Housing Benefit (Amendment) Regulations 2011

Baroness Hollis of Heigham Excerpts

Wednesday 12th October 2011 Grand Committee

[Lord Freud]

I will withdraw that name.

[Baroness Hollis of Heigham]

We did not hear it.

[Lord Freud]

I muttered it. The letter was very moving and was about a particular individual.

Clearly, people on the autistic spectrum who are receiving severe disability premium are exempt from this measure. But not everyone, as my noble friend pointed out, is categorised as severely disabled. The question is: how does one best get support? Our basic view is that the local authorities are best placed to identify this group. Indeed, they have a duty to identify this group, unlike other groups. It is our view that discretionary housing payments to that group are the way to go. Clearly, it would be hugely in the interests of local authorities to make sure that happened because, as my noble friend pointed out, the ongoing costs of getting this wrong in particular cases are much larger than the DHP support. So there is a real incentive for local authorities to get this right.

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[Baroness Hollis of Heigham]

I apologise for not speaking in the debate. I did not do so deliberately, because I thought that we would go through a lot of these issues tomorrow, and it would be more sensible to wait until I had heard some of the arguments addressed. One quick point for the Minister is that, by the time that we have counted up the number of referrals to the local housing allowance of £60 million, I suspect that it will have been overspent by fivefold, but we will see.

The Minister made the point in response to the noble Lord, Lord Kirkwood, that a lot of people between the ages of 25 and 35 choose to share accommodation, which I entirely accept, and it is not right that people who are not in work should have separate accommodation when people in work cannot afford that. To my mind, the key question that has not been identified is how large that shared accommodation is. Clearly, it is reasonable for two people who are not connected to each other in an emotional or sexual partnership to share a two-bedroom flat, but the Minister seemed to be suggesting earlier that single people in a one-bedroom flat, rather than going down to shared accommodation, could take someone in and thereby go into shared accommodation. Can he help us with the statistics on how many instances there are of two people who are not sexually connected who share a one-bedroom flat, which is the obvious analogy, rather than a two-bedroom flat where they have separate accommodation within that flat?

[Lord Freud]

My Lords, I do not have that precise information to hand, but if I can find it I will make it available and write to the noble Baroness. I can say that, in 60 per cent of cases, two people claiming the shared accommodation rate would be more than the two-bedroom accommodation rate. There are many areas where sharing gets the group of people more money than if they formally join up as a couple and go for the same accommodation.

[Baroness Hollis of Heigham]

Sorry, is the noble Lord saying that someone who is in single-bedroom accommodation and now finds that they are subject to SAR because they are 33, should, instead of going down to a shared room, actually seek a larger two-person two-bedroom flat with another person, thus possibly increasing the HB bill?

[Lord Freud]

There will be quite a lot of flexing around, and people do accommodate to systems. According to the figures that I have, regarding shared rates, in 60 per cent of localities the two-bedroom LHA rate is less than twice the shared rate. In 90 per cent of localities the shared rate would cover the relevant share of the three or four-bedroom rate. The point is that, when you are looking at pressure on the market, which noble Lords and the SSAC have been concerned about, fundamentally we are taking pressure off the market by looking for more sharing. Clearly, there are local adjustments but, as I have said, this has proven to be a very flexible market in the past, and we have no reason to expect it not to continue to be.

The question raised by my noble friend Lord Stoneham about the shortfalls in London—the difference between the one-bedroom rate and the shared accommodation rate—reflects the generally higher rents in London. The ability of those not on benefits to live in self-contained accommodation in these areas is also very limited, and many, therefore, already choose to share. Indeed, as my noble friend Lady Thomas pointed out, it is for exactly that reason that such decisions have been taken for very many years in London. I think I can join her in that experience.

It has been suggested that the Government are doing little to encourage the development of houses in multiple occupation. Landlords make commercial decisions about whether to provide such accommodation, and government’s influence on those decisions is limited. We do, however, have a role in setting the planning framework and licensing requirements. Communities and Local Government Ministers have considered whether the licensing regime, which places added burdens on landlords to comply with various health and safety measures, should be relaxed. However, with more people likely to require this kind of accommodation, they do not think it appropriate to remove or reduce this protection.

We also have the rent-a-room scheme, which is an income tax relief introduced in 1992 intended to boost the private rented sector. It encourages individuals to offer spare accommodation in their own homes at affordable rents to low-income groups. Homeowners and tenants who let furnished accommodation in their own homes are exempt from income tax on rental income of up to £4,250 a year.

As I said earlier, it is too soon to know how claimants might react to these changes. Those who will be affected by this change will have to consider their alternatives and make decisions about where and how they live. Some may decide to share with others, move back or stay with their family, or they may manage to find employment that allows them to stay in self-contained accommodation. These are the decisions that people in lower-paid work but not on benefits have to make, and those on benefit should not be sheltered by the state from this sort of responsibility. Picking up the point made by the noble Lord, Lord McAvoy, on work incentives, there is clearly no incentive to work if someone is in a property that is unaffordable for those who are in work. We have at the same time the issue of fairness if someone who is not on benefits is unable to afford a house that someone on benefits can afford.