. I can only quote my own example. I just renewed my two-year rental on a flat in London, and my rent went up by £2.50 per week after two years of being stable. I just could not understand; I was expecting it to be much larger than that.

16:00

The Government are a majority shareholder, if you like, in the rental market in London, because they pay for a lot of the rents in London. I wonder whether any combined impact is yet being felt by the reduction to the 30th percentile and by the Government’s potential overcrowding regime, and the regime for underoccupancy. Is there likely to be any cumulative effect in London on the housing market? It seems to me that you can still find property without huge increases in rental in some parts of London, but I can only use the example of the breakdown of the average housing benefit payments for each London borough, which stretch across quite a wide spectrum from £90 to £150, from the figures given to me by the department.

I repeat the question of the noble Lord, Lord McKenzie, about the 5,000 carer households. There is a very small number of households across the country where carers have been engaged in care that sets them apart and means that they are not available for work. I wonder whether that group of people needs to be looked at and whether the discretionary housing payment will be aimed at such groups.

Finally, I noticed that there was some response from local authorities to the department about the use of the online calculator. This may be a sign of people’s ability to handle IT projects in future. Some of the responses from local authorities were that the calculator was not working. Can we be reassured that it is working now? Also, how can people get help to input their data into the calculator if they cannot do so with ease and alacrity themselves? In summation, therefore, can my noble friend tell us whether the changes that the DHP was meant to lead to, to assist groups of people, will be known well in advance of the impact date of the start of the cap? Secondly, on the start of the nine months’ grace period, will periods of broken work affect it—if someone has a bit of illness in the middle of the year before they lose their job?

I also repeat, in a slightly different way, the question of the noble Lord, Lord McKenzie, about the self-employed. We are expecting the self-employed under universal credit to register their wages monthly. Surely it will become possible under universal credit for people to be given the same sort of understanding as people who lose their jobs in the employed market. I would be grateful for some answers, but I am particularly concerned that we do not yet have the full detail of the guidance available to us.

[Baroness Lister of Burtersett]

My Lords, I think that I and the noble Lord, Lord Kirkwood, were the only Members of this House to oppose the benefit cap on principle and I remain opposed to it on principle, but I will not go through all those arguments again, although the Minister put the principled arguments for the cap, except to say that we have rather different views about fairness. I refer to that in relation to what is not yet a proposal but a suggestion mooted by the Secretary of State that a further benefit cap should be imposed on families with three or more children—exactly the same group who stand to lose most from this benefit cap—before this cap has even been applied. What possible basis is there for floating yet further caps until we know the effects of this one? I should be grateful if the Minister could say something about the interaction between the caps and what work has been done in the department on the likely impact on child poverty.

Like my noble friend Lord McKenzie, I read the Guardian and saw yesterday’s report. I followed it up by contacting the Child Poverty Action Group— I declare an interest as its honorary president. It has just, with the London Advice Services’ Alliance, published a study of London local authorities and how they are dealing with the various cuts in housing benefit.

It is clear that one of the common solutions, as evidenced in that Guardian piece, is to move families from inner to outer boroughs, or well beyond. Like the localisation of council tax benefit, it seems that the Government are taking a Pontius Pilate position here—washing their hands of all responsibility and then saying, “It is the local authorities that are responsible”. A Government spokesperson was quoted in the Guardian yesterday as saying:

“It is neither acceptable, fair nor necessary for local authorities to place families far away from their area”.

I agree, but to the extent that it becomes necessary, the blame lies with central government.

The National Audit Office spelled out, in its report last week, the pressure that the combined cuts in housing benefit would put on the supply of affordable local housing in some areas. The National Audit Office also drew attention to one of the findings of the interim report from the evaluation being carried out for the departments:

“Claimants’ reluctance to consider moving to other areas appears to reflect a considerable attachment to their local area as a place to live”.

The evaluation report refers to the importance of proximity to family, friends and schools.

I have heard Ministers—I do not think that this includes the Minister here today—say that people have no right to be able to live in nice areas that other people cannot afford to live in, as if we are talking about posh areas here and it is all about the niceness of the area. Actually, quite a few pieces of research around poverty and place show the importance of local roots and the networks that people have, and the Government seem completely impervious to this. I find it very strange because it seems to me to fly in the face of the whole philosophy of the big society, which is about the support that people give to each other. Yet this and other policies—I will probably say more about this this evening—wilfully destroy, or are happy to countenance the destruction of, these social support networks. One of my hobby-horses is that this is something that we must look at in all the evaluation that is being done. Like my noble friend I welcome the fact that there will be a review of the impact of the cap, but nothing is said in the Explanatory Memorandum about the impact on social networks.

The Minister talked about incentivising work. We have heard this on a number of occasions. I shall quote the Secretary of State, who said, in the House of Commons in an Oral Answer in September:

“When we recently started dipping into the issue and surveying those who were likely to be affected, it was interesting to find out that, already, well in advance of what is going to happen, about a third of people have admitted that they are out looking for work as a result of the oncoming benefit cap”.—[Official Report, Commons, 10/9/12; col. 15.]

I am interested; I keep hearing this. I am sorry to add to the questions the Minister is being asked, but what is this survey? Is this the telephone calls that he mentioned? Does the department ring up and they say, “Oh, yes, I am looking for work because you are about to cap me”, or what?

I have heard a number of social policy academics say that, if it is in terms of people going into work, this is the normal turnover one would expect. How do we know it is because of the forthcoming cap? Even to the extent that it is having this effect, the CPAG/Lasa study confirmed that several local authorities are working actively with residents to help them move into work or increase their hours in order to avoid a cap, and this is obviously very welcome. It stated:

“However, few see this as an approach able to solve the problems of more than a small proportion of families hit by the cap. One authority estimates that there are at least 500 families who would not be able to be supported into employment due to disability, caring or parental issues”.

Many emphasise the high cost of childcare as a barrier.

My noble friend Lord McKenzie and the noble Lord, Lord German, have mentioned carers and the fact that 5,200 of those expected to be hit by the cap are in receipt of carer’s allowance—that is about one in 10 of everyone affected in 2013-14. The mean reduction will be £105 a week, the median £77 a week. That is a lot of money for people to lose.

The Minister talked about the long-term positive behavioural effect. He might recall that in Committee on the Welfare Reform Bill my noble friend Lady Sherlock and I asked the noble Lord—this is a variation on the question asked by my noble friend—what are the positive behavioural effects that the Government are seeking from carers? Presumably they are not to stop caring. I asked the noble Lord and I am glad to say that he confirmed that that was the case. What other behavioural effects are being sought of carers? I am as baffled as I was then.

I turn to the question again raised by my noble friend on supported housing. I am grateful to Crisis for its briefing on this. It estimates that 10% of those affected could be single adults and it is likely that some of them will be living in supported accommodation. Supported accommodation ranges from hostels for homeless people to domestic violence refuges; it is exempt from normal housing benefit rules so it is not subject to LHA restrictions; the rents charged by different accommodation projects vary, depending on a number of factors but particularly the level and range of support provided. Therefore, a hostel that houses, for example, long-term rough sleepers with severe mental health problems will have higher running costs. A small number of people who live in such high-cost accommodation and who receive other benefits will be affected by the cap. They are not in a position to move elsewhere and they pay a lower rent. We are talking possibly about higher-rate ESA or incapacity benefit as was, and they are likely to be some distance away from moving into work so would not be able to avoid being hit by the cap.

I do not believe that it is right, nor do I believe it is the intention of the policy that the cap should impact on people who are extremely vulnerable or who are at a crisis point in their lives and cannot live independently. Supported accommodation providers rely on housing benefit as a source of funding and they would struggle to provide the vital services that they offer if their residents’ housing benefit were to be cut. Although Ministers have stated publicly that there will be no more exemptions to the cap, I understand that there are discussions going on as to how residents in supported accommodation will be treated. Ideally, I would like to see people who live in supported accommodation exempt from the cap but, failing that, I would be very grateful if the Minister could explain to your Lordships how it is intended to protect supported housing residents from the impact of the cap.

Crisis is also concerned that in the worst instances, households that are not able to find alternative accommodation could be left facing homelessness. That is a point made by my noble friend. I would like to read from the CPAG/ Lasa report, which states:

“Applying the benefit cap to families in temporary accommodation effectively means that families who are accepted as homeless, could be made homeless once more due to their inability to pay the costs of temporary accommodation”.

The situation was recognised by the noble Lord, Lord Freud, during the passage of the Welfare Reform Bill. I quote the noble Lord:

“We need to get a solution to this so that we do not have a ludicrous go-round of people moving into expensive temporary accommodation which they can no longer pay for because of the cap. We are absolutely aware of this and have measures in train to get a solution in the round to that issue”.—[Official Report, 23/1/12; col. 893.]

The report continues:

“At present, however, local authorities see themselves pushed into precisely this ‘ludicrous go-round’, with little option for escape”.

Could the Minister please comment on that and explain what measures exactly are in train to solve what he himself described as a ludicrous situation?

[Lord Best]

My Lords, I thank the Minister again for that period of grace. I had an amendment seeking a 26-week period of grace and this is the first time that I have ever had a Minister exceed my expectations. I knew I should have gone for 52 weeks but I thank him for confirming that that is safely in place.

Although I agree with a great deal of what has already been said, I particularly wanted to pick out the problem faced by those going into temporary accommodation. There are 51,600 households currently in these properties leased from private landlords. The housing association and sometimes the local authority itself stand in the middle. The private landlord charges a rent and on top of the rent that the landlord charges, the housing association, in taking on this commitment, has to agree to return the place to the landlord in pristine condition at the end of the period so there is a need for reinstatement costs. Management costs are also involved in this, so it is unsurprising that rents for these temporary accommodation leases are higher than other rents. In the areas where the other rents are already very high, these are going to be very high rents. However, the £500 per family cap kicks in regardless of the fact that rents in particular places will be very high.

16:15

Let me comment on the point about regional benefits made by the noble Lord, Lord German. After the war, when Beveridge was thinking through the same issues that we all think through today, he concluded that you had to take housing out of the equation that you used to assess all other benefits, because the regional variations for housing were so great that you had to have a separate benefit arrangement for housing. If you are in a property in south Wales, even in temporary accommodation—and probably among the most expensive there—you will pay £150 a week; in an identical property, or perhaps something inferior, in Camden—I am not even going to bother with Kensington and Chelsea or Westminster—you will pay £500 a week. The average in an outer London borough—Newham—is £269.50 a week. Beveridge took housing out and said, “We have to have a housing benefit system that can adapt to all these different places and all these different rents, even if we have universal benefits everywhere else”. We have not done that with this cap. We have a single figure for the cap and the rents have to fit within that.

To take my example of Camden, where the average temporary accommodation rent is £500 a week, if the family have to pay £500 a week they have nothing left for all their living costs, as the cap is £500. That is obviously not tenable. We have to close down the temporary accommodation arrangements in Camden—we just cannot work them at all for a family. Their entitlement to other benefits to live on would normally be £315 per week—this is a couple or a single parent with three children. That would give them headroom of £185 a week within the £500 to spend on rent. With that £185, there are very few places in this country where they could go and be housed. Certainly they could not go out from Camden to Newham, as they would still face a major deficit. They would have to find £84.50 a week, which they could not possibly find—no one on these low incomes could find £84.50 a week. The figure in Birmingham, perhaps slightly surprisingly, at least to me, is a little higher than that in Newham. In Birmingham, you would be back to a rent of £300 a week for the cheapest temporary accommodation property, so the shortfall there—including the £315 a week to live on, making £615—is £115 a week, which is out of the question. So Birmingham ain’t going to work either.

We are going to have to place these people in very specialist parts of the country where, for whatever reason, rents are extremely low. This by definition sends people away from their family support networks, with children coming out of their schools and all the other things. Surely all that disruption and hassle will not be worth while.

What are the alternatives? How can we keep people closer to where they were when disaster struck and they became homeless and had to be placed in temporary accommodation somewhere? I do not think that we are going anywhere near meeting the expectation that landlords would dramatically reduce the rents. The main hope is that the discretionary housing payments will be enough to top up the rents, even if that is quite a wide gap to top up.

This is where we come to our loaves and fishes. The answer to everything is the loaves and fishes—the funds that we are expecting to stretch to cover all the eventualities where the new system does not work. We also have the local housing allowance shortfalls in the private sector; we already had a system in place because the arrangements did not work before and we needed discretionary housing payments. There is more money there, but it is very tight compared with the increase in the gap that a lot of people are facing. There is a need for discretion to be used in relation to the bedroom tax, where there are obviously cases where it is just madness to try to persuade people to live on a much reduced income and there is nowhere for them to go. The loaves and fishes have to stretch to those. Now the loaves and fishes—the discretionary housing payments—are being required to meet those cases where the cap is a nonsense in ordinary accommodation. Finally, the money is to be available in the rather bigger cases of temporary accommodation. It quickly runs out.

I was looking at the new figures which we have broken down area by area and place by place. If we reckon a gap of £80 a week to be a relatively modest gap to be filled by discretionary housing payments, in Ashford—I started looking at “A”—in Kent, an area of quite high pressure, the £67,000 available means that at £4,000 a shot, 16 people would be helped. In Cambridge, which also has a bit of pressure, it is £64,580; this sometimes includes carrying forward funds from the previous year. That is 16 households in Cambridge. Cheltenham did a bit better: £95,000 there, which is equivalent to 23 households. These numbers are not going to do it across the piece for the use of these loaves and fishes stretching out to cover all of the circumstances in which the discretionary housing payment might be required.

I have urged the Minister before—and I urge him again—to have in his back pocket the opportunity to place a foot in the Treasury door to get more funds in the kitty for these discretionary housing payments, if for no other reason than to keep MPs off the noble Lord’s back. That is because there are going to be protests up and down the country that this is a nonsense—that things that ought to happen cannot happen because of these restrictions and that DHPs are about the only way in which one could possibly hope that they would happen. I leave him with that thought.

[Baroness Sherlock]

My Lords, so much wisdom has already been shared with the Committee that I am not going to try to tread over the ground so impressively covered. I would like, however, to ask the Minister to focus on two particular categories of people. I am particularly concerned about families with children, especially vulnerable families with children. The Minister may recall that, among the many amendments that he faced during Committee stage, I moved an amendment that specifically asked that families be exempted from the cap if their household contained a child who was the subject of a child protection plan, a children-in-need assessment or a common assessment framework team. The Minister sadly did not smile on that amendment, but I hope that he has had the opportunity in the mean time to think some more about what happens to particularly vulnerable children. Since the Government now have data about the families who will be affected by the cap, will he tell the Committee today how many of the households that will be affected contain a child who was the subject of any of those protection plans or assessments or a common assessment framework team? If he cannot do so today, would he commit to write before his regulations are considered or, if time does not permit it, to place that in the Library as soon as possible?

I briefly remind the Committee why this matters. I raised this on Report and I am not going to revisit the principle, but I was concerned at that stage because of discussions that we had had in Grand Committee, where I had heard a noble Lord—I shall not name him, because he is not here, but he was someone with great experience—describe having sat in a serious case review of a very serious incident with a child. He described what I have heard over and over again from social workers, which is that when you get to a serious case review, people gather around the table from all the different agencies and, about an hour in, somebody always says: “If only we had talked to each other sooner; if only we had all shared information previously, maybe it would not have come to this”. Reports from one London safeguarding board showed that, in a significantly high proportion of families affected by serious case reviews, rent arrears or impending eviction had been an issue; of them, a significant number were known to more than one authority.

A number of noble Lords from all sides raised throughout our consideration of the Bill the question of what happens to families who are forced to move repeatedly—in particular, what happens if households containing vulnerable children of the kinds that I have described are forced to move some considerable distance. There must be a real danger that these children disappear from the system. Could the noble Lord tell me whether he has considered my proposal to exempt those families from the cap? If he has not, what assurance can he give the Committee as to precisely how those families will be protected and how those children in particular will be protected?

Picking up the point made by various noble Lords about families in temporary accommodation, I am very concerned about the considerable distances that they and other families with children may end up moving. Like other noble Lords, I have been reading the newspapers this week—but I do not read those left-wing communist rags. I shall quote a headline to the noble Lord:

“Homeless families to be kicked out of London and sent as far away as WALES as councils buy up cheap properties to house them”.

The article goes on to state:

“Local authorities say sky-high rental costs in the capital, combined with the incoming benefits cap has forced them to send people miles away from home. Areas as far away as Manchester, Merthyr Tydfil and Hull … ‘It is going to be practically impossible to provide affordable accommodation to meet our homelessness duties in London,’ Dagenham Council say”.

I am sure that the noble Lord recognises that that is from the Daily Mail.

Will the noble Lord tell the Committee whether that is true? Is he expecting significant numbers of homeless or potentially homeless families to be rehoused hundreds of miles away? If not, why are so many of our grand newspapers labouring under such a misapprehension? Perhaps the Minister could put their minds at rest. He might want to write to the editors with a copy of his speech when he has reassured us today.

I would be interested to know whether there is any danger that families could be forced to move, as has just been described by the noble Lord, Lord Best, more than once, either because accommodation for the homeless has become too expensive or simply because, as was raised in Committee, the median rents have gone up over the area. Rents may rise in an area as a result of an influx of families and then they could hit a cap again. Is there any danger that that could happen? I am sure that the noble Lord is aware of the evidence showing the impact of repeated house moves on a child’s achievement in school. If that is the case, will he say how the Government will protect vulnerable children in particular from the damage that could happen to them not only in childhood but in later life as a result of their schooling being impaired?

Finally, turning to the report from the Child Poverty Action Group, to which my noble friend Lady Lister of Burtersett, referred earlier, I should like to draw the noble Lord’s attention to a paragraph on page 40. It states:

“Authorities are also concerned about the impact of the cuts on their ability to meet other government priorities, in particular around the ‘troubled families’ agenda”.

Will the Minister tell the Committee what discussions he has had with the DCLG and other departments about the extent to which this policy may impact on their ability to deal with troubled families? If so, what steps are being taken to address that?

[Lord McAvoy]

My Lords, I rise to speak briefly because my noble friend Lady Sherlock has spoken with wisdom and analysis, as have my noble friend Lord McKenzie, the noble Lord, Lord Best, and others. I do not think that I could hope to match that. I prefer to speak about the effects of what this Government are doing on families and people. First, I should make it plain that I am not a social liberal or a bleeding-heart liberal with a small “l” or even with a large “L”. As a genuine member still of the honest working class, I am totally opposed to people fiddling the public purse and the benefits system.

I do not think that the Government care so much about that. I am not trying to paint a picture of an uncaring Government, although the effects of what they are doing here are exactly that. Some of the stuff that has come from the Government for dealing with the people who will be affected by this is in the Explanatory Memorandum to the regulations. Paragraph 7.7 states:

“The Government expects different households to have different behavioural responses to the cap but those affected will have a number of options to consider”.

What are the options to consider? The options include,

“reducing their non-rent expenditure”.

I should like to ask the Minister some questions. Under what budget heading should that come? Does he have any suggestions about which item of household expenditure in these poor households should be cut to make up the shortfall in rent? Paragraph 7.7 suggests that they should make up the shortfall,

“using a proportion of their other income or moving to cheaper accommodation or area”.

We will come to that later, because to me that has the biggest impact on families who are being treated in this way.

16:30

Another so-called option is starting work. Has the Minister looked at the unemployment figures in Scotland? Has he looked at the figures in suburban areas of Glasgow, Edinburgh, Lanarkshire and Ayrshire, where the unemployment rate is tremendous? If the Minister has any job applications or knows of any jobs, I would be grateful if he would let me know. In addition, just this week, there have been big redundancies in Glasgow and Broxburn. Again, this will have an impact on families who do not have much to start with. I will come back to what happens to people when they have to move under circumstances like this.

The guidance section says that the department is working with IT suppliers,

“to make sure that those likely to be affected by these changes know about them in advance”.

How much in advance? What notice will be given to people like this, and how much will that cost, for a start? The memorandum also mentions,

“some impact on the public sector with one-off costs for local authority housing benefit and housing departments to implement these changes”.

It goes on to say:

“The Department is working closely with the Department for Communities and Local Government to assess the financial impact of these changes on local authorities as part of its work to quantify the extent of any new burdens for local authorities”.

In short, local authorities must find whatever money they need from their current budgets and grants. Again, that will result in problems.

I come to what happens when people are forced to move. With my background, my family would have been one of those affected by these proposals. In Scotland, one-third of the households affected are in the cities of Glasgow and Edinburgh. The number of adults in affected households in Scotland is around 3,500, but the number of children who face being moved is around 7,000. In my case, with quite a chequered family history of an itinerant father who did not have permanence in our house over a number of years, underoccupancy would have applied one month, but perhaps not three months later. With that whole history of being away from home and then coming back, it would have been a shambles. Under these proposals, my mother would have been forced to move from her area. The street where I was born is next to the street where she was born, which is next to the street where my wife was born. That is what Rutherglen is like: a lot of people who are born there stay there.

When I was growing up in Rutherglen, there were not really any areas that were poorer than any others. The picture that comes to me is of properties being brought up by the local council in the city of Glasgow, across the Clyde from Rutherglen, to house the families being evicted from there. I was born and brought up in that area and have stayed there for my whole life. Hundreds of children were the same. Moving from there would have meant uprooting all the family connections with neighbours and school friends—and I will come on to school connections in a minute—treating us like people who do not deserve any permanence in their lives.

As for schools, in the west of Scotland approximately one-third of the population are Roman Catholic and go to Catholic schools. The population is such that Catholic schools must draw their school intake from a bigger area than the non-denominational schools, because it can be spread quite thinly. I do not know what school I would have had to go to, but I would have had to leave St Columbkille’s, leaving all my friends and relatives, moving to Glasgow or somewhere ostensibly cheaper to live. To impose that on 7,000 children and treat them in that way is quite disgraceful.

I suggest to the Minister that he looks at a Scottish paper called the Daily Record. A couple of weeks ago, it ran a film that was designed especially for the Scottish Liberal party conference, to remind that party about the impact of this. To its credit, it appeared to show the impact that these changes are going to have on thousands of people in Scotland, never mind in Great Britain. In the interests of educating people, I suggest to the Minister that he contacts the Daily Record and asks it either to give him a special showing of the film or, even better, to have it shown somewhere in the Palace of Westminster.

I know that I have not dealt with the fine detail, as my colleagues and other noble Lords have, but I thought that that was right. I have no illusions about this place. I accept that this is a revising Chamber. I accept that we do not have a democratic right—except maybe in some circumstances, as the Conservatives did during our 13 years—to defeat the Government and that we should think very carefully before we do so. On the other hand, I would not be able to face up to myself when looking in the mirror, or face many of the people I know, if I did not demonstrate my opposition to these proposals.

[Baroness Thomas of Winchester]

My Lords, I have a very simple question for my noble friend. I think that he probably gave us the answer during the passage of the Welfare Reform Bill, but I am afraid that I have forgotten what it was. Those in receipt of disability living allowance are going to be exempt from the cap. What about those who have appealed against their initial assessment? I declare an interest because, while I have never been on benefits, I have appealed against a decision, which I won, so I feel for those who may not have been successful the first time in their assessment but who have then appealed. There can be a few months between these two events and it would seem very unfortunate if someone or their family was forced to move only to find that they had won an appeal at the tribunal, with all the upheavals that that would amount to. Can my noble friend tell me about that situation?

[Lord Freud]

My Lords, as I would have expected, we have had a very knowledgeable debate, and a lot of very learned views, which I always listen to very closely, have been put forward. Clearly, I am also aware of the concerns that have been voiced in expressing the anxieties of a number of external organisations and stakeholders, some of which were referred to today. I will try to deal with as many of the questions as I possibly can, although there were a lot of them.

Let me start with support and exempt accommodation. That needs to be looked at in two periods. As I said, once universal credit comes in we are looking to keep the housing costs outside universal credit. I am looking to make some long-term arrangements for people in exempt accommodation. I am particularly concerned about people in refuges and, clearly, in hostels. I acknowledge absolutely the issue of support and exempt accommodation, which needs some quite sophisticated work. Meanwhile, we are writing very specific guidance, as these are the people for whom DHPs really are designed to prevent some effects that we do not want to see.

On temporary accommodation, a point raised by the noble Lord, Lord McKenzie, that is again an area where we will use DHP. I know that the noble Lord, Lord Best, did some sums, but clearly this will be a huge incentive to move people very quickly to something much more permanent rather than staying for the full year in temporary accommodation, which, as he rightly said, is very expensive. Under universal credit, there are likely to be changes. We are looking at how we deal with temporary accommodation—especially the division between the management costs to which he referred and the actual housing payment element. We are out to consultation on that area and there will be more developments.

On the mental health issue that the noble Lord, Lord McKenzie, raised, those who have been assessed as being in the support group under ESA will be exempt, as will those receiving DLA and, later, PIP, so they will not be affected. The reason that PIP is not specifically mentioned in the regulations is that the PIP regulations have not yet been laid, so they will be consequential.

We do not have any information about other types of income that those households have—to answer a question asked by the noble Lord, Lord McKenzie. Where they do not have any other income, a claim for DHP can be made. I have already detailed the funds available.

Several noble Lords asked about stories of local authorities sending people all over the country. I remind noble Lords that it has always been the case that London boroughs have sent people out of borough and, in some cases, many miles away. The reason is that people come from all over the country to London boroughs; it is not always appropriate to house them in those boroughs and they are sent out. There is an important distinction to be made between local people and those who arrive with a homeless obligation in a particular borough. It is important because new regulations come into force later this week, on 9 November.

[Lord McAvoy]

Sorry, but will the noble Lord let me intervene at this stage? So if there are two families, a recently arrived family and a longer staying family in a borough, somebody would decide that the newer family, for want of a better description, should go and the older residential family should stay?

[Lord Freud]

I am referring to people who arrive in Euston and turn up homeless in Camden. They do not have the local links. There is a homelessness duty on Camden to do something, but there are not the local links. That has always been the position.

[Baroness Lister of Burtersett]

I am sorry to interrupt, but those are not the people we are talking about; we are talking about people with local links that matter to them for all sorts of reasons. This policy will destroy many of those local links.

16:44

[Lord Freud]

Perhaps the noble Baroness will let me finish the point. A lot of the stories in the newspapers refer to the former. Councils have had arrangements for many years with other councils some distance away. We have reinforced the point—this is where the regulations coming in on 9 November apply—that where people are local, the council has to consider whether the location is suitable for the household’s individual circumstances, including the significance of any disruption to employment, education and caring responsibilities. Local authorities are required to carry out a full impact assessment before moving people out to other boroughs.

[Baroness Lister of Burtersett]

I am sorry to push this, but if the stories are referring to the first group, why are local authorities expressing fear that they could be subject to legal challenge for moving families out? We are talking about a different group.

[Lord Freud]

I am trying to say that if you read the stories carefully, as I have been, you will see that they refer to preparatory moves about what councils may do and what they are preparing for. The stories are fairly evanescent, if you look at them closely. Clearly one reason for that is that these changes have not happened yet. Through this year, we have had the introduction of the LHA reduction from 50% to 30%, which my noble friend Lord German talked about. There has not been a huge flood of changes as a result of that. The stories are about councils being worried and their preparatory plans. They are about plans to move people around councils, but local authorities have always done that, for the reasons that I have given. They have always had this problem in London—people arrive and the councils have had to do something about them. Let me repeat the obligation in the 9 November regulations. Under the regulations, local authorities are required to keep people in the local area whenever they can and to carry out a full impact assessment before moving people out to other boroughs. We have strengthened that localism point in recognition of the same sentiments that are concerning noble Lords today.

[Lord McKenzie of Luton]

Could the noble Lord just remind us which regulations these are? Is it right that they have already been laid and will come into effect? Under which provisions are they?

[Lord Freud]

They were DCLG regulations—I cannot remember the exact title, so forgive me. They have been laid and cleared and they are due to come into effect on 9 November. They are under the Localism Act—the noble Lord may be more familiar with them than I am.

On whether people will be treated as intentionally homeless if they are evicted as a result of rent arrears caused by the cap, again, it is for local authorities to make decisions on individual homelessness applications, as they do now. Under the statutory legislation, if the only reason for a person’s homelessness is a reduction in benefit that is outside their control, they should not be considered intentionally homeless by their local authority. The help available includes cases where the reduction is not much; it includes help in renegotiating rent or making up small shortfalls, help with moving to more affordable accommodation, other means of trying to help people back into the workforce, and so on.

There was a group of questions around the delivery process, which I will try to gather up into one. The department will identify cases through scans of analytical data, which will be clerically checked against live IT systems to see whether any exemptions or grace periods are in place, and it will obtain up-to-date benefit amounts. Data will then be transferred electronically to local authorities via ATLAS. The LA will confirm the correct amount of housing benefit and can apply the cap via an automated system. It will issue a notification to the claimant informing them that their housing benefit is being capped and the amount of their new housing benefit award. This notification will also give information on support available and who they should contact if they have a query about the decision.

[Lord McKenzie of Luton]

Before the Minister leaves that point, I am interested to understand the process, the mechanics. He said that there will be scanning of all the data. Of course, some of that would have to be of benefits that do not currently feature in housing benefit calculation. Will that be an ongoing scanning? I see that the Government are going to do something upfront to try to identify people, but people’s circumstances change. Will it be a real-time scanning?

[Lord Freud]

When there is a change in circumstance, it is up to the claimant to inform us of that, as it is now. We are still in the old world, or the existing world before universal credit. To ensure that all changes of circumstance are applied in a timely manner, we will use CIS, the customer information system, to report them. I think that the noble Lord is referring to that system, which holds a record of most benefits included in the benefit cap calculation. As the noble Lord pointed out, some of them are not included in CIS—especially child benefit, which will be identified by a further data match with the monthly IGS scans.

[Lord McKenzie of Luton]

I know that the noble Lord has a lot to get through, but is the obligation to report a change of circumstances an obligation arising from a change of circumstances which would affect the application of the cap, quite apart from obligations in respect of other benefits? Is that what we are talking about here?

[Lord Freud]

I was referring to the change of circumstance to the individual. Clearly, if we are changing benefit structures in some way, we will know that and be able to make that adjustment and send the new information over to ATLAS, but the important facts are the changes of circumstance of the individual, who will make the application for the benefit in the normal way. It will come through the systems and be scanned, checked, compared and sent over.

[Lord McKenzie of Luton]

A change of circumstance that would put someone within the benefit cap when they were not currently? Would an individual making a housing benefit claim have to say, not only, “I have applied for a change of circumstances that may change the level of housing benefit”, but, “I think I am therefore liable for the cap? Can you do me for it?”?

[Lord Freud]

It will not be exactly like that. It will be no change from the present position, where you should inform us of changes in your benefits in the normal way. When that happens, it will work through in the normal way into our systems. There is an obligation on all benefit recipients to inform us of changes in circumstances. There is no obligation on the part of the benefit recipient to inform us in relation to the cap; it is only to inform us in the normal way of changes in circumstance, as applies to the rest of his or her benefits.

[Lord McKenzie of Luton]

I apologise; I promise not to intervene again after this one, but that obligation, for example in relation to housing benefit, would be to report the change of circumstance to the local authority, not to the DWP. How does that fit with the notion that it is basically the DWP which has to notify the local authority, “We’ve got somebody here who may be subject to the cap”? Seemingly, there is no ongoing separate obligation on the local authority to report back in the opposite direction?

[Lord Freud]

I will be corrected on this if I am wrong, but ATLAS works both ways, so the information flows both ways, so we will have the information and will be able to notify and go through the normal process. We will know what is happening on housing benefit. That is how it will flow back and forth. There had to be an adaptation to ATLAS to make it a two-way flow. When it started, as the noble Lord probably remembers, I hope with nostalgia, it was a one-way process.

How and when are the guidelines being produced? The local authority Practitioners Operational Group, with a subgroup based on the benefit cap, has been briefed at working level on detailed procedures and guidance. Members have confirmed that people will develop detailed guidance and products which will supplement those to be published via the DWP intranet and the LGA’s knowledge hub.

The way that the benefit cap interacts with financial sanctions is that the benefit cap will apply to the overall level of household benefits. If the sanction is imposed, any reduction will be applied to the sanctioned benefit after the application of the cap. Otherwise, clearly, the impact of the sanction would be negated.

My noble friend Lord German and the noble Lord, Lord McKenzie, raised the issue of ESA. The specific exemption is to do with the people in the support group of ESA, not in the WRAG group. Several noble Lords mentioned carers. The benefits system is designed to provide financial support where caring responsibilities prevent carers working full-time. As such, the carer’s allowance should be treated in the same way, for the purposes of the cap, as other income-maintenance benefits. Clearly, where the carer is in the same household as someone entitled to DLA or ESA support, the whole household, including the carer, will be exempt. Most carers of working age want to retain a foothold in the labour market where possible. We know that more than nine in 10 claimants receiving carer’s allowance are claiming another out-of-work benefit. In other words, they are looking for work. Carers who move into work clearly become eligible for the working tax credit and will be exempt from the cap.

[Baroness Lister of Burtersett]

I am still unclear what behavioural change the noble Lord seeks from that group of carers. If they are already seeking work anyway, why do they need the cap to spur them on to do it on top of their caring responsibilities?

[Lord Freud]

Clearly, we are expecting that they will find work at that level.

On the grace period questions from the noble Lord, Lord McKenzie, which really boiled down to the self-employment questions, they are entitled to working tax credit if they meet the other conditions. On the 50 out of 52 weeks, there may be a gap in employment, but my understanding is that SSP, statutory sick pay, which is paid by the employer in the case of the employed, would constitute being in work, for obvious reasons. That actually responds to my noble friend Lord German’s questions.

16:59

As to the question from my noble friend on the entitlement to a grace period, although entitlement to working tax credit will lead to an exemption from the cap, qualification for a grace period is not dependent on entitlement to working tax credit being maintained. So you do not have to go on taking the benefit as long as you are in work. But during the qualifying period the claimant would have had to have been in employment and not entitled to ESA, income support or JSA.

On my noble friend’s question about the regionalised cap, we do not have a regionalised benefit system and therefore we intend to implement the cap on a national, rather than a regional, basis in April.

[Lord McKenzie of Luton]

Can the Minister help me on one more point on the period of grace? If somebody is employed but falls out of work completely, and would otherwise fall within the benefit cap, the period of grace would operate. One of my questions is to do with circumstances where somebody is outwith the benefit cap because they are fully employed and then they fall below the level at which working tax credit kicks in. They are not unemployed at that stage, but their earnings are lower, their benefits are higher and they are potentially within the cap. Does the period of grace protect them in those circumstances? It would be logical that it should, but I am not sure that it does.

[Lord Freud]

Yes, effectively, in the current system, going below the 16 hours would take you into the benefit system, so formally out of work. Clearly, under universal credit it would be a very different system, and we would have to have a notional figure of what the equivalent of work is, which we will introduce when we have the universal credit. The noble Lord is absolutely right in his analysis and his conclusion that there is no other way of doing it when you think about it, given our existing system.

My noble friend asked when we will publish our guidance. We had consultation on that guidance in August and we will make it available towards the end of the year. I can confirm that DHP will be allocated on the basis of greatest need. We are consulting with local authority representatives right now—in November—and we will make an announcement at the end of that time.

I am taking a long time, but with the forgiveness of noble Lords I will keep going, because there are a lot of interesting questions to answer. I could end up writing, but I would prefer to deal with them now if noble Lords will indulge me. My noble friend raised the cumulative impact of the changes on the housing market. We are monitoring this really robustly; I think we have one of the best assessments on what happened to housing changes in terms of the LHA changes that we have made. I think the noble Lord, Lord Best, would agree that it is one of the most thorough examinations of what really happens in a housing market when you make these changes and it will be valuable for a lot of the purposes. Clearly there is an overlap when we look at the effects of the benefit cap as well.

On the issue of the calculator not working, we have had stringent availability standards and there were two short periods when it was down for maintenance. There is a lot of help available to use it. On behavioural change, one of the things you can never predict when putting in these pressures is how people’s behaviour will change. However, we really are working with a lot of stakeholders to make sure that decisions are made such that people respond positively to the implication of the cap for them.

I can confirm to my noble friend that we are committed to tackling child poverty, but clearly our focus is on trying to tackle the causes of that poverty and not just moving people around on slightly artificial income lines. One of the things that universal credit will do is to move a lot of adults and children out of poverty. I make the same point to the noble Baroness, Lady Lister. We are looking for better measures and clearly the negative impact on child poverty may be mitigated if affected adults in the family move into work and the benefit cap supports our plans to make work pay. The £500 per week limit for couples and households with children is above the poverty line for a lone parent with up to four children, and broadly equates to the poverty line for a couple with four children; looking at the mechanics, that is where it is.

[Baroness Lister of Burtersett]

The point I was raising was about the effect on child poverty should the Government introduce a new cap on families who are not in work with three or more children, over and above the benefit cap. What work is being done in the department to look at the effect of the interaction of these two different caps on child poverty? It is possible that the noble Lord was about to go on to this but he seemed to be moving on to another issue.

[Lord Freud]

We have not done any work on that because it is not agreed government policy, but it is something that we are looking at, clearly. To the extent that we do look at it, it will be done on flow and not on stock. That was very clear in some of the discussions on this particular option. However, it is about people who get more than two children rather than people with more than two children. People will at least be able to plan their families should that become government policy. Regarding local networks, as raised by the noble Baroness, Lady Lister, clearly we acknowledge their importance. That is one reason for the regulations coming in on Friday: to try to ensure that people are not moved without very serious consideration.

There was a question about our early findings. There has not yet been a coherent survey. However, there are some interesting figures from our early findings showing the effect of the cap, and I think we will be able to share those more widely when they are locked down. As the noble Baroness said, it is absolutely essential that we do not confuse things that are happening anyway, and that we try to get analysis of the excess. There is, however, an interesting point: quite a few people dropped out of the benefits system when this started. That is not a surprise. One would expect to find some of the people who feel uncomfortable claiming gathered in the area with the highest numbers of claims—I put that as delicately as I can. I hope to be able to give some more information on that.

The noble Baroness asked about childcare. Jobcentre Plus recognises the importance of childcare as a key enabler, and clearly financial assistance is available for a claimant moving into the labour market. We accept the need for appropriate childcare when we make that judgment.

I think that I have done my best to deal with the point about temporary accommodation. The noble Lord, Lord Best, talked about rent levels and urged a regionalised system, quoting the originator of the welfare state. The rate of increase in rent has slowed down a bit over the past year and local authorities are working with households affected by the cap to ensure that they are able to locate affordable homes. I was just looking at some rental levels, which show a slight slowdown in some months of the year.

I am running out of time. There is a lot of other business and I have to stop now. I will have to write on the other matters, as there was just so much—I counted 40 questions from the noble Lord. I commend the draft Benefit Cap (Housing Benefit) Regulations 2012 to the Committee.

Motion agreed.