Housing Benefit (Abolition of the Family Premium and Date of Claim Amendment) Regulations 2015
(8 years, 9 months ago)
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Lord Kirkwood of Kirkhope
That this House regrets that the Explanatory Memorandum to the Housing Benefit (Abolition of the Family Premium and Date of Claim Amendment) Regulations 2015 does not contain sufficient information to gain a clear understanding of the policy objective and the intended implementation; and that some of those in receipt of housing benefit will be adversely affected by the regulations.
Relevant document: 17th Report from the Secondary Legislation Scrutiny Committee
Lord Kirkwood of Kirkhope (LD)
My Lords, it is a pleasure to move the Motion standing in my name on the Order Paper, which refers to the 17th report of the Secondary Legislation Scrutiny Committee. This is a slightly unusual Regret Motion. I gave the Minister’s private office notice of the fact that I wanted to spend a moment looking at some of the process issues around the regulations and in a wider context before moving on to some comments about the difficulties that may arise for those claiming housing benefit who may be adversely affected by the regulations.
I shall also refer to the 21st report of the Secondary Legislation Scrutiny Committee because, taken together, they cover an important worry that the committee, chaired so ably by the noble Lord, Lord Trefgarne, was beginning to have about the information and data supplied by the Department for Work and Pensions over recent weeks and months. Two other sets of regulations, the Universal Credit (Waiting Days) (Amendment) Regulations of a few weeks back and the housing costs amendment regulations, were also subject to some lapses, as is the committee saw it. The committee’s report stated in stark terms that it believed that there was insufficient information to determine the policy intent or intended implementation in the Explanatory Memoranda that the department supplied for the purposes of scrutiny by the committee.
The report used some stark language: there was a section on inaccuracy, a section on incomplete information, one on obscurity and one on lack of context. Taken together, they caused me some concern that this was a matter that should be drawn to the House’s attention. Speaking for myself, I rely almost completely on the excellent work that the committee, chaired by the noble Lord, Lord Trefgarne, does. It has a duty to bring matters to the House’s attention when it feels that that is necessary. If it is not getting the basic data that it needs to do that, it is a matter for concern. Incidentally, the Social Security Advisory Committee report that also looked at the regulations in front of the House also complained about limited material, lack of consultation and no analysis of the backdating period that was currently being claimed for the regulations as they were submitted to the committee.
Having said all that, I must acknowledge that the noble Lord, Lord Freud, responded to that in a robust way. He went to the committee and the exchange that he had with it is clearly set out. He agreed to set up a review to ensure that the process is clarified at a strategic level to deal with some of the complaints raised. I warmly welcome that. His letter of 11 January, I think it was, sets out clearly that some work is being done. He has given a reassurance that he will make sure that that happens. I am perfectly prepared to take his word for that, but I am sure that I am not the only Member of this House who will be looking carefully at the review when it is published.
I say this not by way of threat by any stretch of the imagination, but process is an important part of scrutiny. If the process is inadequate, it could be tested in the Lobbies. I am not saying that that by itself would be a reason for voting down statutory instruments, because the policy content is important, too, but these are important procedural matters. I am pleased that the Minister responded as clearly as he appears to have done, but I want the House to know that I support the statutory instruments committee and the SSAC in pursuing the department if they feel that they are not getting the information they need.
Having got that off my chest, I turn very briefly to the content of the final clause of the Motion, which deals with the backdating issue. Again, I drew heavily on the conclusions of the Social Security Advisory Committee. It came up with a compromise of a three-month period for backdating, not one; it is currently six months, as colleagues will know. I have looked at the argument both ways and the government response. I just do not believe that the department has dealt adequately with the important set of detailed questions raised by the Social Security Advisory Committee, which eventually took the issue under reference after it had a workshop about it. These are skilled people who know the complexity of the legacy benefits in a way that is not normally given to the rest of us.
I absolutely agree that the digital service of universal credit will deal with some of this in future. The one-month backdating is perfectly adequate for universal credit in the way that it is cast, as far as I am concerned, although we will need to wait and see what happens. So this is a transitional issue; I understand that. Of course, the announcement was made in the Budget. As the Minister knows, I complained religiously about him letting Treasury Ministers make announcements about social security. It is not a good thing because it is done under purdah. Nobody really gets a chance to look at the consequences. I am sure that the savings are drawn like blood out of the department and it is not an easy thing to do. I understand, too, that there is a responsibility to the nation’s taxpayers. But the Budget announcement just came out of the sky and I do not think any of us had a chance to understand any of the implications until after the deed was done. Once a Budget Statement is made, there is no going back.
I cannot figure out how the saving is £10 million. There are no data in there that persuade me that that is anything other than an estimate. I understand that it is a marginal amount of money in the totality of the Budget. I also understand that when this kind of material was being sifted through in the Treasury and the department there were a whole lot of other things going on. I can see a context where Ministers were saying, “Well, why are you bothering me with small amounts of money like this?”. Having said that, the people that it may affect are potentially the most vulnerable. We all know that these legacy benefits will still be around for a long time, in spite of everyone’s best endeavours to try to get universal credit implemented as soon as we can. Backdating, as I know from my former constituency days, is a well-known legacy safety net but one of last resort. People who really need it really need it. There are obviously delays, oversights and mistakes in the legacy systems, and we hope that universal credit will deal with some of that, too. But the histories of people who disproportionately claim backdating for lengthy periods of time are, in my experience, those claimants who have a disposition to mental illness and other vulnerabilities. That has to be weighed in the balance.
I would argue, too, that continuous good cause needs to be proved for any backdating claim to be seen under the legacy system. That is a way of dealing with claims that are not considered appropriate or within the rules. So there is a protection there. I also make the point that, as Crisis recently explained to me, its most recent work suggests that if people fall into homelessness —if they cannot get the backdating, are evicted and become homeless—that can cost between £3,000 and £18,000 further downstream to the public purse. That is just passing the problem on to our colleagues in local government. That is not necessarily helpful.
As I understand it, if there is only a one-month backdating period eligible, because there is no eligibility for housing benefit beyond that, there is no capability within the current rules as I understand them of applying discretionary housing payments. You need to be entitled to housing benefit to apply for DHPs. The Government have been quite creative about using discretionary housing payments to fill some of the gaps but I am not sure that they can be used properly in this context that we have in front of us this evening. I am be anxious to be put right on that if I am not correct.
I have just a final point of experience. Through my experience in the Wise Group in Glasgow, I saw one or two really difficult cases of sanctions being applied and, because of that, housing benefit being stopped over a long period of time—wrongly. That causes distress to housing benefit claimants whose situation will be made worse by these regulations.
So I am not sure about the saving. The wider cost-benefit analysis would need to weigh in the balance any discretionary housing payments or alternative payments found by local authorities to try to deal with the consequences of eviction as a result of these changes. I still believe that the SSAC compromise of three months would be a good one. Apart from anything else, the other legacy benefits such as income support and income-related JSA already have three-month backdating limits. So it is maybe not surprising that the SSAC in its conclusion came to the view that,
“the summary rationale given for the proposals—namely early alignment with UC—is too simplistic and potentially misleading”.
That is quite strong language for the Social Security Advisory Committee, but it is right to be concerned. I share its concerns and I hope that the debate this evening will point up some of the problems that may arise. I hope the Minister will watch these things carefully—I know that he always does—and that he will give us an assurance that if the changes have unintended consequences, he will do his best to bring these matters back to the House and try to get them sorted so that no vulnerable clients and HB applicants in future are caused further distress and misfortune by the content of these regulations. I beg to move.
Lord Low of Dalston (CB)
My Lords, I support the Motion of the noble Lord, Lord Kirkwood. I will speak particularly on the backdating aspect of the regulations.
Limiting backdating of housing benefit payments to one month is likely to put vulnerable people at risk of rent arrears and subsequent eviction, and possibly homelessness. Crisis, the charity for single homeless people, wrote to tell me that it is concerned that the most vulnerable will be affected by this change, including those who have experienced homelessness. It says that many of the people it supports to find and sustain tenancies make successful backdating claims for housing benefit often for upward of 12 weeks. These are often the result of clients having additional support needs that make it difficult for them to navigate the benefits system. Consequently, they fail to claim the benefits to which they are entitled in time.
The Government dispute the suggestion that limiting the backdating period will lead to tenants falling into rent arrears but Crisis says that many of its clients accrue considerable arrears before they seek the support they need to backdate a claim. Backdating claims are often made following a change in circumstances that affect a person’s entitlement or because of failures in the system that lead to housing benefit not being paid. I will mention three examples of when people may need to make a backdated claim. There is where there are fluctuations in income. When someone finds a job their entitlement to housing benefit must be adjusted. If they enter casual work, such as on a zero-hours contract, their entitlement must be calculated on a weekly basis. This can lead to payments being stopped until the claimant can provide all necessary payslips. That causes delay and the need for a backdated claim. The ability to backdate by only one month may not be enough to cover that delay.
Housing benefit claim forms may be lost. Despite the best intentions of council staff, housing benefit claim forms can go missing or online submissions may not be received. I can empathise with this and can vouch for the fact that this kind of thing can happen through nobody’s fault. Today, I rang up to buy some more premium bonds, only to be told that I needed to provide a password. Apparently, one had been sent to me in the course of the last year but it never arrived. Getting back to housing benefit, resubmitting claim forms can cause serious delays at the beginning of a tenancy. We need a backdating period sufficient to cover such delays.
Again, housing benefit is sometimes stopped in error when someone is sanctioned. This can lead to arrears, particularly if the landlord is receiving direct payments and does not notify the tenant that the rent has not been paid.
The Social Security Advisory Committee advised that the case for this policy has not been made out and recommended that it should be possible to backdate housing benefit for at least three months. It says that inconsistencies between the rules attaching to different benefits are hard to defend and add to the complexity that claimants are required to navigate. For people whose rent is paid monthly or four-weekly in arrears, the proposal will mean that there is no slack in the current complex legacy benefit context for them to realise that there is a problem with their housing benefit entitlement and make a late claim. This presents a clear risk that the impact on landlord and tenant behaviour could result in upward pressure on homelessness among the more vulnerable, with attendant costs that could offset the projected savings. It is disappointing, the committee says, that there has been no cost-benefit analysis of these aspects. For people whose rent is paid monthly or four-weekly in arrears, the proposal will mean that the new rules will not provide sufficient time for a backdated claim to cover the delays that have taken place.
The fact that there has been no effective impact assessment makes it difficult to assess the effect of reducing backdating by different amounts from the current six months. Centrepoint undertook a survey of more than 800 young people using its services and found that 78% of those who made a late claim for housing benefit were not seeking backdating for longer than three months; the majority of backdating claims could therefore be accommodated within a three-month period, and reducing it further could have a financial impact on a sizeable group of vulnerable young people, potentially causing hardship to those least able to withstand it. The Committee highlighted the fact that the legacy benefits system is more complex than universal credit; that being the case, there is a strong case for maintaining a longer backdating period to account for these complexities. Removing the ability to back-date housing benefit claims for a sufficient period may deter landlords from letting to tenants in receipt of housing benefit. Landlords may be particularly reluctant to let to people who have experienced homelessness in the past, given that they may be vulnerable to falling into rent arrears, often through no fault of their own.
The committee concluded that the position faced by housing benefit legacy claimants, particularly the more vulnerable, is substantially different and more challenging than the position following migration on to universal credit. It added that in the absence of a robust impact assessment, the case for a simple alignment with a one-month backdating rule has not been made and that there is a significant risk of offsetting additional costs to the estimated one-year saving of £10 million if the proposal is pursued in this form. It therefore recommends that, if the Government still wish to make an early reduction in the backdating period, a three-month period would strike a better balance between the aim of securing an expenditure saving and recognition of the substantial differences between the housing benefit legacy and universal credit positions. With the noble Lord, Lord Kirkwood, I would want to maintain that the three-month compromise is the one that we should go for, and the Government should rethink.
Lord McKenzie of Luton (Lab)
My Lords, we should be grateful to the noble Lord, Lord Kirkwood, for giving us the opportunity to range over this issue this evening and to the noble Lord, Lord Low, for his very extensive analysis of some of the risks around homelessness that these changes will create. Given the hour and the business to follow, I shall raise one or two brief questions.
On the family premium, the Explanatory Note with the regulations says:
“Removing the Family Premium helps to simplify the overly-complex HB system … and should therefore reduce administration costs”.
Can the Minister seriously tell me how much of a reduction in administration costs is anticipated just from removing this one component of what is and can be quite a complex calculation? It seems to me that it should be built into the system, so whether it is there or removed would make very little difference to the cost.
As for backdating, we have heard the arguments against the Government’s position that effectively we want to get equality with universal credit and if universal credit only needs one month’s backdating why does the housing benefit system need longer? I should have thought that it was recognised—and the noble Lord, Lord Low, has made it clear—that the housing benefit system is more complex. Indeed, is that not one of the boasts of the Government about universal credit, which we have supported—that it is an easier system whether you are in or out of work? You simply move up the scale; you do not have to come off one system of benefits and go on to another, or seek to return to them in due course.
We are in danger of overlooking a fundamental point here—that this is about backdating if there can be shown to be good cause. It is not something that is awarded willy-nilly. There are particular concerns around people with mental health conditions and the extent to which they are supported to make the right sort of decisions and judgments about their claim for benefits. That seems to sweep aside that issue.
There is one technical issue that the Minister may be able to help with. If somebody is awarded JSA after making a claim, they would be entitled to a three-month backdating of that benefit. The award of that benefit could automatically transport somebody on to maximum housing benefit—somebody who was not previously eligible for housing benefit. So we get somebody on JSA with a three-month backdating, which opens up the opportunity for housing benefit for somebody not previously entitled. There is something in the text that suggests that that backdating would apply to housing benefit as well, but I cannot quite see technically how that comes about. I would be grateful if the Minister could clarify that on the record tonight, because clearly there would be an anomaly with accessing one benefit opening up the opportunity for another benefit and giving rise to different backdating results, as a result particularly of these regulations.
Baroness Sherlock (Lab)
My Lords, I welcome the Minister’s enthusiasm to respond to the challenges put to him, but I regret that I am going to add to them, if he can bear with us for a little bit longer. I, too, thank the noble Lord, Lord Kirkwood, for giving us the opportunity to debate these regulations and for having gone into some detail about the process questions. I very much share his concerns. We have concerns of substance on these Benches, but the process should be of concern to all Members of the House, irrespective of the view that they may take on these regulations. I hope that the Minister gives some satisfactory answers on that.
As we have heard, these regulations do two things: they remove the family premium from claims to housing benefit from April 2016 and the backdating of housing benefit, to which I shall come in a moment. Existing claimants will also be affected if their circumstances change, such as if they move or if a child reaches the age of 18. When it is lost, it will be lost almost exclusively to working families, because households where someone is claiming an out-of-work benefit will automatically receive the maximum possible housing benefit payment. The Social Security Advisory Committee report cited an example from the Peabody Trust of a single parent in part-time work, caring for her disabled adult son. Should she need to make a new claim for housing benefit following the removal of the family premium, she would lose around £572 a year, compared to what she would get currently—a lot of money for someone in those circumstances.
My noble friend Lord McKenzie asked a very good question about the admin costs. It is hard to believe that simplification is the reason; one could always simplify benefits by abolishing them. We really have to have better arguments than that.
The DWP claims that withdrawing the family premium in HB will “promote better work incentives”, but, as the SSAC points out, some HB claimants will permanently lose the premium if they temporarily increase their hours and therefore could be deterred from doing so. Equally, some will be deterred from moving address to secure or look for work if it means a drop in HB, or could be discouraged from taking short-term work over Christmas, for example, if it means a drop in housing benefit. Will the Minister comment on that?
The SSAC was also very critical of the Government’s refusal to adopt linking rules. It gives the very serious example of domestic violence victims who need to be rehoused and points out that if somebody moves outside a local authority area, they lose the entitlement. The SSAC points out that some local authorities and social landlords have a deliberate policy of moving domestic violence victims to a different local authority area to minimise the risk that they would run into their assailant and to protect them. It states:
“Those organisations now face a fairly stark choice in terms of whether to keep the existing policy in the knowledge that the victim is likely to be financially worse off, or to rehome them within the existing local authority area where they may be at greater risk”.
The Government’s only response to this is to say:
“Since 2010 our policy has been to move away from building new linking into our reforms to Housing Benefit”.
That is not a reason. That is basically saying “The reason for our policy is that it is our policy”. I hope the Minister can give us the reason behind the policy rather than telling us that it is the policy. The Government go on to say that they do not think linking rules are the most appropriate way of supporting vulnerable cases, but they do not explain why. The only alternative they can offer is our old friend the discretionary housing payment, which has already been offered as an answer to almost every problem created by welfare change since 2010, from the fallout of the welfare Bill to the benefit cap.
The SSAC also points out that universal credit will allow linking and continuity of claim where there is a temporary increase in income or relocation to another local authority area, but they will not be available under these HB proposals which it says will have a negative impact on work incentives and will raise issues around income stability and security.
I now come to the backdating change which other noble Lords have commented on. A number of NGOs and charities have said that limiting backdating to one month will have a significant impact on vulnerable renters, a point made very clearly by the noble Lord, Lord Low, and my noble friend Lord McKenzie. As we have heard, the SSAC recommended that the Government should not proceed with the reduction from six months to one month. It is interesting that the committee expressed disappointment at the lack of proper consultation with local authorities, landlords and voluntary and charitable bodies which will be impacted by these changes. I hope the Minister can explain why that consultation was not done.
The SSAC’s view is that the position faced by HB legacy claimants, especially the more vulnerable, is substantially different and more challenging than the position following migration to universal credit. It pointed out that in the absence of a robust impact assessment the case for simple alignment was not there.
The response from the Government to the SSAC report was so slight as to be almost rude. Their only argument is to say that the policy intention is to align the housing benefit treatment with that in universal credit. Where is the rush? As the noble Lord, Lord Kirkwood, pointed out, it is not as though the entire population is about to land on universal credit. I know that back in November 2010 the DWP believed that everybody would be on it by 2017, but we now know that it is going to be at least 2020, possibly 2021, and maybe some way beyond that. We are years away from everyone needing housing support getting it entirely through universal credit. There could yet be millions of people who could come on to housing benefit, get it, move into work, come off it, come back on to it and still not be on universal credit, so there is a significant issue. I hope the Government will tell us their real reasons. It cannot just be that they want to be in exactly the same position on universal credit and on legacy benefits; otherwise they presumably would not have allowed the situation to develop where two people in identical circumstances, one on tax credits and the other on universal credit, could find themselves with a difference of £3,000 a year in entitlement. Will the Government tell us what the real reasons are?
To summarise I would like the Minister to answer some questions. I will be interested in his response to the process points made by the noble Lord, Lord Kirkwood. He referred to the Minister’s letter of 11 January to the noble Lord, Lord Trefgarne, saying that he had instigated a review of the way the DWP produces explanatory memoranda. Will he tell the House when that review is likely to report? Will its findings be published? If they are not going to be published, how will the House get reassurance that his department will be able to do this job better in the future than it has in the past? Will he tell us why the Government did not consult properly before issuing this instrument? Will he explain the reasons for opposing a linking rule in the family premium? In particular, will he tell us why he has rejected the SSAC recommendation of three months if the Government are not willing to go all the way to six months? I look forward to the Minister’s answers.
Lord Freud
My Lords, I ask noble Lords to forgive me for not keeping up with the exact floating role of the noble Lord, Lord McKenzie, as he moves forward and back on the Benches. I thank all noble Lords for their contributions which, as one would expect, covered a number of issues.
I start with the family premium, which will align housing benefit with universal credit, which does not have this process. As noble Lords will be well aware, it applies to new cases only. It will therefore not affect people in receipt of family premium on 30 April this year. They will continue to receive the family premium until they are no longer responsible for any children or young people under 20 or make a new claim for housing benefit. To avoid people dying at the stake for the sake of these premiums, I remind noble Lords of their very complicated history which started in 1988. With the reform of tax credits, they were removed from income support but not from housing benefit. I know there is a lot of historical nostalgia for bits of the benefit system, but this one reminds me more of an appendix than of anything else: it had a purpose at one time, but it is pretty odd to remember what it was and it can cause you problems, as I am discovering.
On the linking rules, where claimants are in receipt of housing benefit and subsequently move house into a different local authority, they are required to make a new claim for housing benefit. That has always been the case and the policy does not seek to change it. If the claimants were in receipt of the family premium before their move and they move after 30 April, they will no longer receive the family premium in their new housing benefit claim from their new local authority. That responds to the question from the noble Baroness, Lady Sherlock. I know that the noble Baroness likes to stretch out the period for which this will last, but universal credit will be coming in for new cases reasonably soon. It is simply not feasible to introduce linking rules for these cases because that really would introduce a level of complexity and cost.
I regret that I cannot answer the precise question from the noble Lord, Lord McKenzie, on the administration costs saved. When you go through the sums of how you reach that family premium amount and then do the taper with it, and you have to do that differently through every local authority, I have to believe that it genuinely saves some money. However, I cannot put any amount on that.
On the point about work incentives made by the noble Baroness, Lady Sherlock, the loss of family premium would be one factor among many others, including the financial gain and development prospects that would come from entering work. It is important to mention the likely behavioural change that could result from this policy, as the potential reduction in benefit may make claimants more likely to find work or increase their hours. Indeed, you see evidence of that in some of our welfare reforms already.
I turn to the issue of backdating, which noble Lords touched on. This change introduces equality for working-age claimants by aligning housing benefit rules with those in universal credit. Under current rules, as noble Lords have pointed out, the working-age housing benefit claimants may have their claim treated as made from a date up to six months before they actually make the claim. The backdating period will apply from the date of claim and is not dependent on the time that it takes to process claims. Our rationale is that the one month provides a reasonable period to seek assistance or to get claimant affairs in order for those who can demonstrate good reason as to why they did not claim more promptly. While claimants still receive legacy benefits before migration to UC, there is sense in preparing them for the transition to UC by, so far as practicable, equalising how they are treated. The other factor that is useful when we look at this is that our administrative data show that more than two-thirds of backdating claims for housing benefit are awarded for one month or less.
The noble Lords, Lord Kirkwood and Lord Low, asked why we rejected the three-month recommendation —although, interestingly, the numbers between the one-month figure and the three-month figure are actually not very great. We are aiming to change behaviours. If people want to claim benefits, one month allows sufficient time for them to register a claim in the first instance. It does not matter if it is a more complicated process, because the processing and getting the detail does not change the date of entitlement, which is established on the initial claim.
To respond to the noble Lord, Lord McKenzie, who as usual has excruciating detail at his fingertips, I confirm—and I am impressed that he has looked at this—that where a claim for housing benefit is linked to a claim for one of the legacy income-related benefits that applies the three-month backdating rule, entitlement to housing benefit will be linked back for the full three months if it is made within one month of the award for legacy benefit. So he got that spot on.
On the point from the noble Lords, Lord Kirkwood and Lord Low, we do not anticipate pressures on the homelessness front. I am slightly influenced by the fact that every time we make such a change we are warned about that but so far it has not come through.
Lord Low of Dalston
Does the Minister not agree that I gave some concrete and tangible examples where people might be justified in needing to have their claim backdated for longer than a month, through no fault of their own—for example, where forms have gone missing or where they have been sanctioned in error? Would it really mean any skin off the Government’s nose to include an element of flexibility to take account of those cases? If someone has lost a form or they have been sanctioned in error, those are not instances of behaviour that can be changed by limiting the backdating rules to one month.
Lord Freud
I listened very carefully to the noble Lord on those points. My response to that is, if the claim was made on that date and it was lost but it was made then, the issue is whether the bureaucracy accepts the claim that it is lost. The date is established then, and would be established in both of those cases. A lot of the problems may be through legacy benefits, where, as I just explained, the situation has not changed.
DHPs are designed to give additional support to claimants who need it. It is technically possible for DHPs to meet a historic need, although in practice we suspect that it is rather unlikely that a local authority would make this award for that reason, as the regulations state that a claimant should need further financial assistance with housing costs to receive a DHP. As the time period that they are applying for would have passed, it would be difficult to argue that there was a need for financial assistance with housing costs. Therefore it is unlikely but not impossible.
Lord Kirkwood of Kirkhope
My Lords, I am grateful to all colleagues who took part and, as always, I am grateful to the Minister. We will all collectively study his remarks in the Official Report tomorrow. I am very grateful for the opportunity the business managers have given us to have this debate, and I am pleased to seek permission of the House to withdraw the Motion.