Rent Officers (Housing Benefit and Universal Credit Functions) (Modification) Order 2023

Wednesday 22nd March 2023 Lords Chamber

Motion to Regret

19:31

Moved by

[Lord Shipley]

That this House regrets that the Rent Officers (Housing Benefit and Universal Credit Functions) (Modification) Order 2023 will freeze Local Housing Allowance (LHA) at the levels applied in April 2020 and therefore fails to account for inflationary increases in rent, resulting in vulnerable claimants spending a greater proportion of income on rent; further recognises that His Majesty’s Government’s inability to control inflation has resulted in unaffordable rents and contributed to housing insecurity for all tenants; and calls on His Majesty’s Government to align LHA with local housing rates.

Relevant document: 27th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)

[Lord Shipley (LD)]

My Lords, I move this Motion on behalf of my noble friend Lady Thornhill, who cannot be here today because she tested positive for Covid last night. She sends her apologies to the House, and I am sure we all wish her a speedy recovery. I draw the House’s attention to the wording of the Motion. Special attention is drawn to the instrument in the Secondary Legislation Scrutiny Committee’s 27th report.

No one in our society should be without a home but, due to successive freezes in local housing allowance, more and more people are being pushed into homelessness. This evening I will challenge the Government to reconsider urgently the decision to impose further real-terms cuts on local housing allowance this year. Last week the chief executive of Crisis described this decision as

“nothing short of crushing for people who rely on this vital lifeline”.

More than 1.87 million private renters on low incomes rely on local housing allowance to help pay their rent —this is more than one in three private renters.

It was right for the Prime Minister to act to protect these households during the pandemic, when as Chancellor he invested in the local housing allowance so that it would cover the cheapest 30% of rents in a local area. That meant that people were able to sustain tenancies during a period of hardship, and it also helped people who had been trapped in homelessness into tenancies. It is worrying that this progress has not been sustained. Despite inflation and rising rents, local housing allowance remains at the same cash level as three years ago, based on rent levels from four years ago. As the report by the Secondary Legislation Scrutiny Committee highlights, the Explanatory Memorandum did not “explain the policy objective” of the Rent Officers (Housing Benefit and Universal Credit Functions) (Modification) Order 2023 or explain what its effects would be on the recipients of local housing allowance.

However, the Government’s own figures show how severe the consequences are. Landlord repossessions increased by 98% at the end of last year. For every household facing eviction or rent rises it cannot afford, moving house is incredibly difficult to afford; for some, it is impossible. Advertised rents have risen at record rates since 2020, with Zoopla estimating an increase of 12.1% in the last year alone. Some areas have seen particularly high increases: rents are up 15.6% in Manchester, 14.1% in Glasgow and 17% in London.

In recent weeks, DWP Ministers have said that local housing allowance is not intended to cover all rents in all areas—nobody is calling for that, but surely the Government agree that it should cover some rents in all areas. Dataset after dataset shows that, in significant parts of this country, a household would simply not be able to find any properties to rent at local housing allowance levels. In July last year, the Bureau of Investigative Journalism found that only seven properties were advertised at local housing allowance levels across Wales. More recently, in February, the Bevan Foundation found that 16 local authorities in Wales did not have a single property advertised that was affordable on local housing allowance. Last autumn, Crisis and Zoopla found that only 8% of properties advertised across England over the previous 12 months were affordable on local housing allowance. In Watford, only 4% were affordable on local housing allowance. Overall, nearly a quarter of local authorities had fewer than 20 properties available at local housing allowance rates, and more than 100 local authorities had 3% of properties or fewer affordable on local housing allowance. For context, 38% of private renting households rely on local housing allowance to help pay their rent.

With an acute shortage of social housing, we need far more housing for social rent. As Members in this Chamber today have constantly pointed out over recent years, our building rate of social housing for rent has simply been far too slow. With that acute shortage of social housing, many people on low incomes have no alternative to renting in the private sector. As that becomes unaffordable, homelessness is rising. Having made progress in ending rough sleeping during the pandemic, the Government have now overseen a 26% rise in rough sleeping in England in the last year.

Investing in local housing allowance prevents people experiencing homelessness and makes it easier for people to move out of homelessness. As well as being one of the most effective ways to prevent homelessness, uprating local housing allowance would lead to savings across public services. Almost 100,000 households are stuck in temporary accommodation in England, including more than 125,000 children. Temporary accommodation costs local authorities nearly £1.6 billion a year. Staying in temporary accommodation, including unsuitable hotels and B&Bs, also has a damaging impact on people’s lives, making it harder for people to work, get their kids to school and stay healthy.

The Institute for Fiscal Studies has been clear that the choice to freeze local housing allowance is resulting in wide geographic disparities, whereby low-income renters in some areas can get the cheapest rents almost covered, whereas those in other areas must find an extra £150 a month to top up their rent, or face homelessness. Last month, Sam Ray-Chaudhuri of the Institute for Fiscal Studies said of investing to uprate local housing allowance:

“This isn’t an expensive policy”.


In a debate that can be overly focused on averages and aggregate costs, I will conclude with the experience of what it feels like for people on the brink of homelessness. One person—who it is not possible to name, but it is on the public record—has described how the rising cost of living was affecting him. He said,

“I wasn’t even earning enough money to be able to pay for the rent that I had currently for two years been paying, which was £870 a month, plus all of the other bills. And then of course when [the landlord] came back to me he said, ‘I put it up to £1200 because that is the going rate,’ and I just thought I have no hope … of being able to find that extra money, because it was hand to mouth pretty much all the time … to be able to find another £400 a month was just absolutely impossible. So, I had to tell the estate agent that I wasn’t going to be taking the lease on again and I was going to have to find other accommodation.”

There are plenty of people like that, and the other accommodation that they would like is just not there. Hostels, sofas and rough sleeping are what remains for far too many people, and the instrument we are debating does not offer them a route out. Unless the Government change their approach, thousands more people will be forced into homelessness over the coming months. With that, I beg to move.

[Baroness Lister of Burtersett (Lab)]

My Lords, I am grateful to the noble Baroness, Lady Thornhill, for tabling the regret Motion and to the noble Lord, Lord Shipley, for moving it. I hope that the noble Baroness will be better soon.

The regret Motion follows a highly critical report from the Secondary Legislation Scrutiny Committee. The importance of the issues it raises was reflected in the unusually large number of very helpful briefings I received when I tabled an Oral Question on the issue recently and the “huge amount of evidence” on the impact of the freeze received by the Levelling Up, Housing and Communities Committee recent inquiry into the private rented sector. As the Commons Library briefing on the LHA notes:

“Numerous bodies, including homeless charities, the representative bodies of local authorities and private landlords, are making the case for LHA rates to be uprated to cover at least the 30th percentile of local rents, alongside relinking rates to the real cost of renting for future years.”


According to the IFS, the freeze means that just 8% of low-income private renters now have all their rent covered by housing benefits, compared with almost half in the mid-1990s. For nearly a third of them, the amount of rent not covered eats up at least a third of non-housing benefits income, a situation faced by just 14% of the group in the mid-1990s.

This is one reason why analysis from the Joseph Rowntree Foundation indicates that the cost of housing for private tenants is a key driver of poverty today, most starkly for families with children. The more that private tenants are having to use their non-housing universal credit to meet their rents, the less that next month’s 10.1% increase in universal credit and other benefits—which no doubt the Minister will pray in aid —will help them to meet other basic costs, such as food.

A recent report by the JRF and the Trussell Trust shows how universal credit is too low in any case to meet the most basic of needs. A piece in my local paper, the Nottingham Post, just last week cited the growing gap between the LHA and increasing rents as an important factor in the worrying increase in arrears and everyday living debts seen by the local Citizens Advice.

In his helpful letter following the uprating debate, the Minister said that DWP is working closely with DLUHC to monitor rental shortfalls. Could he tell us what their assessment is of the average shortfall and of the numbers affected? Following my Oral Question, he promised to write to the noble Lord, Lord Carrington, with a reply to his question as to what proportion of those receiving the LHA are unemployed and therefore more reliant on this money to pay their rent. Could he share that information—in a letter, if necessary—with the rest of us and include other private tenants without earnings?

The other reason that this is so important is that the inability to meet the full rent can tip people into homelessness, as the noble Lord, Lord Shipley, said, and as the homelessness charities have warned. So far, the Minister has carefully avoided answering questions as to the likely impact on homelessness of freezing the LHA yet again. I cannot believe that the Government have not done some kind of assessment of the likely impact, so I would be grateful if he could share it with us.

Hitherto, whenever this issue has been raised in either House, the ministerial response has been woefully inadequate. There seems to be three stock justifications, none of which is convincing. The first is simply the cost, which, it is suggested, cannot be borne in addition to the general benefit uprating. I have already indicated why this is short-sighted from the perspective of individuals suffering the consequences, but as the noble Lord, Lord Shipley, has highlighted, it is also short-sighted from a public-spending perspective, because of the knock-on effects on public services through homelessness, short-term accommodation and both physical and mental health. Have the Government made an estimate of those knock-on costs? From last week’s Westminster Hall debate, it would appear not, which betrays a very narrow approach to assessing the cost of policies to the public purse.

19:45

Secondly, there is the inevitable reference to discretionary housing payments and, to a lesser extent, the household support fund. Discretionary cash-limited funds such as those are not suitable for meeting ongoing weekly costs, and lack the security provided by weekly benefits themselves. Moreover, according to Shelter, the DHP budget was cut by nearly a third in 2022-23, and the Government’s own data show that councils are already struggling to meet need. Shelter notes that 31 English councils had spent three-quarters or more of their allocation before the winter had even started, with some on the brink of running out of funding. It warns that local authorities are under pressure to cope with the worsening inadequacy of LHA rates with less DHP funding than at any time since 2013. In answer to a follow-up question to my Oral Question, the Minister said that he would see whether it would be possible to publish the information from local authorities on how these discretionary funds are spent. Perhaps he could let us know now or follow up in a letter.

Thirdly, there is an attempt to justify the freeze on the grounds that, to quote the Minister, it

“it is right that the money we give is properly targeted to those who are in genuine need.”—[Official Report, 22/2/23; cols. GC 476]

The LHA is already targeted by way of means testing. Moreover, it provides a vital lifeline for groups in vulnerable circumstances, such as survivors of domestic abuse and violence. As a briefing from Crisis, together with 14 organisations in the poverty and domestic abuse sectors, points out, access to

“affordable housing is a key factor in decision-making about whether they stay with, or leave, an abuser”,

and research shows that possible homelessness is a barrier to many deciding to leave. Crisis cites the experience of the domestic abuse charity Hestia, which is finding that families are having to stay longer in refuges because they cannot meet the rising cost of a home to rent.

To the extent that the LHA helps to prevent homelessness, surely maintaining it at a level that bears a realistic relationship to local rents is a well-targeted use of public money, especially given the impact of homelessness on children and on the ability to respond to the Government’s desire to see more people in paid work.

Crisis concludes:

“Investment in housing benefit rates is well-targeted at people who are facing the greatest pressures as a result of the cost of living crisis.”

Is Crisis wrong? If yes, could the Minister explain why? Are these groups not in genuine need? If they are not, why should local authorities be expected to help them out using their limited funds? How does the targeting argument stand up in the face of the

“(increasingly) large and arbitrary variations in entitlements”

across the country, as demonstrated by the IFS?

It was desperately disappointing that, despite many representations, there was no mention of the LHA in the Budget—a Budget which targeted billions of pounds of pensions tax relief at the top 1%, yet could not find the £600 million to £700 million needed to protect low-income private tenants. The Parliamentary Under-Secretary responded to last week’s Westminster Hall debate with the comment that

“the challenging fiscal environment has led to where we are”,—[Official Report, Commons, 15/3/23; col. 372WH.]

as if the Government had no agency in the matter. In fact, they have made a clear choice to target resources to very high earners at the expense of low-income private tenants. There is no point in those on the Front Bench shaking their heads; it is absolutely true.

It is not good enough for the Secretary of State to say that he will consider the concerns raised by many parliamentarians and others when it comes to deciding on next year’s uprating. That means any increase is at least a year away. What are those who rely on the LHA supposed to do in the meantime? How are they supposed to feed themselves and their families, keep warm and keep a roof over their heads? I have twice asked the Minister what advice he would give to someone in this wretched situation and twice he has avoided answering. Perhaps he could do so on this third attempt.

[Lord Best (CB)]

My Lords, I thank the noble Lord, Lord Shipley, for bringing forward this Motion, and I send my best wishes for a very speedy recovery to the noble Baroness, Lady Thornhill.

It is certainly a matter of regret that the 2020 freeze on the local housing allowance is to be perpetuated, despite rent rising considerably in a number of places. When the local housing allowance which caps housing benefit falls behind market rents, tenants must make up the shortfall by finding the money from their other benefits intended to cover food, clothing, heating, et cetera. Research by the Joseph Rowntree Foundation in partnership with the Trussell Trust shows that universal credit for everyday living costs is already at a critically low level; there is absolutely no room here to pay for a rental shortfall.

Of course, what these households need is secure accommodation provided at social rents, far below the market rents of the private landlord. But as we all know, there is the most acute shortage of available social rented housing. With the social housing sector halving to 17% and the private rented sector doubling over recent years to around 19% of the nation’s homes, more and more households have had to turn to the private rented sector. But private landlords in most places have no need to take in anyone in receipt of housing benefit at a lower rent than they can get from the market.

The freeze puts terrible strains on local authorities that are working to reduce homelessness. How on earth can they fulfil the statutory duty to house families and vulnerable people when there is an absence of social housing and when rents present an insuperable barrier in the private sector? The only answer is to secure a place for them in temporary accommodation, which, as graphically described by Shelter in its recent report entitled Still Living in Limbo, is often of the most abysmal quality, often overcrowded and far from their previous home, friends, schools and family. Temporary accommodation now accommodates nearly 100,000 households, including over 125,000 children, at a cost of £1.6 billion per annum.

I have heard the argument, which was addressed by the noble Baroness, Lady Lister, that the problem of the rental shortfall—the gap between rent and housing benefit—can be overcome by the tenant obtaining an emergency discretionary housing payment, or DHP. Sadly, this safety net is not any kind of proper solution. DHPs represent less than 0.5% of total housing benefit expenditure and are usually for a few months only. There is no way in which DHPs can save tenants in a wide spectrum of extreme circumstances, including all those afflicted by the LHA freeze. I gather from housing expert Sam Lister at the Chartered Institute of Housing that last week, the Treasury announced that the total for DHPs for the next two years will be much lower than in any of the preceding 10 years, despite the extra pressures the continuing LHA freeze will bring.

It is understandable that the Government do not wish to pay more to private landlords. The total cost to the nation of housing benefit is around £22 billion per annum. Blame for this predicament must fall on the Chancellor’s predecessors, who made short- term savings by cutting up-front grants for social housing. Grants paid for new social housing would have secured homes at lower rents for decades. For the longer term, the answer is to rebalance the rented stock so there is more social housing to go around. To accelerate this, government funding for acquisition and modernisation of run-down privately rented stock by social landlords is a solution that saves money over the years ahead.

However, the immediate regret is that perpetuating the LHA freeze will bite harder and harder as private rents inexorably increase. Citizens Advice has calculated the proportion of all households in a critical financial state that would be rescued by the lifting of the LHA cap. The answer is that this action by the Chancellor would take about 10% of these households out of their current financial crisis—by no means a panacea for all the problems of negative budgets and debilitating poverty, but a significant and simple way in which to make a huge difference to the lives of the hardest pressed of our fellow citizens.

I support the noble Lord, Lord Shipley, in his Motion to Regret.

[The Lord Bishop of Manchester]

My Lords, I am very pleased to take part in this short debate. I would like to add my support to the Motion proposed by the noble Baroness, Lady Thornhill, and along with others wish her a speedy recovery. I am grateful for the impressive way in which the noble Lord, Lord Shipley, took this on at very short notice.

I declare my interest as set out in the register, I am the owner of one apartment, in Birmingham, currently privately let. I echo the concerns of other noble Lords. I had intended to add further statistics—I am a mathematician by background—but I think noble Lords have had enough numbers in this short debate already.

It is my privilege to chair the Manchester Homelessness Partnership, which brings together our city council along with public sector bodies, the private sector, universities, the blue light services, health services and charities. We have fought hard and long and we have actually got rough sleeping down in our city since its peak in 2018. But increasingly, my colleagues and I are finding that those who end up on the streets are not there for the usual reasons, such as the breakdown of a marital relationship or leaving the parental home after a dispute. It is also not just about mental health, although that is still a major concern. Increasingly, it is simply because they have lost a private tenancy due to being unable to pay the rent. We have heard how rents have gone up, but homelessness carries a huge cost. It is a heavy drain on public funds, as we have heard, but even more critically, as the noble Lord, Lord Shipley, has said, it wrecks the lives of ordinary, decent members of our communities. It does not take long to end up homeless, but it takes years to get out of the pit you have fallen into. It is a long, slow and painful process, as I know from having befriended people who have been rough sleepers on the streets of my city.

I am also concerned by the opaque nature of explanatory material on this SI, provided by the Department for Work and Pensions. The Secondary Legislation Scrutiny Committee’s report states that the explanatory material laid in support of the statutory instrument

“provides insufficient information to gain a clear understanding about the instrument’s policy objective and intended implementation”.

Indeed, it does not do much more than to state that,

“for 2021/22 and 2022/23, all rates were frozen at the same cash levels that were set in 2020/21”.

That is not an explanation—and there is no understanding of the policy in that. As the committee’s report states, this makes the House’s scrutiny role much more challenging. We need to know why something is being done if we are to scrutinise it properly.

To conclude, I add my support to the noble Baroness’s Motion and echo the calls of many in the housing sector, as well as noble Lords in this debate, who are urging the Government to unfreeze local housing allowance now.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise to offer the Green group’s support for this regret Motion and to echo others in thanking the noble Baroness, Lady Thornhill, wishing her all the best and thanking the noble Lord, Lord Shipley, for his excellent introduction.

In formal terms, this is a Motion to Regret, but what is very clear from this debate is that it is really an expression of horror at the infliction of poverty, inequality and deep suffering on people who are in that situation through absolutely no fault of their own but as a result of—as the noble Lord, Lord Best, said—decades of government policy that have seen housing treated primarily as a financial asset rather than homes that should be secure, affordable places for people to live in. That includes the great privatisation of the right-to-buy policy, the failure to keep building council homes and the reliance on a handful of private sector builders whose profits keep going up while the rest of us suffer—a structure that reflects so much of our economy.

20:00

I echo the comments of the right reverend Prelate. I really think that the Government, reading the Secondary Legislation Scrutiny Committee report, should be absolutely embarrassed. It is clear that the committee had to act like a dentist drilling into a hole so as to uncover basic facts that should have been in the government statement itself We have discussed the issue of cost and, thanks to its work, the Secondary Legislation Scrutiny Committee has deduced from the information provided by the Government that the decision

“represents a saving to the DWP in the order of £600 million.”

I went looking for comparisons for that and found quite a few. To pick out one: that is 1/60th of the money estimated to be lost to tax dodging every year. Where does the money come from? Let us make corporations and rich individuals pay just a tiny fraction more of what they should be paying in tax and it would cover the Government’s costs.

We have already had an extensive account of just how awfully inadequate the levels of housing support are. The Chartered Institute of Housing has described this as a “huge gap in support” for private tenants. As with so many government decisions, this issue is particularly affecting the young with greatest force. The LHA shared rate for those who are single and under the age of 35 only covered the rents in 10% or less of cases, or seven out of 10 local housing markets. In one in 10 housing markets, there are no shared properties within the LHA rate.

To look at what is happening as a measure of the failed government policy that we started with, a report last year by Shelter showed that private rents across the country have gone up by 5% to 8% since the LHA was frozen in response to the pandemic in 2020. However, that is, again, another best guess, another deduction. If we look at the figures from the Office for National Statistics, rents in the UK increased by 4.4% between January 2022 and 2023 alone. That is the largest increase that the ONS has recorded since it began these records in 2016.

The fact is that this is only what is measured. The reality of rent inflation is worse. Unlike house prices, which are recorded in the Land Registry, there is no central registry for rents. The attempt by the ONS to collect this data is still what it describes as “experimental”. It is based on newly advertised properties and does not cover what happens within tenancies. There is plenty of anecdotal evidence around of private renters saying that their rent has gone up by 20%, 30% or 50% while they stay in place, struggling on as best they can. Those are the kinds of figures that are simply not even being recorded in the horror stats that we are now reflecting on.

This truly is an indefensible statutory instrument. I cannot help thinking that, because it is a financial matter, this House is not in a position to move a fatal Motion—but, boy, should we be doing that if we want to act for some of the poorest, most disadvantaged people in the most desperate circumstances in our country.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, like others, I thank the noble Baroness, Lady Thornhill, for tabling her Motion and wish her a speedy recovery. I also thank the noble Lord, Lord Shipley, for moving the Motion on her behalf. I say at the outset that I think I agree with every word that every noble Lord has said so far in this short debate on the regulations before us.

When local housing allowances were introduced in 2008, the aim was to reach up to the 50th percentile of all rents in a broad rental area. In other words, people on benefits could afford to live in the cheapest half of rented properties in the area that they live in. However, from 2011, that all changed. First, LHA rates were downgraded to the cheapest 30% of local properties. Then, rather than moving with rent levels, LHA rates were uprated by inflation, then by just 1% and, finally, they were frozen in 2016. The result was that, by 2020, LHA rates bore no connection to the actual rents in local areas. In 2020, the Government restored them to the 30th percentile, only to then freeze them in cash terms. This year, although Ministers finally agreed to raise most benefits by inflation, they excluded LHA rates. The effect of this freeze is seen in a growing gap between the actual rents that people pay and the amount of housing support that they can receive—an approach that the Institute for Fiscal Studies said was

“arbitrary and unfair, and its consequences will only become more bizarre over time.”

There is deep and widespread concern in the housing world about the effects of this policy. The Northern Housing Consortium told Ministers that

“a continued freeze on LHA would make it even harder for existing private renters to make ends meet, risking homelessness and making it increasingly difficult for local authorities to discharge their homelessness duties effectively.”

It reported in the Northern Housing Monitor 2022 that only 7% of rental adverts were affordable to those reliant on LHA in the north. The National Residential Landlords Association says that the LHA rate freeze has

“led to the proportion of landlords letting to tenants in receipt of benefits falling over the past decade.”

If supply falls, demand does not, if only because there is no alternative. The Levelling Up, Housing and Communities Committee, in its report on the private rented sector in February—my noble friend Lady Lister made reference to this report—concluded that the failure to ensure LHA rates keep pace with market rents

“is quite obviously making the private rented sector even less affordable for many people who are only there because the social housing sector has been cut back and can no longer accommodate them.”

That is the problem.

Unsurprisingly, given high inflation and the pressure on supply, while LHA rates are frozen in cash terms, private sector rents have continued to rise, so the gap is getting bigger year on year. The Institute for Fiscal Studies says that, compared with uprating LHAs to match local rents, the freeze will reduce support for nearly 1.1 million households by an average of £50 per month, saving the Government more than £650 million in 2023-24. That is on top of the amount that people were already having to find as a top-up. Over 800,000 households in the private rented sector face a shortfall between their rent and their local housing allowance, including over half of all universal credit households who rent privately. The Institute for Fiscal Studies further says that

“two-thirds of lower income privately renting households must cover at least a quarter of their rent from sources other than housing support.”

The House of Commons Library briefing, which has been referred to in this debate, says that, from April 2023, on average, households will need to top up their rent by

“just under £750 a year.”

People in households with a disabled person are more likely to be hit by LHA shortfalls. Paul Sylvester, head of housing operations at Bristol City Council, told the Work and Pensions Select Committee in 2021 that half the households they saw with a shortfall included a disabled person. They were increasingly seeing disabled people forced to use their disability benefits to cover the rent top-up, rather than what the benefits were meant for. Can the Minister say whether the Government have looked at the impact of this policy on disabled people specifically? And the problems are not equally distributed. The IFS cites the example that, while the 30th percentile of rents in Bristol is £100 more than in Newbury, the amount of housing support that those who live in Bristol can receive is £12.50 less than those who live in Newbury can receive. How can this be right? Can the Minister please explain?

I have no doubt that the Minister will try to suggest that there is not a problem, because anyone who is struggling can always request a discretionary housing payment: other noble Lords referred to this in their contributions. But let us be clear: a discretionary fund for one-off payments is not the answer. In any case, a report by Shelter published in February—again, this has been referred to—found that the Government’s own data showed that councils were already struggling to keep up with demand. It says:

“Some were on the brink of running out of funding—31 English councils had spent three quarters or more of their allocation before the winter started”.


It points out that the problem is especially bad in certain regions. Take the north-east: Sunderland, Gateshead and Northumberland spent more than 90% of their allocation by the end of September 2022, and none of this is surprising given that DHP funding was cut by £40 million in this financial year. At a time when inflation is dangerously high and food bank use is at record levels, how do Ministers expect those on low incomes to find ever larger sums to top up their rent?

We see from the figures that homelessness is soaring. Rough sleeping is up by 74% since 2010 and by 26% in the last year; there has been an 83% rise in the number of children now living in temporary accommodation as a result of homelessness. One in 23 children in London is now homeless. The squeeze on local housing allowance is undoubtedly a major driving factor in this situation. It is also hitting local authorities and the taxpayer, as evidence suggests that more people have been forced into expensive temporary accommodation. Can the noble Viscount tell the House what assessment the Government have made of this wider cost to the public purse of the LHA freeze?

Investment in social housing is by far the best solution to this crisis. That is the way to ensure that low-income families can have a secure and affordable home to live in, and a better-managed private rented sector would also be good for tenants. Ministers have promised action for years, but what have we seen? Not a lot. All these things would be better for the public purse too. In the meantime, freezing the local housing allowance makes no sense whatever and serves only to make a bad situation worse.

I ask the noble Viscount whether he might like to join me one day and go out to some of the London boroughs to look at the quality of the accommodation we are asking people to live in. As the noble Lord said, people are being asked to live in the most appalling accommodation, so I hope he will join me. The noble Lord, Lord Young of Cookham, came out with me a couple of years ago. It is quite shocking where we expect families to live, so I hope the noble Viscount will accept the invitation to come out with me some day in the next few months. Anyway, I look forward to what he will say in response to this debate.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, I start by taking up the offer of the noble Lord, Lord Kennedy. This is a fairly straightforward answer: it is a yes. I would very much appreciate the opportunity to join him and whoever else he might care to bring along to see for myself what is happening. It is very much what I would like to do—genuinely.

I thank the noble Lord, Lord Shipley, for initiating this debate on the Rent Officers (Housing Benefit & Universal Credit Functions) (Modification) Order 2023. This annual legislation informs rent officers in the Valuation Office Agency, the VOA, and rent services in Scotland and Wales of the level at which to set local housing allowance, LHA, rates from April 2023. I also add my voice to those of other noble Lords in wishing the noble Baroness, Lady Thornhill, a speedy recovery from her illness—as the House is aware, the debate was down in her name.

20:15

This Government continue to spend considerable amounts annually to provide housing support to those on low incomes. We spend almost £30 billion a year on housing support in the private and social rented sectors, supporting those on low incomes. In fact, we currently spend more than any other OECD country as a proportion of GDP on housing support. The noble Lord, Lord Shipley, echoed our view that LHA rates are not intended to cover all rents in all areas. We have a fiscal responsibility to taxpayers, but I also say, in terms of what I have just said, that we really do understand—I am personally very aware of this—that global inflationary challenges are putting pressures on household budgets, and rents have risen rapidly in some areas. We are very aware of that, and this is why, in the Autumn Statement, we announced a significant, wide-ranging package of support to help low-income households struggling with the cost of living.

I pick up the theme of homelessness that was raised by several noble Lords this afternoon and evening, particularly the noble Baroness, Lady Lister, and the noble Lord, Lord Shipley. I start by saying, as the House will know, that the causes of homelessness are multifaceted and often complex, and they interact dynamically, making it difficult to isolate the relative importance of individual factors. Having said that, in answer to questions regarding this freeze, for 2022-23 we are investing £366 million into the homelessness prevention grant in England to support local authorities to prevent homelessness. Local authorities can use the homelessness prevention grant flexibly to meet their homelessness and rough sleeping strategies—for example, to offer financial support for people to find a new home, to work with landlords to prevent evictions or to provide temporary accommodation, among other preventive measures. We have announced over £650 million in funding for the HPG in England from 2023 to 2025.

The homelessness prevention grant helps tackle homelessness before it occurs. It supports local authorities to deliver their statutory duties to prevent homelessness and provide temporary accommodation where required. Tens of thousands of people will be protected from homelessness as a result of this funding. As a reminder, this is for England only: the devolved Administrations have their own policies, as the House will be aware, to tackle this important issue.

I return to the Autumn Statement and remind the House of the detail which is germane to this debate. Measures in the Autumn Budget are intended to provide stability and certainty for households and include further cost of living payments for the most vulnerable, meaning that around 8 million households on eligible means-tested benefits will get up to a further £900 in payments in 2023-24. As the House will be only too well aware, I took through the Bill on this earlier this week, and we hope to receive Royal Assent shortly. We are providing support to all households through the energy price guarantee, which caps the price people pay for each unit of energy and, as I will set out later, and as the House will again be aware, we are extending it. The benefit cap, working age and disability benefits will also be uprated by 10.1% in 2023-24.

For those who need additional support, the Government are providing an additional £1 billion of funding, including the Barnett impact, to enable a further extension to the household support fund in England over the 2023-24 financial year. In England, this scheme will be backed by £842 million, running from 1 April 2023 to 31 March 2024. Total funding for the devolved Administrations is £158 million, and it is for Wales, Scotland and Northern Ireland to decide for themselves how to allocate their additional Barnett. Local authorities are expected to support households in the most need. I noted all the comments made by the noble Lord, Lord Best, in this debate. I know and hugely respect his knowledge and expertise in this sector over many years.

The household support fund can be used to meet immediate needs and help those who are struggling to afford energy and water bills and food, as well as related wider essentials. I make the point that the focus of this is on the essentials, such as bills, clothing and essential transport-related costs.

I will pick up some points made about the private rented sector by the noble Lords, Lord Best and Lord Kennedy, and the noble Baroness, Lady Bennett. We invested almost £1 billion in 2020 to provide support for private renters and have maintained the increase in cash terms since then. As I said earlier, we recognise that rents are increasing in the private rented sector, but the challenging fiscal environment means that difficult decisions have to be made to ensure that support is targeted effectively. The Chancellor announced a package of targeted support worth £26 billion in the Autumn Statement. The noble Baroness, Lady Bennett, is shaking her head, but she must realise that this is true. To protect the most vulnerable, working-age and disability benefits will be increased in line with inflation for 2023-24.

Further on the private rented sector, to respond to the noble Lords, Lord Kennedy and Lord Best, we also recognise the supply challenges in the PRS and the competitive nature of the market, which drives up rental prices. This theme was also mentioned. We continue to work very closely with the Department for Levelling Up, Housing and Communities, which is responsible for increasing the supply of affordable housing. The £11.5 billion affordable homes programme aims to deliver tens of thousands of new affordable homes, many of which will be for social rent.

As I alluded to earlier, in the Spring Budget we have gone further by extending the current energy price guarantee from April until the end of June this year. Taken together, the Government have provided total support of over £94 billion over 2022-23 and 2023-24 to help households and individuals with the cost of living—an average of over £3,300 per UK household. The House will know that, as well as providing support for low-income households, we are focused on supporting people into work by removing the barriers currently stopping them working. We are determined to see people moving into and progressing within employment, creating the conditions to help them move off benefits, improve their lives and boost economic growth.

I remind noble Lords that in last week’s Spring Budget, the Government announced an investment of £3.5 billion over five years to boost workforce participation. This includes help to address the issue of upfront childcare costs by allowing parents to claim back a flexible support fund payment for childcare and increasing the generosity of the universal credit childcare costs caps. This will allow parents to claim back more for their childcare so that those wishing to move into full-time work are not prevented by high childcare costs.

We also announced that, for those who are disabled or have a long-term health condition, we will remove the work capability assessment to ensure that those who are able to can progress in or towards work without the worry of being reassessed and losing their benefits. Moreover, we will launch universal support, a new programme working directly with employers to match individuals with jobs. In addition, we previously announced an increase in the national living wage to £10.42 per hour from April 2023.

I return to the question of renters. As mentioned earlier, we have provided consistent support through DHPs, which we provided to enable local authorities to deliver critical support to vulnerable claimants who need help with their housing costs. Since 2011, we have provided nearly £1.6 billon in DHP funding to local authorities. We made £100 million in DHP funding available to local authorities in 2022-23 and will make a further £100 million per year available in 2023-24 and 2024-25.

In addition to the central government contribution, to answer questions from the noble Baroness, Lady Lister, and the noble Lord, Lord Best, English and Welsh local authorities can top up DHP funding to a maximum of two and a half times this figure with their own funds. Local authorities administer the DHPs, as they are best placed to make informed judgments about relative priorities and needs in their area to ensure that the most vulnerable are supported and the funds are targeted effectively. Officials at the DWP engage with individual local authorities and through regular forums to support effective administration of the scheme. Local authorities have been informed that they will receive the same DHP funding in 2023-24 and 2024-25 as in 2022-23. This provides consistency and certainty for them to plan services to support the most vulnerable in their local areas.

I reiterate that we spent £30 billion to support private renters in the previous financial years. While we recognise that rents are increasing, importantly, we must balance this significant investment with the cost to taxpayers and use our resources in the most effective and efficient way possible.

The noble Lord, Lord Kennedy, and the noble Baroness, Lady Lister, expressed concern that local authorities are underfunded. I will try to be helpful by saying that local authorities in England are already funded through the local government finance settlement, on a non-ring-fenced basis, to deliver local welfare provision using their existing powers. Councils have flexibility to use the funding they receive from the annual local government finance settlement for local welfare assistance.

We have invested significant amounts in supporting private renters since 2020. In response to the Covid-19 pandemic, this Government increased local housing allowance rates to the 30th percentile of local market rents, investing nearly £1 billion to support private renters. We have maintained those increased levels since 2020, as has been mentioned.

I will address a number of further questions in the limited time I have. First, the noble Baroness, Lady Lister, asked how many claimants have a shortfall. From our figures, 56% of claimants face an average shortfall of £149 per month, as of August 2022. She also raised an important point about domestic abuse victims. She will know that much work on that is going on across government; in my area, child maintenance services are a priority. The Government have brought forward hugely beneficial changes for vulnerable young claimants who rent privately. In October 2022, we introduced two new exemptions from the shared accommodation rate of the local housing allowance for victims of domestic abuse and of modern slavery, brought forward a year earlier than planned. I hope that provides some help.

On the Secondary Legislation Scrutiny Committee, I do not think I can add to what noble Lords have read. I have no particular answer, except that it has given its verdict and my department has taken strong note of what it said.

The noble Lord, Lord Kennedy, made a very important point about the disabled cohort. I reassure him that a full equality analysis has been undertaken to consider the impact on those with protected characteristics, including the disabled. I hope that gives him some comfort.

To conclude, as reaffirmed by both support packages announced in the Spring and Autumn Budgets, the Government are committed to supporting all members of society, in particular low-income households. We recognise that we must continue to provide that support for the most vulnerable in society while balancing it with fairness to the taxpayer, as I said earlier.

[Lord Kennedy of Southwark (Lab Co-op)]

I am glad the noble Viscount mentioned fairness to the taxpayer, as it is not only about the sums of money—our whole point is that the Government are not spending it very wisely. If they looked and listened a bit more, they could spend it more effectively and get better value for money for the taxpayer. It is no good saying that they want to spend money wisely. They are not spending money wisely and that is causing huge grief for people. I do not understand why they will not address that. They need to work across departments, address the issues and spend the money better.

[Viscount Younger of Leckie (Con)]

I absolutely have listened to the noble Lord, but how Governments spend money and whether they spend it wisely is a subjective issue wherever it is spent. We want and need to spend it wisely and on the most vulnerable.

[Lord Shipley (LD)]

My Lords, in the one or two minutes I have, I thank all those who have spoken this evening. I hope the Minister has been impressed by the unity of view across the Chamber. He said that the Government were spending around £30 billion a year on housing support in the private rented sector. That is a false economy. It is essential to spend it, but the only way to bring down the benefits bill is to build more genuinely affordable social housing, as the noble Lord, Lord Kennedy of Southwark, has explained.

20:30

The Minister said that the Government increased local housing allowance during the pandemic. That is true, but now it is not being increased and it will be based on rents of four years ago. The problem is that the Government did not increase local housing allowance between 2016 and 2020; during the pandemic they were putting right what had gone wrong in previous years.

Finally, the Minister referred to the affordable homes programme and new homes being built. However, the truth is that each year, there is a net loss of genuinely affordable homes for social rent. Fewer social rent homes are built compared to those lost through sales and demolition.

I hope the Government will reflect on this evening’s debate. There is clearly a lot of concern about what is happening, and something needs to be done about the amount of social housing. I hope the Minister and the Government will reflect on the need to revise local housing allowance. At its heart, it is a solution for the Government in supporting those who are less well off.

Motion withdrawn.