Welfare Benefits Up-rating Bill
Lord Best Excerpts(11 years, 4 months ago)
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Lord Best
My Lords, I shall speak to Amendment 12A, which entirely supports Amendment 7, so eloquently moved by the noble Baroness. In fact, I think that I prefer her speech to mine. However, my amendment has a slightly different take on the same set of issues, as it has been prepared by the Residential Landlords Association, which represents its member landlords. I have no interest to declare as a member of any landlords’ association, but I draw attention to other housing interests in the register.
It is important to note that the amendment’s call for a review of the impact of capping rent increases in local housing allowances at 1% next year, rather than at the consumer prices index level, comes from the landlord side as well as from those excellent bodies Shelter, Crisis and the others representing tenants. If the case made from the perspective of tenants does not win the argument, perhaps the points made by the landlord representatives will prove convincing.
Why is there a need for a special review of how rent increases in the private rented sector in comparison with increases in help with rent from local housing allowance are likely to work out in the years ahead? I suggest that there are two distinct reasons why the capping of local housing allowance at 1% per annum irrespective of levels of real rent increases in the marketplace is critical. First, the local housing allowance can represent half or even more of the total benefits received by those out of work and can represent most of the support which many of those in low-paid jobs receive from the state. That means that there are huge repercussions for tenants where a gap opens up between the actual rent that must be paid and the local housing allowance received to cover it. Cutting housing support means the tenant finding the money to meet the shortfall on the rent out of income intended for food, heating and other essentials.
High housing costs greatly increase the level of child poverty—the issue of concern to my noble friend Lady Howe. Department for Work and Pensions statistics analysed by the Joseph Rowntree Foundation this month show the child poverty rate in England at 19% before housing costs are factored in, but at 28% afterwards. Where housing costs are lower, that huge impact does not show up. In Scotland, for example, the child poverty rate is the same as for England excluding housing costs, at 19%. It rises to 21% when housing costs are taken into account, far short of the 28% figure for England because of England’s high housing costs. Help with housing therefore makes a very real difference to the number of households in relative poverty.
Not providing enough money to pay the rent for those who rely on income from benefits simply means a cut to the other benefits that they receive. For tenants in the private rented sector, the reduction in living standards in real terms resulting from the Bill could well be doubled: first, from the gap in direct help with income between 1% and whatever inflation turns out to be and, secondly, from the gap in housing help between 1% and whatever rent increases over the next three years turn out to be.
Secondly, there are consequences where support for housing costs is cut not only for those receiving benefits but for the housing market—the availability of accommodation. Obviously, it affects the attitude of landlords towards providing accommodation for those on modest incomes if they are subject to tough rent controls. In most parts of the UK, there are plenty of other people desperately keen to find a rented home—students, mobile single people who share, and, as we know from excellent new research by the Building and Social Housing Foundation, increasing numbers of working families with young children who would have bought a home in times past but now cannot afford the deposit and mortgage costs. The acute housing shortages in so many parts of England mean that landlords are most unlikely to reduce rents to assist those in receipt of local housing allowance. Rather, as the Residential Landlords Association survey cited by the noble Baroness, Lady Hollis, shows, landlords will avoid lettings where LHA rent controls could apply, and will go for lettings on the open market.
Growth and Infrastructure Bill
Lord Best Excerpts(11 years, 5 months ago)
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“Time when development began
In section 56 of the Town and Country Planning Act 1990 (time when development began) after subsection (4)(e) insert—“(f) such works as may be described in a condition attached to the relevant planning permission having been agreed between the local planning authority and the applicant for that planning permission.””
Lord Best
My Lords, I declare my interests as president of the Local Government Association, whose officers have, as always, done brilliant work in preparing amendments for the Bill, and as chair of the Hanover Housing Association, which is a relevant interest for the amendments that now follow and relate to affordable housing. These amendments begin with Amendment 55ZA, in my name and that of the noble Lord, Lord Tope, and continue with those in the next six groupings. All of them address concerns about the provisions in Clause 6, which allow developers to appeal to the Secretary of State—that means to the Planning Inspectorate—for a reduction in the level of affordable housing, which the developer previously agreed to provide. This new right for house developers would be activated if the local authority does not accede to a developer’s demands for such a reduction in affordable housing provision.
As we launch into debates on this new right for developers, I think it is necessary for me to spell out why I believe this clause needs serious modification. If I do this now, the Committee will be spared my making these points under each of the six amendments in my name in the following groupings.
First, developers have freely entered into legal agreements with local authorities pledging that they will allocate a specified proportion of the new homes that they build—perhaps 25% or 35%—to be let or sold on a shared-ownership basis to those who cannot afford the full market price. The developer has signed a deal which he believed would deliver a good profit. In normal circumstances, the agreement, under Section 106 of the Town and Country Planning Act 1990, would have to be honoured if property prices turned out to be lower than the developer had predicted. Equally, the local authority could not amend the agreement if prices went up by more than expected and the developer made a larger profit. For central government, using the Planning Inspectorate to overrule the agreement between the two parties in order to improve the profits for the housebuilder would represent a retrospective intervention to change a legal agreement freely entered into by two competent parties. I do not think it has ever been suggested that Machiavellian local authorities have hoodwinked innocent developers unfairly into signing Section 106 agreements. No, the developers thought they had a good deal and the retrospective tearing up of a private contract by central Government diktat would seem to set a sinister precedent.
Secondly, there is the question of fairness. To say the least, this clause is galling for those would-be buyers of a site who were outbid by a developer who, it now transpires, paid over the odds. The reason housebuilders are now seeking to renegotiate the agreements they signed is that they speculated on property prices rising inexorably, but now find that their profit margins will be less than they hoped. In outbidding others, including the many housing associations which have been prevented from buying land by the exorbitant prices these developers paid, they have taken a gamble which has not paid off. If their rash behaviour means that with hindsight they should have paid less for the land, is it fair on other more prudent housebuilders and housing associations for the Government to bail them out? Is it fair that Clause 6 should reward speculative developers by letting them off their obligations to ensure that they can make a handsome profit from the development?
Thirdly, I can see the argument that it is important to save a developer, even if he has acted foolishly, from going out of business because we need to maintain the capacity of the housebuilding industry through these difficult economic times. However, while property prices have fallen in real terms in some areas, particularly in Northern Ireland although it is not covered by this measure, prices have seldom dropped dramatically, and in parts of the London and the south-east, they have even continued to rise. Far from going to the wall, a number of major housebuilders have recently reported substantial annual profits and their share prices have risen significantly. That does not suggest a need to make concessions to prevent bankruptcies in the sector.
Finally, and most importantly, we should scrutinise Clause 6 with great care because it is likely to lead to a reduction in the amount of affordable housing at a time when there are desperate shortages, fewer and fewer households can afford to buy, and market rents are absorbing disproportionate percentages of average incomes. Local authorities are already making concessions in order to be helpful to developers, and if they have got to the point of saying, “This far but no further”, they have good reasons so to do. Section 106 agreements have been hugely important in securing a high proportion of all the affordable housing built over the past decade. These agreements have meant that the bulk of social, subsidised housing has no longer been built in separate, segregated estates exclusively for the poorest and on the cheapest sites. Rather, it has been integrated into mixed-income communities of tenants, shared owners and owners. Backtracking on the gains for local communities that have been achieved by planners through this route is really bad news.
Moreover, inclusion of this element in a development was a key component in the planning consent being granted in the first place. A block of flats in east London with little or no affordable housing may be sold virtually in its entirety to overseas investors and occupiers and will make little contribution to supporting Londoners who need somewhere to live. In rural areas it is likely that local opposition to development was considerably moderated because housebuilders signed up to some affordable housing on the site so that local people who had been priced out of the housing market could stay in the locality. I know that the rural case has been addressed in relation to the special case of exception sites in the government amendment we will consider with the Minister shortly, but I am making the more general case about all developments in more rural communities: take out the affordable housing ingredient and a significant reason for both local authority and community approval for housebuilding will be removed.
These are the reasons why Clause 6 needs to be amended, and the first amendment for consideration seeks to address the key argument against my list of criticisms. This is the counter-argument that despite the disadvantages I have set out, unless the developers in question are let off all or part of their affordable housing obligation, they will simply sit on their hands, do nothing and leave sites undeveloped. How much better, runs this counter argument, for development to get started, and for at least some affordable housing to be built, rather than for the land to lie idle.
Baroness Hanham
My Lords, I would be very happy to write to the noble Lord, but my feeling is that, if the local authority owns the land and thereby gives it without cost to the developer, by definition everything ought to be lower cost and it ought to be able to have some more control over it. I think this justifies a further look and I will come back to the noble Lord.
Lord Best
My Lords, I am deeply grateful to all noble Lords who have joined in this debate. By covering a lot of the ground on this now, we have saved time later. I will respond briefly to some of the key points made. With regard to the powerful speech by the noble Lord, Lord Deben, I have been discussing these things with Housing Ministers and Planning Ministers for longer than I care to remember; it was the noble Lord, Lord Waldegrave—then William Waldegrave, the Planning Minister—who first introduced the idea of planning gain paying for new housing development. I remember those conversations. It started in Docklands, where there was a need for local people to see something for themselves when lots of new housing was being built that was much more expensive than they could afford; from that came this way of paying for affordable housing for a range of people.
Perhaps it would be better if one simply taxed more deeply the landowners, the house builders and the occupiers, and put the money in a pot to pay for affordable housing, but it would not then be produced in the way that the noble Lord, Lord Alton, was commending—on sites that are now a mix of owner-occupiers and people who are renting or in shared ownership, which are socially very valuable. In a way, the way in which planning gain operates is a tax, and there are really only three people who can pay it. As the noble Lord, Lord Deben, suggests, the purchaser—who may be a first-time buyer—will actually be charged what the market can bear and the market is determined by the 85% of properties that change hands in the second-hand market rather than those that are built new. The developer can charge only what the market will bear, and the purchaser will look at other properties as well. The purchaser is unlikely to see their price increase for that reason.
The house builder themselves cannot operate at a loss—they would just not be in business at all—so they cannot absorb all the cost of this tax themselves. It is, I think, the third party, the landowner, where the tax finally lands, because there is a very wide variation in the value of land for agricultural or other purposes and land for development, and that is where the tax really has been drawn over the years. That system has worked pretty well.
The noble Lord, Lord Davies, makes the point that this could be a double bad deal for local communities unless we get some changes. The noble Lord, Lord Burnett, noted that local authorities already renegotiated a lot of deals, and he approves of the idea of a quid pro quo now if we are to tamper with the Section 106 agreements.
Lord Best
I accept that with some gratitude. The noble Lord, Lord Alton, talked about the social mix on decent sites, which is an important part of Section 106. The noble Lords, Lord Beecham and Lord McKenzie, were supportive, for which I am grateful. The noble Lord, Lord McKenzie, wondered whether this way of approaching the issue would actually not work and one might require a different change to the Town and Country Planning Act. The point of this amendment is that it would enable a Section 106 voluntary agreement —yes, I agree, with some pressure—to be made between two parties, and that could specify the definition of what starting on site and getting going would mean. That would not require legislation; you can put anything into a Section 106 agreement. However, the inspectorate, in reducing the amount of affordable housing, would make that conditional upon agreement being reached about what it means to start on site. I think that it could work.
Clearly the Minister is not minded at this time to go for an amendment of this sort. She very properly applauds the way that Section 106 works and accounts for a lot of affordable housing today. Like her, I approve greatly of the work of Nick Boles, the Planning Minister, in energetically trying to ensure that we build more homes, not just to ease housing shortages but to help the wider economy. She brings some reassurance that the community infrastructure levy provisions might produce ways in which developers were obligated to get on with the job. I am not sure whether that is going to be enough and I reserve my position, but at this point I beg leave to withdraw the amendment.
“(1A) This section only applies in relation to English planning obligations agreed prior to Royal Assent.”
Lord Best
Apologies, my Lords, it is me again. The amendments that follow set out further proposals to moderate the likely adverse consequences of Clause 6. Amendment 55A in my name and those of the noble Lords, Lord Tope and Lord McKenzie, make it clear that Clause 6 relates only to planning obligations agreed in the past, which would usually mean agreed prior to the economic downturn when the foolhardy believed that house prices could go on going up for ever. The amendment, somewhat indulgently, would mean that cases of Section 106 agreement signed right up until the enactment of this legislation could still be subject to appeal and a reduction in the affordable housing component previously agreed by the developer.
I sincerely hope that the Planning Inspectorate would show little sympathy for the developer who has only recently entered into an agreement and almost immediately wishes to renege on it on the grounds that the project is no longer viable. The amendment would fix a clear end date to ensure that appeals, as is obviously the Government’s intention, relate not to the future but to the problems created by the economic downturn of 2008 and the years immediately thereafter. I beg to move.
Baroness Hanham
That is because we are concentrating here only on affordable housing. Putting this in primary legislation means that the provisions come into effect immediately after Royal Assent and we do not have to spend time working out regulations. These provisions are in primary legislation because this is an important aspect of getting sites unlocked.
Lord Best
My Lords, this has been an important debate. My amendment and some of the others in the group are about there being a cut-off point for the provisions in Clause 6. We know that the Government’s target is, as it should be, agreements made before the peak of the market back in April 2010. I take the point that economic uncertainty—the possibility of things getting worse—prevails; however, one would hope that developers will not enter into agreements from now on without recognising the dangers that they can get into.
My housing association is trying to acquire sites even as we speak, and we keep being outbid by people who we think are paying ridiculous prices for the land. They are entering into Section 106 agreements with their local authorities. It would not be fair on those who are playing the game properly if, later, those who go out and pay far more than they should for a site come back and say, “Sorry, the scheme is not viable with this Section 106. Can we have it reduced?”. That is not a fair way to operate and I think that the Government accept that. I take comfort from the fact that on Report we will hear more about this matter. Therefore, at this stage, I am delighted to withdraw the amendment.
Lord Best
My Lords, Amendment 55B in this group, which is in my name and those of the noble Lords, Lord Tope and Lord McKenzie, would enable the planning inspector to rule, after looking at the situation, that the level of affordable housing should be increased, rather than only being able to decide that the affordable housing component must be reduced. Without this amendment, the housebuilders have a one-way bet. They cannot lose by going to appeal, and they might win. This is a recipe for developers to simply “have a go”. The amendment would ensure that there are appeals only where a robust and well evidenced case can be made for a reduction, so it should deter frivolous and unsupported applications.
Baroness Hanham
The noble Lord, Lord Best, has spoken to Amendment 55B, which seeks to allow the modified obligation on first applications to be more onerous than the original obligation. If a developer undertook a voluntary renegotiation, he would neither expect nor agree to more onerous terms. He would expect to come out with something better than he went in with. He would revert to the original, agreed obligation if the negotiation was unsuccessful. Under this application process, we want to replicate these circumstances for the first application. It provides an important incentive for developers to come forward and review their schemes. We need housebuilders to bring sites forward and I hope that this provision will ensure that they do this.
The clause also provides an important distinction between the first and subsequent applications to encourage the developer to proceed quickly. Under the first application, the affordable housing requirement must be reconsidered if it is found to be causing the scheme to be unviable. The local planning authority must modify or remove it so as to make the development viable, and the outcome must not be more onerous than the original obligation.
In relation to a second or subsequent application relating to the same planning obligation, the authority has more flexibility in amending the affordable housing requirement. Where it is justified on the basis of economic viability, the affordable housing requirement could be made more onerous than in the original obligation. The only restriction is that the amended obligation must not make the development economically unviable.
The distinction between first and second applications provides a real incentive for developers to reach a new agreement on their affordable housing requirements on the first application and to get on with building. It discourages repeat applications unless the developer is very clear that viability evidence supports their case. It also provides an important incentive for them to come forward and review their schemes. The purpose of these provisions is to ensure that development goes ahead and is not delayed because of unviable affordable housing requirements.
This amendment prevents a developer requesting the local authority to remove the affordable housing requirement, even if viability evidence justified this. It is not our intention that developers should remove all affordable housing requirements. We want affordable housing to be justified on the grounds of viability. In the clear majority of cases, we expect that evidence will demonstrate that some—probably most—affordable housing is viable
However, there will be some cases where evidence demonstrates that no affordable housing at all can be supported by the development. The developer must have the option to apply for this and the local authority must have the option to agree to this. Stalling development with unviable affordable housing requirements serves no purpose. Stalled development brings no local benefit to anybody. I hope that I can reassure the noble Lord that this clause does not encourage applications to remove all affordable housing but looks to ensure that viable applications are agreed to enable development to proceed.
Amendments 55BB and 55BD propose a review of affordable housing after two years where land value has increased. These amendments aim to put in place primary legislation incentives to ensure that developers build their schemes. They look to allow local authorities some control where obligations have not been delivered within two years. The drafting of Clause 6 does not prevent local authorities agreeing a mechanism with developers to increase obligations should markets improve. I am aware that this is the practice in many local authorities where obligations are “staircased” according to market conditions.
We will be clear in guidance on the options open to local authorities, and I urge that this be allowed to be negotiated locally, according to local circumstances. I do not agree that a fixed period for review in primary legislation would be helpful. I hope that the noble Lord will now think that the clauses are helpful.
Benefit Cap (Housing Benefit) Regulations 2012
Lord Best Excerpts(11 years, 7 months ago)
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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.
Housing Benefit (Amendment) Regulations 2012
Lord Best Excerpts(11 years, 7 months ago)
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Baroness Lister of Burtersett
My Lords, we have heard some powerful speeches in support of the amendment. I take us back to the debate in Grand Committee on 15 October and what the Minister had to say:
“A lot of people will decide that they will have enough money or that they will be able to take in a lodger or take extra work. Those are the kind of decisions that we expect to happen in the marketplace”.—[Official Report, 15/10/12; col. GC 485.]
How many of us think of our homes as the marketplace or the decisions that we make around our homes as market decisions? We are not just talking about bricks and mortar; we are talking about the homes that people live in and the local roots that nourish them. The Minister made it sound so simple, saying that people will decide whether they have “enough money”; we are talking by definition about people on a low income, as my noble friend Lord McKenzie said. Or, the Minister says, they can “take in a lodger”; my noble friend has explained why that is not always appropriate. Or, the Minister says, they can find “extra work”; that is not so easy, either to get a job or increase one’s hours.
According to the National Audit Office report, one-third of households surveyed by Housing Future expect to fall into arrears as a result of this policy. According to Citizens Advice, other debts are likely to increase because, initially at least, people will try to prioritise their rent. Yet the Minister made no mention of debt or arrears as a likely solution, if that is a solution, even though debt is identified by the Government as a primary cause of poverty. One thing that we discussed in Grand Committee was the disproportionate impact of this policy on disabled people. There is evidence about the particular effects on disabled people of debt, and how debt can itself create mental health problems.
I come back to a point that I made earlier, and I have made before. I know that I probably sound like a broken record, but I refer to the impact on social networks when people move as a result of this policy—to people’s lives and to their being able to find work. Often lone mothers can use those networks for childcare, and so forth. The Minister mentioned the evaluation that will take place, which I welcome. In our last gasp, when we were discussing the then Welfare Reform Bill and this provision, the Minister committed that the monitoring would include the impact on social networks. In every subsequent reference that I have seen to that monitoring, I have not seen a mention of that, so I would be very grateful if the Minister could recommit this evening that that monitoring will include the impact on social networks.
On discretionary housing payments, I will not labour the loaves and fishes point any further, but I would instead like to quote from the National Audit Office report that came out last week, which says:
“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 reforms. The £390 million of funding over the Spending Review period represents around six per cent of the total £6.4 billion savings expected from Housing Benefit reforms during this period. This works out at around £200 per household affected … There is also no established process for reviewing the level of funding for Discretionary Housing Payments over time. For example there is no mechanism to assess whether the overall funding amount should change to reflect higher claimant numbers. Uncertainty about the basis for future funding in part reflects the fact that the Department is still reviewing how to provide support for housing as a result of broader welfare reforms … Monitoring of how payments are made by local authorities would improve the Department’s understanding of local need. At the moment monitoring is limited”.
I would be grateful if the Minister could tell your Lordships’ House what the department’s response is to those observations from the National Audit Office.
Letters have already been going out to people who are likely to be affected by this policy, and it is striking fear into their hearts. It is a mean-minded policy that shows scant concern for the lives of those affected—and, as the right reverend Prelate put it, shows no concern for the dignity of those affected. Human dignity is at the heart of human rights.
Lord Best
My Lords, the noble Lord, Lord McKenzie, attributes the phrase “bedroom tax” to me, so I take responsibility for this—because it is a tax. It is not about trying to ensure that people are allocated to the property that best suits their needs; it is about raising money and reducing the deficit. We all understand about deficit reduction. Where we differ on this is whether people on the lowest incomes should be contributing to that deficit reduction with what is in effect a tax. It is a payment, which the tenant makes out of their benefits—out of the other benefits they receive, such as disability living allowance, income support or child benefits. It goes to government; that is where the payment ends up, and it reduces the deficit. That is a perfectly valid objective, but I and others maintain that it should not be at the expense of people who are living on the very lowest incomes at present.
The noble Baroness, Lady Turner, attributed the underlying problem to the shortage of accommodation, which then means that rents are much higher than one would hope and expect that they should be. It is not the fault of the occupier that they pay a large rent. We say that it is a disgrace that people are paying these enormous rents, but it is not that people wish to pay large sums in rent; that is what the market has determined. It is very different in London, as the noble Baroness pointed out, as it is in so many other places.
I am collecting examples of people who have written to me with their own cases. One after another, they are cases in which any reasonable person would say, “In that particular case, it seems very unfair for people to have to pay a new tax that they didn’t pay before—in that case, I agree that there should not be this tax to be paid”. One such case I can cite comes from the diocese of the right reverend Prelate the Bishop of Norwich. I agreed very much with his words. I apologise to the Minister for repeating the content of an e-mail that I mentioned in Grand Committee, but it is such a typical case. The lady has lived 23 years in her council house and now it contains herself and her husband. It has three bedrooms. They have actually done quite a bit of work to the House; the garden is immaculate—this is their home. But it is a tax, and they will face a bedroom tax of £25 a week unless they can move out. They have been told that there is a place in another Norfolk town. It is 16 miles from where they live, but there will be a place there in due course. It is not available at the moment, but in due course they will be able to get a one-bedroom flat. The absolute last thing that they want to do is to leave the family home where they have been for 23 years, where their children still come back at Christmas and on other occasions, and where she has a base to look after her mother in the village. It will cost the social services an arm and a leg to have to send in carers to look after mum. At the moment she goes in three times a day: once in the morning, briefly at lunchtime, and once in the evening. She will not be there to do that once she has moved away to the town. This is all ridiculous, and anyone would say, “Look, in that case don’t charge them the tax. Leave them where they are”. Anybody can see that that is the sensible thing to do. However, it will be extremely difficult to make those special cases, and to find the resource that will bridge the gap in their rent in those cases.
Housing Benefit (Amendment) Regulations 2012
Lord Best Excerpts(11 years, 8 months ago)
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Baroness Turner of Camden
My Lords, I support my noble friend’s analysis of these regulations. As the Minister said, we have already debated this issue in detail when we discussed the Welfare Reform Bill and many of us voiced our objections at that time. Nevertheless, I still oppose what is proposed in the regulations because it seems to me that, when they are implemented, very vulnerable people may be placed at an enormous disadvantage.
There are particular problems in certain areas. I am particularly concerned about the area of London in which I live. At one time there was a fair amount of reasonably priced property available in that area. However, that is no longer the case. As soon as a large house becomes available, developers move in and turn it into flats. Houses that once housed two or three families are now filled with masses of people living in the same block. It is all enormously charged for. A number of people are making an enormous amount of money. I am told that a small two-bedroom flat in the area in which I now live would cost £500 a week. When you remember that the median rate for employment in London is £26,000 a year, how do people on those rates afford that kind of rent?
I know that the regulations will not take account of the local rents only. On the other hand, the fact that these kinds of development are going on in large parts of London and people are making quite a lot of money out of them means that the amount of housing available at reasonable rents has decreased because the developers move in and make a lot of money. As a result, there is a shortage of the kind of housing that would normally be available for people on much lower incomes.
The problem is that people now in receipt of benefit may find that they are underoccupying—that they do not need two bedrooms and so on—and they may have to move. If people have to move, that is a great disadvantage for them. In particular, it is a disadvantage for disabled people, who usually have some support mechanisms in the area in which they live—they may belong to groups that look after their needs and so on. To have to move is a great disadvantage to them. It is a great disadvantage to them if they want to work, and some of them do want to work. The Government are already closing the Remploy factories in which some of them could work. If they have to move, there is nowhere for them to obtain suitable employment. That is a great disadvantage.
For all these reasons, I believe that the regulations before us this afternoon are to the disadvantage of numbers of people whom we ought to protect. My noble friend has already indicated that in some detail and I do not want to repeat it, but I emphasise that I am not at all happy about these regulations. I am not the only one—so are many people and so are the organisations particularly concerned with disabled people, which have already made representations to us on these grounds.
Lord Best
My Lords, the Minister is well aware of my disquiet, and I am unlikely to be satisfied in relation, in particular, to underoccupancy—the bedroom tax. I know that he has made some important efforts and I think that he is going to be able to be reassuring on one or two points that noble Lords have raised. I am sure that we will hear that full-time students will not have to lose their bedroom and regain it by a convoluted process while they are away at university. Also, I think that we now have a date when it will be the case that taking in a lodger will not mean that benefit will be cut by the amount received in rent, which will be helpful to some people. These measures are not going to change the world, but they are good things to do and I am grateful to the Minister for putting them in place. There may be more.
I want to talk about discretionary housing payments, which are the way out when you can see that a situation is quite untenable and any reasonable person would say, “Of course, in that particular case, this whole business is a complete nonsense and we must allow those people to stay where they are”. I am now getting the kind of letters that hundreds of MPs are going to get when this really big change gradually dawns on the world outside. I shall read to the Committee from a letter and will give the kind of reply that I would like to be able to give and explain the difficulties I have in giving it.
There is a woman in a relatively rural area of Norfolk who lives with her husband. They are not of pension age. He is a bit disabled. She looks after him, and she also looks after her elderly mother in the village. She sees her mother in the morning, at lunchtime and in the evening. She does a great job with her 81 year-old mother. She is in a three-bedroom council house. They have been there for 23 years and have brought up their children, who have gone. She uses two bedrooms because she and her husband do not sleep in the same bedroom. She will be paying another £25 a week because she is deemed to have two empty bedrooms.
The council has said that it has some one-bedroom flats in the nearest town, which is 16 miles away, that it may be able to move her into, but not now because the one-bedroom flats in the town are rather precious. Later, it might be able to move her in, but in the mean time, she will have to stay where she is. She says, “I can’t afford the extra £25 a week bedroom tax. What am I to do?”. In my letter back to her, I should like to say that there are things called discretionary housing payments. I am hinting at it but what hope can one give to people in such circumstances? It would clearly be completely foolish to move her out, although she cannot afford to stay; she cannot afford the extra £25 a week. However, moving her 16 miles away would mean that her mother had to be looked after by social services at considerable cost and her husband will not be properly housed—it is a nonsense. I should like to be able to say that the local authority should have the opportunity, where anyone can see that it would be sensible, to fill that gap and pay the bedroom tax, enabling her to stay where she is.
We know about discretionary housing payments that take care of some of the local housing allowance and the private rented sector. We know about the sums that relate to the total benefit that people can get from the universal credit—the £500 limit. We know about these other aspects of using discretionary housing payments. However, I cannot find anywhere any money for discretionary housing payments to pay the bedroom tax, except in respect of two special categories. These are thoroughly commendable, although I was startled to hear that the money was taken from the rest of the bedroom tax payers.
There are two kinds of special case. One covers adapted properties that have been physically changed for the people who live there. It would be a nonsense to move them out because there is a spare bedroom. It would cost everyone an arm and a leg. The other exception is a case where there are foster children. They do not count as part of the family but, obviously, they must have a bedroom. There is £30 million a year, which will continue indefinitely, for those two exceptions. That is great but they are very restricted categories. My middle-aged couple in Norfolk would not fall into either group.
I am afraid that noble Lords and, in particular, Members of the other place will all get such e-mails and letters, so they should be prepared. I had another letter from someone with two daughters, one aged 11 and one aged 13. One daughter is severely disabled. She needs a very large bed and, therefore, her own bedroom. However, the two girls are expected to share because they are aged under 15 and are therefore underoccupying by having two bedrooms. That will cost the family £14 a week from their disability allowance. They do not have £14 a week; they have great difficulty in getting by on what they do have. Everyone says that they must stay where they are. This is where a discretionary housing payment could come in. However, as I read the numbers I can see nothing. What does the Member of Parliament say in replying to his constituent?
I hope that the Minister has up his sleeve the opportunity to put in place more discretionary housing payments to get us through what I suspect will be rather a large number of cases in which anyone would agree that it would be best to let people stay put. I do not think it requires more legislation. We will not get the results of the very important, thoroughgoing research—I have congratulated the Minister on it—until some way down the line. Then we will see how things are working out. If it is not already the case, I advise the Minister to talk to his Treasury colleagues and provide a bit more discretion for local authorities to pick up cases that otherwise will just be hopeless. I have no idea how we and the people concerned will be able to cope.
Baroness Hollis of Heigham
My Lords, I declare an interest as chair of Broadland Housing Association, which spans Norfolk as a major traditional housing association. I also congratulate the Minister. We appreciate the reviews that he is seeing through and respect his respect for the evidence. It is welcome to be working with a Minister who is evidence-based. We appreciate that and it should be recorded.
Despite what the Minister said, these regulations are not about overcrowding. The people who are overcrowded and the people who are underoccupying are two different populations and in two different sets of places—they do not match. If the Minister were really serious about the issue of overcrowding, he would actually be looking, as some of us have tried to do, at the underoccupation among pensioners who, of course, are the biggest source of underoccupation. Although I am not suggesting that we should do that, if the Minister were serious about this, he would not confine his efforts to families, many of whom have children.
Secondly, the regulations are not about treating social housing in the same way as private rented housing. This is the second line that the Minister has offered us. What we have learnt over the last six months is that, far from the local housing allowance pressing down private sector rents, which was the mythology offered to us throughout the past year, the reverse is happening. Private rents have soared because, as my noble friend said, no new housing is being built. Private renting is not becoming a transitional tenure but a longer-term tenure. Demand is going up as a result, as are rents, as will the housing benefit bill. So, far from this exercise pressing down housing benefit, I am confident that we will see housing benefit in the private sector rise, because there are not three housing markets in this country, there is one. As new building has stopped in the owner-occupation sector and the social rented sector, the pressure on the private rented sector will increase, rents will go up and, as a result, the housing benefit bill will rise.
So neither of these two things are at issue. This is not about matching underoccupation and overcrowding— it does not fit. The Minister knows the statistics— they do not fit. It is not about following the example of the private rented sector, where rents are soaring and HB bills are likely to go up.
Like others, I do not want to repeat the arguments aired at great length in Committee. I have not been persuaded by anything since that the Minister was correct in his analysis. As a chair of a housing association whose tenants will lose the best part of £1 million in forfeited benefit, I have some questions for the Minister. What advice will he give me, given that his colleagues in DCLG have ensured that, instead of having £42,000 on average for a grant for a new house, it is now down to £16,000? As we cannot build without a grant of a minimum of £26,000, we cannot build. For the first time in 40 years my housing association is not building any new property. Given that, we have no possibility at all of “balancing our stock” to build the new single-bedroom properties that are pivotal to this scheme. As a result, our tenants know that they are faced with only our existing stock and occasional re-lets.
Occasional re-lets, when they come up, if they are attractive and in the right places, are for the most part pursued by pensioners. However, in future, pensioners who would like to leave a three-bedroom house and move into a one-bedroom flat or bungalow, will not be able to access any re-lets in our villages. This is because people currently in two-bedroom properties who are in the client group affected by the benefit cuts will now have to move to any available one-bedroom property against their will. I have yet to discover how that in any way adds to the sum of human happiness.
Many of our tenants have functional illiteracy and may therefore be re-classed as vulnerable, with the result that we will enjoy their housing benefit direct. However others, such as couples with children, will find it hard to manage; they will have debts, the banks will lean on them, and although I am trying to get them into credit unions, that may not be possible as they do not operate throughout Norfolk. They may well run into arrears. What would he have us do? If we let the arrears run, that will affect the estate, other people will stop paying their rent, we will go into the red, our books will not balance and we will go into special measures. The alternative is to evict, but the local authority will hope that we do not, because those families will go into bed and breakfast accommodation. This may be 10 miles away, the children will have to leave their schools, the younger ones may be bed-wetting, they will all be crammed into one room, and the cost to the public purse will actually increase because the cost of a bed and breakfast will be something like £300 per week, as opposed to the rent for their current accommodation at about £70 or £80 per week. So we have made that family deeply unhappy, broken up the pattern of managing their lives and very fragile incomes, and put them into accommodation at greater cost to the public. However, as they are a family they are entitled to be rehoused, so the local authority will ask us whether we can help. We will reply that the only property we have available is the same three-bedroom accommodation from which they were evicted because they could not afford to pay for it.
Welfare Reform Bill
Lord Best Excerpts(12 years, 4 months ago)
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“(3A) The Secretary of State shall commission an independent review (“the review”) of the impact of the provisions of sections 11 and 68 of this Act.
(3B) The review shall assess the impact of those provisions on—
(a) families; (b) the incidence of poverty;(c) the incidence of homelessness;(d) levels of underoccupancy;(e) local authority resources;(f) rent arrears; and(g) any other consequences of sections 11 and 68 of this Act which the Secretary of State or the reviewer consider should be covered by the review.(3C) The review will commence six months after sections 11 and 68 of this Act come into force (or, if the provisions of sections 11 and 68 comes into force on different dates, six months after the latter of those provisions comes into force).
(3D) The review will conclude with the making of a report within six months of the review commencing; and shall be repeated one year after it commenced.
(3E) Reports made under subsection (3D) shall be laid before both Houses of Parliament.”
Lord Best
My Lords, in response to the Minister’s defence of the inclusion in the Bill of this underoccupation penalty, perhaps I could briefly spell out the position that we have reached this evening.
Before Christmas, this House asked the other place to reconsider the idea of requiring several hundred thousand tenants in council housing or housing association homes to move out or pay a fine if they were deemed to have a spare room. The amendment that we sent to the other place would have meant that although the requirement to move out or pay up would still stand for all these households, it would not take effect unless a suitable smaller home to which they could go was available. This would have removed the injustice of penalising people through a reduction in their housing benefit, which they would have to make up from the rest of their extremely low income, when they had no option but to stay put. The fine, or bedroom tax, of an average of £14 per week would have to come out of the tenant’s other income—for example, from a single person’s income from jobseeker’s allowance of just £68 per week—even where they had no chance of escaping this significant reduction in their living standards. Of course, rent arrears will follow, which means evictions and more cost. Long-standing residents in council housing, not least in rural areas, would have to move away over considerable distances to avoid the financial penalties of staying in their own homes.
Despite support from your Lordships on all sides, in the other place this amendment was rejected on financial grounds since the measure was expected to cut the deficit by some £470 million per annum. I put forward a modified amendment, which your Lordships again accepted. Under it, the delay in imposing the penalty charge until an alternative smaller home could be offered would not apply to all the households hit by the underoccupation rule, but only to the most vulnerable, such as disabled people, war widows, those caring for severely disabled people or children under one year-old and others not required or expected to seek work.
On the issue of caring for a disabled relative, perhaps I could elaborate a little on the Minister’s comment that a spare room would be allowed for a carer looking after an older relative. This will apply only to a non-family member who is a carer and lives there all the time, exercising their caring duties. However, that spare room is often for the daughter who comes on a temporary basis when her mother comes out of hospital or to look after another member of the family. Having that bit of space can save the National Health Service money as well. Strong speeches were made in favour of the amendment in the other place, including from the Conservative Benches. For example, the particularly acute position in Northern Ireland was highlighted. There was recognition that disabled children often need their own bedroom, as do adults when one of a couple is disabled, and older people for whom an extra room for a family carer who just visits from time to time can be so important. These arguments have fallen on stony ground and the Bill is now back with us.
So that there are no threads still to be untangled, perhaps I could pick up on a couple more of the points that the Minister made in defence of this measure. He very fairly made the point that an additional £30 million in discretionary housing payments has been found to give the extra benefit back where there are foster children in the home—that is very welcome—or where the property has been adapted and it would be foolish to move people out to somewhere smaller and have to adapt that property, possibly with the adaptations to the previous property going to waste. However, the £30 million that has been found to increase discretionary housing payments in those cases has come from increasing the fine for everyone of £13 per week—the original average figure that we heard in Committee—by an extra £1 per week for everyone who is not exempt. Although the £14 that we now face means that the extra funding will help as many as 40,000 households—I am pleased that it will—the remaining 670,000 households will all pay another £1 a week, which is where that funding has come from.
I turn to the amendment that has now come back to this House. I must say that I was tempted to bring forward an amendment that would lessen the cost to the Government since it is clearly the level of expenditure that has inhibited the Government from going anywhere near my amendments so far. However, frankly, to modify the earlier amendments by taking out yet another group of those trapped by the penalty would become invidious as we try to choose between different categories of highly vulnerable people, and select some but not others for the already limited protection that the earlier amendments would have afforded.
Instead—and I apologise to those who hoped that this House could save the day but will now be deeply disappointed—the amendment that I have brought before your Lordships takes a different tack. It would rely on high-quality research to show the consequences of this measure. The amendment places an obligation on the Government to review the impact of the underoccupation penalty on the families concerned and on levels of poverty and homelessness; to calculate the cost to local authorities and housing associations; to look at whether levels of underoccupancy actually fall; and to consider other foreseeable and unforeseeable consequences. The exercise would begin six months after implementation of the provisions in the Bill. It would be completed within a year and repeated a year after that. My hope is that the Government would prove willing to make some in-flight corrections and to take mitigating action if the evidence shows clearly that the consequences of this measure are dire.
In response to a Motion that I moved on the regulations that introduced earlier housing benefit cuts, the Minister put in hand a thoroughgoing research project on the impact of those changes. I have been delighted by the extent and quality of this research project and I remain very grateful to the Minister for that initiative. I know that he fully understands the value of high-quality research and hope that he feels able to go forward with this amendment. After the long journey we have all taken in pursuit of this matter, that would at least mean that a modest outcome would result from all our deliberations.
Lord Best
I am extremely grateful to all noble Lords who have spoken from all sides of the House, including the Bishops’ Benches. I thank the noble Baroness, Lady Lister, who made the point that breaking up social networks by requiring people to move or face a penalty that they find very difficult is disruptive. Once it is known that a Member of your Lordships’ House is involved in these things, we of course get targeted. One of the most moving e-mails that I received was from a woman who, with her husband, has two rooms and will, I am afraid to say, face a charge of £25 per week. Her husband is partially disabled and they live on a very meagre income. Her mother is a neighbour, living not very far away, and this lady provides a full caring service for her. She has looked into the possibility of moving elsewhere and she can move some miles away. However, she is not going to be able to get back to see her mother twice or three times a day. She cannot afford that £25 a week and is going to have to do something. These are the kinds of social network issues that are raised by this measure.
I am very grateful to the noble Lord, Lord German, who spelt out the need for milestones when one brings in new legislation of this kind. To the categories that we ought to look at, he added the disruption of education. Moving children to a different area and taking them out of school can set them back, and that can have life consequences.
I am grateful to the right reverend Prelate the Bishop of Ripon and Leeds, who has talked on children’s issues eloquently throughout the Bill. From the intelligence on the ground, he is worried that the level of homelessness will increase, and that is certainly an issue that research would look at carefully.
The noble Lord, Lord Kirkwood, who has throughout on this and other aspects of the Bill been absolutely tireless, makes the point that rents may not go down, as the Government hope. I hope that the Minister does not get the blame when the housing benefit bill does not fall. For example, I received some new figures just this week which show how the number of claimants of housing benefit has gone up recently because of the effects on the economy, with more unemployment and more people having to claim housing benefit. That is not the Minister’s fault and I hope that the Treasury does not hold it against him. The housing benefit bill is very hard to curb. The noble Lord, Lord Kirkwood, draws attention to these knock-on effects of everything that one does and calls for a much wider review, which sounds entirely sensible.
The noble Lord, Lord Boswell, to whom I am grateful, stressed the importance of housing more generally and the value of an independent evaluation of the kind that is proposed in this amendment.
The noble Baroness, Lady Sherlock, raised a point to which the Minister responded. I believe that he is genuinely interested in the outcome of an independent review, upon which good policy can be based.
The noble Baroness, Lady Grey-Thompson, highlighted—quite rightly, as it probably has not had quite enough attention in this debate tonight—the fact that very many disabled people are in the accommodation that we are talking about, with fixed incomes and no opportunity to go out to work. They will be particularly badly hit and we must look carefully at that.
The noble Lord, Lord McKenzie, having followed this every inch of the way and to whom I am extremely grateful for his support, made the point that the long list of potential escape routes, such as taking in a lodger or using up one’s savings, are not really viable alternatives to having to move or pay out. He concluded that this was going to place unacceptable burdens on the most vulnerable.
I am extremely grateful to the Minister for accepting the necessity for an evaluation and for committing himself to bringing forward full-scale proposals when the regulations come to us. The noble Lord, Lord Kirkwood, made the point that when regulations come before us, we have another chance to look at these matters; we even have a chance to vote on them, and we are able to hold the Minister to account on this. I think we will be pleased with what is brought forward, not least because he also committed himself to full consultation on this research project with the stakeholders concerned; to consulting, discussing and working with the stakeholders, including myself, the subsequent action—the strategy and the guidance—that follows from this.
Therefore, I must be satisfied with the Minister’s response. He will, he said, be keeping under review the very key ingredient: the level of discretionary housing payments with which local authorities are provided to top up and help people who are in difficult circumstances. I do not think local authorities are going to be very keen to bail out the Government on this one and make up the deficit themselves, but if the Treasury finds, as a result of the research that we do, that there are sufficient hard-luck stories where one cannot really resist having to pay out more housing benefit, the discretionary housing benefit will be one lifeline which could be substantially influenced by research, when it comes along.
At the end of what seems to have been a very long innings on all of this, I thank the Minister for his response and for the courtesy and good humour with which he has approached all aspects of this Bill; I am grateful to him in all those respects. I beg leave to withdraw the amendment.
Welfare Reform Bill
Lord Best Excerpts(12 years, 4 months ago)
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“(3A) In relation to a dwelling of which the landlord is a local housing authority or a registered provider of social housing, and no suitable alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available, regulations under this section shall not permit the housing cost element of the universal credit to be less than the actual amount of the liability in a case where a household has no more than one spare bedroom, and—
(a) the claimant is subject to no work related requirements in accordance with the provisions of section 19;
(b) the claimant, or a child or a young person for whom either or both the claimants is responsible, is in receipt of disability living allowance, or personal independence payment, or attendance allowance or an increase of disablement pension where constant attendance is required; or
(c) the claimant is a war widow or widower; or
(d) the claimant routinely provides foster care placements.
(3B) In subsection (3A), “claimant” means a single claimant or joint claimant.””
“( ) In relation to a dwelling of which the landlord is a local housing authority or a registered provider of social housing, and no suitable alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available, regulations under this section shall not permit the AMHB to be less than the actual amount of the liability in a case where a household has no more than one spare bedroom, and—
(a) the claimant is subject to no work-related requirements in accordance with the provisions of section 11D of the Welfare Reform Act 2007;
(b) the claimant, their partner or a child or a young person for whom the claimant (or their partner) is responsible, is in receipt of disability living allowance, or personal independence payment, or attendance allowance or an increase of disablement pension where constant attendance is required;
(c) the claimant is a war widow or widower; or
(d) the claimant or their partner routinely provides foster care placements.”
Lord Best
My Lords, this combined amendment seeks to achieve a compromise on the so-called bedroom tax, the underoccupation penalty that reduces the housing benefit entitlement—later the universal credit entitlement—for those of working age in a council or housing association property.
Perhaps I might recap on the position we have reached on this measure. I have argued since Committee that the Government should stay with the current definition of underoccupancy from the Department for Communities and Local Government, which allows a household one spare room, which may actually be a room that is occupied all the time; for example, where children are not sharing because one has a disability or because a teenager wants a separate bedroom to do her homework and so on.
Requiring people settled in their council or housing association homes to move or pay a fine of what will now be £728 per annum on average seems very harsh. The housing benefit of these tenants will be cut by this amount so they will have to find the bedroom tax out of other benefit income. For an unemployed separated father who has a spare room so his children can stay, this represents a cut of nearly 20 per cent in his income from jobseeker’s allowance. Even though £14 a week may not seem a huge sum to most of us in this House, it means a very significant reduction in living standards for all households affected.
Your Lordships will recall that the earlier amendment on this theme was carried in this House with significant support from all parts of the House. It did not go so far as to allow families one spare room, but it changed the position so that the penalty would only become payable if the tenant refused an offer of a smaller, suitable flat. This amendment would still require all 670,000 households—rising to 740,000 households as the pension age rises—to move if they were to avoid paying the tax, but no one would have to pay until they had been offered and had turned down an alternative tenancy. This took away the surely inequitable requirement to pay the penalty for staying put even where there was nowhere else to go.
As your Lordships know, the majority of council homes built from 1920 onwards have three bedrooms. Requiring a move to a two- or one-bedroom flat can mean waiting for vacancies for some time; for example, in rural areas there are places where all the council houses have three bedrooms so if the tenants are to downsize they must leave the village, perhaps after living there all their lives. Some urban councils purposely avoid putting families into tower blocks, so singles and childless couples have been allocated larger flats there. To suddenly impose the underoccupation penalty on all these households before they have any chance to move elsewhere seems most unjust, and your Lordships voted for the amendment that would provide some relief for this problem.
It is important to note that the earlier amendment did not abolish the bedroom tax, and the penalty would still kick in for those who felt that they could not accept the alternative flat offered to them. Their reasons for refusing to downsize might be very compelling, but regardless of those reasons, the amendment—the compromise from the position of permitting a spare room—meant they would still have to pay if they did not accept the offer of the smaller accommodation.
This Lords amendment was rejected in the other place, though with a relatively small majority of 42, and with support from the amendment from all parties, including 12 Liberal Democrats and two Conservatives. This gives me some hope that if an amendment that cost half as much were to be presented to the other place, it might indeed gain acceptance there.
I am therefore bringing forward an even more modest amendment, in the hope of salvaging something here. The new amendment confines the postponement of the imposition of the bedroom tax to certain categories only, rather than to all tenants. I deeply regret abandoning hundreds of thousands of households who, even if this amendment is approved, will still be caught by the penalty charge on the 1 April next year. Even if they are willing to move, they will be trapped where they are because there are no smaller flats available. However, needs must, and the new amendment reduces the cost in the early years from perhaps a maximum of £300 million by around half, a far cry from the billions referred to in earlier debate. In due course, the Government will collect the great majority of the tax if, as gradually some people are offered a smaller home and do not take up the offer, they are then required to pay up. The cost implications are not, I suggest, too frightening.
Therefore, for the categories spelt out in this new amendment, no fine, penalty, tax, or housing benefit cut would apply unless and until they turned down an alternative offer of something smaller that is defined in regulations as “suitable”. The categories given relief in the amendment are: first, claimants who are not required to work for reasons already set out in the Bill in Clause 19, including those with,
“regular and substantial caring responsibilities for a severely disabled person”,
or for,
“a child under the age of 1”.
These are households for whom pressures to take a job—which, as the Minister has explained, is a key policy driver for the Government—are not relevant. For these people, the penalty simply represents a substantial loss of income with no escape. If the household felt that they could not accept an offer of an alternative flat, they would still have to pay, but only after that offer had been made.
Secondly, the amendment covers claimants who have already been exempted from the household benefits cap, mostly because they are disabled, but also including war widows. These are people who the Government recognise as having extra costs. My amendment simply replicates the categories which the Government have acknowledged should not be penalised by the benefits cap. Many of the 70 charities that are urging parliamentarians to accept an amendment on this issue represent people with disabilities, who are particularly badly affected by having to share bedrooms. Again, I fear that these would not be exempt from paying the tax unless they moved out, but the tax would not be payable until they turned down another home, deemed to be suitable, but smaller.
Each household would still have a very tough decision to take. For one it would be, “Could we move and put our disabled child with his special bed into the same room as his sibling, or should we take the cut in our living standards and stay in this house with a separate bedroom?”; or, for an older couple, where one is under pension age—under 61 years and 5 months next April—the choice could be, “Should we move from our two-bedroom flat to a one-bedroom flat, even though we often sleep apart when my husband is ill, and we frequently use the other room when my daughter comes to give me a hand for a few days?”; or, “Must we move, because £14 per week off my husband’s state pension would be just too much?”. I fear that these difficult choices would still have to be faced even if the amendment is carried, since the amendment only postpones the moment of truth until an offer of a suitable alternative flat is made. Thirdly, this concession would apply where the household regularly takes in foster children. Barnardo’s and other children’s charities are keen to see the nonsense of taxing foster parents removed.
What are the arguments against my case for a now extremely modest element of relief from the proposed underoccupation penalty? It cannot be said that granting this relief takes away the pressure on scroungers—people able to work but not working—since the revised amendment does not cover anyone required by the benefits system to seek work. Can it be argued that the Government have already announced a sufficient safety net to cover the most extreme cases? They have made available £30 million against the expected savings of £470 million, which the bedroom tax would yield, for discretionary housing payments which local authorities can use to cover the tax for deserving cases. The Government have mentioned two groups in particular to be helped by local authorities; namely, those living in homes that have been specially adapted and for whom downsizing would require the smaller home also to be adapted, no doubt at considerable cost, and households with foster children where the underoccupying rule is particularly inappropriate.
The funds for this discretionary power to bail out some hostels is confined to these special cases. If something was left over, it would leave local authorities with an invidious task; that is, how to assess the relative hardship of the bedroom tax in each of the other 670,000 cases where the discretionary housing payments are available to help only one in 16 of those affected.
Nevertheless, I confess to having been thankful for this small mercy—until I learnt that the £30 million for these discretionary housing payments is to be paid for not by the Treasury accepting any reduction in the gains achieved through the bedroom tax but by increasing the tax for the other tenants by another £50 per annum from the previous £13 per week to the new £14 per week.
What about the argument that those on very low incomes could find the money to pay the penalty charge from their savings? I fear that it is more likely that such households will be struggling with debts, perhaps depending on payday loans and even resorting to the loan sharks, rather than sitting on a pile of savings. While older tenants may have put aside a bit, few will be able to cope when faced with a new tax of £728 every year on top of the rises in their heating bills and other costs.
One other remedy suggested by the Minister is for these households to take in lodgers. That is certainly to be strongly encouraged, although the current disregard as to the amount that tenants are allowed to keep without losing benefit has not proved a sufficient incentive to date. Obviously, however, taking in lodgers is not appropriate for most of those in the priority categories of the very vulnerable and disabled people now covered by this new amendment. By all means promote lodgers’ schemes among those not helped by this amendment but it seems unrealistic to expect this idea to be of much help for those singled out in my new amendment.
I hope that since the earlier, more expensive amendment gained such a high level of support from all parts of this House, this lesser version will be acceptable. As noble Lords know, there is backing for any such measure. It comes not just from the many charities concerned with children and disabled people but from the social landlords—the councils and the housing associations. These social landlords have expressed grave concerns, not only on behalf of their tenants but because of the administrative and financial problems that the Government’s proposals will create for them.
The landlords will be asked to be the tax collectors of the £14 per week from each liable tenant to make up the weekly deficit on the rent that the penalty will create. They know that they will have a huge job identifying who may be eligible. I am grateful for the reassurance from the Minister that there will not be an army of snoopers to check on whether a young person has left home or is away for just a few weeks. But landlords will have the problems of collecting the £14 per week or £25 per week if there are two rooms. That will not be covered by housing benefit any more.
Even if the housing benefit is paid directly to the landlord because the tenant is classified as vulnerable or has run up arrears, the extra sum—the penalty charge—will still have to be collected directly from the tenant. This will not be easy. A gradual accumulation of rent arrears seems inevitable, meaning in turn evictions in due course and less money for renovations, new homes or regeneration. The gain to the Treasury is likely to mean losses for housing, as well as the misery of loss of income for those unfortunate tenants who have to pay up.
This will be a particularly painful levy on communities in the north-east and the north-west where 45 per cent of the relevant tenants will be hit, and in Northern Ireland, where rather higher standards have justifiably applied, 68 per cent of these tenants will be affected. In this House we are not troubled by postbags full of protests from aggrieved constituents, as I strongly suspect will be the case in the other place, but I know that many of your Lordships feel strongly that we have a role in restraining government where measures seem excessive or unfair. Even though this amended, amended amendment is now providing much less relief than I feel the situation requires, it nevertheless draws a line by mitigating at least some of the hardship for at least some of those on the lowest incomes, and now exclusively for those who are not in a position to go out to work because they act as carers or are disabled themselves, I hope very much that noble Lords’ support for these households will be sustained.
I pay tribute to the Minister who has worked extremely hard and effectively on this important legislation. I congratulate him on the changes he has achieved, but I know that he feels the hot breath of the Treasury on his collar. I therefore ask him to feel emboldened by the strength of feeling in your Lordships’ House to accept this very modest new amendment. I beg to move.
Baroness Hollis of Heigham
My Lords, universal credit is about using benefits to encourage behavioural change, and above all to encourage people to seek work by reducing its risk and increasing its reward. Like most people in this Chamber, I am deeply supportive of that, as the Minister knows. The House is extremely grateful to the Minister for the care and attentiveness with which he has introduced the changes made by universal credit through the stages of this Bill.
However, this amendment in the name of the noble Lord, Lord Best, has nothing to do with universal credit, nothing to do with behavioural change and nothing to do with urging people into work. It is simply a means of making savings that will come from cuts which will fall on some of the poorest. The Minister has already said, by referring to Moody’s, that we cannot afford to lose those savings, yet none of them falls on me although they could do so. I would be happy to indicate to the Minister, if he so wishes, where they might. In my view, this is about political and moral choices. Do I pay or should a disabled child suffer?
I want to make three brief points. First, I believe that at the core of the policy on underoccupation is a fundamental dishonesty. I do not accuse the Minister of this, but the position is a dishonest one. That is because it states that people of working age must downsize if they have one spare bedroom but, as the Government acknowledge in their own impact analysis, those smaller flats and houses to which people should move do not exist. The Government acknowledge that 85 per cent of people will therefore have to stay put. If they do not, and instead move into the more expensive private-rented sector, the savings will not be made. Let us think about this. The Government are publicly requiring people to downsize and then, knowing that the stock is not there, they hope and expect that people will ignore what the Government are telling them to do—otherwise they will not make the savings. The Government are calling for one outcome but want people to do the exact opposite. We are asking the House not to collude in that false choice.
Secondly, the Government’s position, as has been well outlined by the noble Lord, Lord Best, is deeply unfair to particular groups of people. I shall take just one: the couple with disability who need a bedroom each on occasion. He may have early prostate cancer and be going to the loo half a dozen times a night; she may have a respiratory problem and cough heavily through much of the night. On most nights, they need a separate bedroom otherwise one is being required to go without sleep or the other to sofa-surf in her own home night after night—a 60 year-old woman is being asked to sleep on a sofa night after night because of the change.
The same problems apply to disabled children being expected to share bedrooms with their siblings. If those disabled children need regular night-time care, their siblings are going to go to school without enough sleep, tired and upset, and almost certainly underperforming. Do we really believe that such families should carry the cuts on behalf of us all? I think not.
The third and last point is the consequences for housing associations such as my own—I declare an interest as chair of Broadland Housing Association, half of whose housing is in rural Norfolk. I cannot currently rehouse pensioners in rural Norfolk who want to downsize because I do not have the stock in the villages in which they want to live, yet it is among pensioners that underoccupation is most common. In future, the disabled family which does not want to move will be required to move, while to the pensioner who wants to move we will have to say, “You’ll have to stay put”. Can your Lordships think of a more foolish as well as—in many ways—more selfish policy, whereby people who do not want to move are made to move, and those who do want to move cannot, even though the costs of the one and the other would balance out? That cannot be right.
What will we do? As the noble Lord, Lord Best, said, families who cannot move, including those with a disabled child, will have to take a hit on their housing benefit through no fault of their own because they cannot move, and they will within weeks fall into arrears. What do we then do in a housing association? Either I evict a family with a disabled child into temporary accommodation or bed and breakfast—how I can do this to them?—or they stay put and arrears mount. I have already trebled the amount in my accounts for increased arrears. As the noble Lord rightly said, the money is not available to pay the debt charges of new building, which alone will solve the problems of getting our stock right in the longer term.
The Minister says that such people may make a contribution out of their benefit, by which he means, frankly, that they must either eat less or heat less. A disabled child and their family are being asked to eat less or heat less in order to bridge the gap between their housing benefit and the home in which they live.
I return to my opening point: we do not have to do this. It is about our political and moral choices. Families with a disabled child will lose £14 a week, while most of us enjoy a tax-free winter fuel allowance or find for the second year running that our council tax has been frozen. Not a penny of these cuts is falling on me or, I suspect, on very many of your Lordships, yet we are asking disabled families and families with disabled children to carry those cuts for us. I hope that your Lordships will put themselves on the side of the very modest amendment moved by the noble Lord, Lord Best, put themselves on the side of disabled children, disabled people, war widows, foster carers and kinship carers, and support the noble Lord’s amendment.
Lord Freud
My Lords, we have to look at these things in the round, as we did with the Bill. The reality is that we had a range and we set the provision at an affordable level within that range. Noble Lords may argue that saving money is a cynical thing to do but, as I say, we had a range and we set the provision within the range. We have found the money to ameliorate the measure through the discretionary housing payments process.
My noble friend Lord Newton made an important point about changing circumstances. We have rules within housing benefit to protect people when their circumstances change. Among those changes are going into hospital, being on remand and the death of a member of a household which would result in a reduction in housing benefit. Those same rules will apply in the social rented sector and provide protection for such claimants. For example, housing benefit currently provides 12 months’ protection from rent restrictions where there is bereavement, so there are ways of dealing with such circumstances.
The noble Baroness, Lady Hollis, referred to couples who have health problems. I re-emphasise the point that they would not be pensioners by definition as they are excluded from this measure, so we are talking about couples of working age. Clearly, if there is real difficulty in that regard and separate bedrooms are required, where discretionary housing payments would be considered, and where the couple required an overnight carer, whether non-resident or otherwise, the size criteria would be increased to provide additional room. However, we should consider what happens to people who are renting in the private sector. These situations are already faced by more than 1 million people—I think it is 1.3 million people—renting in the private housing sector.
This is part of a package of reforms to keep the housing benefit bill under control. I have never tried to disguise that in any way. This is a way of trying to control the housing benefit bill that is moving up towards £26 billion, if we do not take the £2 billion of savings across the piece as we are planning to do. That is the saving that we are trying to make within the social rented sector as opposed to the private sector. We are trying to sort out our budget deficit, and we need to make sure that we spread that load right across society in as fair a way as we possibly can.
We realise, obviously, that we need to support tenants, their advisers and housing providers in preparing properly for what is a very substantial change happening in April 2013. Work is well under way to support social housing providers, local authorities and other government departments. An important point raised by my noble friend Lord Kirkwood is the impression that it is all happening on one day. It might be happening on one day, but in practice there is a year before it culminates in which we are aiming to get a very smooth implementation process. We are working closely with the stock team, which is part of the Chartered Institute of Housing, funded by the GLC. We are putting a tool-kit out for local authorities, which involves working on who will be affected; advice on data sharing; allocations policy; tackling worklessness; taking in lodgers; letting spare rooms; reducing arrears; national home-swap schemes; affordable rents; and alternative housing options. We are working on all those areas.
A behavioural response is required right across the piece on something like this. We are looking to help claimants. Those who can must look for a job. Those who are in work can increase earnings by getting more hours. We have discussed taking in a lodger, moving to a smaller property or moving into the private rented sector. Landlords need to have responses. They need to give permission to accept lodgers, identify those affected, communicate changes, train staff, review their allocation policies, look at where the discretionary housing payments need to be made, and so on. There is a range of things on a substantial scale that need to happen, just as the Government have to do a huge amount of work to ensure that they do happen.
We are not expecting the 670,000 people who are affected to move. As I have tried to describe, there are a number of ways in which claimants can make up any shortfall and stay where they are. So I ask the noble Lord to withdraw his amendment.
Lord Best
My Lords, I am extremely grateful to people from all parts of the House who have joined in this debate. My thanks go to the noble Baroness, Lady Hollis, who has been tireless in supporting this amendment and so many others during the course of this Bill; to the noble Lord, Lord Newton, who has been a hero in bringing common sense and good judgment to this Bill at all kinds of stages; to the right reverend Prelate the Bishop of Ripon and Leeds for his support; and to the noble Lord, Lord German, who raised a number of important points. Perhaps I could respond to his point that 1 million bedrooms—I am not sure whether he actually quoted this number—are underoccupied in the social housing sector, and that it would be good if we could get those used. In this country there are, I think, 6.8 million empty bedrooms in houses where there is already one spare room. We have lots and lots of spare rooms, but they are in the owner-occupied sector, and nobody is suggesting that we levy a bedroom tax on the occupiers in the owner-occupied sector—quite rightly; I absolutely would oppose that. However, on council estates now, people who have exercised the right to buy and are homeowners are living next door to tenants in identical circumstances. One of them will be penalised and one of them will not.
I am also grateful to the noble Lord, Lord McKenzie of Luton, for his contribution and indeed to the noble Lord, Lord Wigley. I single out the noble Lord, Lord McKenzie of Luton, because he has brought the expertise of a previous Minister on this key issue to all of our debates and has been more than helpful to me in my formulation of the amendments that we have before us today.
I was greatly encouraged when the Minister said that the cost of this has come down from the earlier amendment, which found favour with your Lordships and did not do so badly in the other place. The cost has come down from some £300 million to about £100 million. I think the Minister said up to £100 million. This, I agree, is serious money, but it is set against the savings in housing benefit that the Minister mentioned again that he is seeking to achieve of over £2 billion. The £100 million is for particularly vulnerable and low-income households. I was not convinced by the argument from our earlier debates in Committee for the increase in the amount that will be charged each week. It will rise from £13 per week to £14 per week, which happens to be the amount required to find a further £30 million of discretionary housing payments. That, I fear, has meant that we are robbing Peter to pay Paul. We are charging another 50 quid to everybody else to pay for the ways in which we can exempt certain people, people in houses that have been expensively adapted, and indeed those who regularly have foster children in the home. That is excellent, but it is being paid for by pushing up the total bedroom tax for everybody else to £728 a year. That is three-and-a-half times the winter fuel payment, for example. That is a serious amount for people on the lowest incomes to find.
I do understand the pressures on the Minister to help the Government achieve deficit reduction, but I see it as incumbent on us in this House to take a stand, even a modest one, to draw a line where deficit reduction is at the expense of many thousands of the very poorest households. We have to say: so far, and no further. Applying the bedroom tax to these vulnerable groups, set out in this amendment, where there is no opportunity for those on very low incomes to avoid the tax, is going too far. I wish to test the opinion of the House.
Welfare Reform Bill
Lord Best Excerpts(12 years, 5 months ago)
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“( ) After subsection (7) insert—
“(7A) In relation to a dwelling of which the landlord is a local housing authority or a registered provider of social housing, and no alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available, regulations under this section shall not permit the AMHB to be less than the actual amount of the liability in a case where a household has no more than one spare bedroom.””
Lord Best
My Lords, Amendment 8 gives effect to an amendment which was in my name on Report and to an amendment to my amendment in the name of the noble Lord, Lord McKenzie of Luton, at that stage. These amendments, which addressed the cuts to housing benefit and universal credit for those deemed to have a spare room, were declared to be consequential amendments to two earlier amendments approved by your Lordships on 14 December and now incorporated in Clause 11.
However, the consequential amendments were not moved formally. They should have been. I fear that the complexities of consequential amendments and of amendments to amendments meant that this amendment is now required. With apologies, I beg to move the amendment formally.
Lord Freud
My Lords, I accept that Amendment 8 from the noble Lord, Lord Best, is a duplicate of previous Amendments 49 and 49A, which related to Clause 68 and should have been formally moved during Report stage. We find the veil and draw it as to why they were not. The Government acknowledge that it was the view of the House, following the vote on the amendments in the name of the noble Lord, Lord Best, on 14 December, to have those amendments made. Essentially Amendment 8, which is a duplicate of Amendments 49 and 49A, would mean that a reduction is not possible where the tenant has no more than one spare bedroom unless suitable alternative accommodation, which is to be defined in regulations, provided by a local housing authority or registered provider of social housing is available. I am clear that to complete that picture Amendments 49 and 49A should also have been made.
The Government regret that the House reached such a conclusion on the social sector size criteria. While I do not intend to oppose these amendments now, I should make it clear to this House that this is not an indication that the Government agree with the overall principle of the amendment proposed by the noble Lord, Lord Best. It is now for another place to consider this when the Bill returns there.
Welfare Reform Bill
Lord Best Excerpts(12 years, 5 months ago)
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“( ) Regulations under this section shall provide that the benefit cap shall not be applied for the first 26 weeks from the date on which the claimant’s total entitlement to welfare benefits exceeds the relevant amount.”
Lord Best
I shall speak to Amendments 60 and 61, which would constrain two of the more extreme aspects of the benefit cap proposed by the Bill. Your Lordships will not be surprised to hear me say that I note that most of those pushed over the cap are in that position because of their housing costs. They are paying high rents in London or the south of England. Why the Government's effort to change people's behaviour and psychology is concentrated almost exclusively on this part of the UK remains a mystery.
Let me take the amendments in turn. First, Amendment 60 would provide a period of grace of 26 weeks for those suddenly affected by the total benefit cap. The noble Lord, Lord German, said in Committee:
“People need the breathing space to be able to find a new job and get themselves back into work. The rationale behind this Bill is making work pay ... giving people time to find another job … should be a first and not a last resort.—[Official Report, 21/11/11; GC 344.]
Such a breathing space is currently the pattern before housing benefit/local housing allowance is curtailed in other circumstances. If, by contrast, the new £500 cap kicks in instantly, the household will run into serious financial problems as soon as any savings they have are exhausted. Rather than having savings, many families may have loans and debts. Because of the new cap, many families in privately rented accommodation—or even some housing association accommodation—across the south of England who encounter unemployment or family breakdown that means loss of a breadwinner will run into difficulty immediately. They will find the safety net of benefits—the social security they have been paying for in national insurance contributions—is no longer there to see them through the transition. Without a period of grace, the cap will mean that the rent can no longer be paid and they are likely to face the prospect of having to leave their current home precipitously.
If people become homeless in this way, the savings the Treasury seeks will swiftly be absorbed by the extra costs for local authorities in finding them somewhere else, which, as we discussed earlier, will not be easy. If they are moved away to a low-cost area, say from Brighton to Bradford, job opportunities are likely to be few and far between. Long-term unemployment becomes much more likely than if they had had the chance to get a job in the locality they know. The move will disrupt children’s education, cut helpful links with grandparents, and all the other disadvantages we have heard of in earlier debates. The harm done can continue for another generation, all because of impatience in imposing the new cap too rapidly. Finding a new home, even in a cheaper area, will not be easy and it takes time to secure a rented property even if the council is trying to help. Surely the best approach is for the DWP to hold back on imposing the new cap long enough to enable the family that has run into difficulties to get back on their feet, rather than forcing them into a crisis with the double trauma of losing their job and losing their home in rapid succession.
I heard the Secretary of State say this morning—we hear it first on the “Today” programme—that hard-working families trying to get a new job would not be penalised. The Minister has dropped many hints that something will be done. I am hopeful, therefore, that the Minister will be able to accept Amendment 60. Colleagues from different parts of your Lordships’ House have told me that in today’s job market 26 weeks is not a long enough period of grace. They have urged me to press for 52 weeks before the total benefit cap takes effect. I have, however, stuck with 26 weeks in the hope that it will give the Minister less trouble. But, a shorter stay of execution would not seem either humane or sensible.
Amendment 61 also seeks to take the edge off one of the most extreme aspects of the total benefit cap. This amendment would exclude from the cap families placed by their local authority in temporary accommodation—normally a private rented flat when the council has struck a deal with the landlord. Rents for temporary accommodation, even though many local authorities send the homeless family some distance to the cheapest neighbourhoods they can find, are high and the housing benefit has to encompass an extra charge to cover the administration of the arrangements. A total bill for a family of three children could be £440 a week in London, even though a central London borough has despatched the family to the lowest-priced accommodation it can locate. If £440 goes on rent, a total benefit cap of £500 obviously leaves practically nothing for all the family’s other costs, as the noble Lord, Lord Greaves, noted earlier. There is no prospect of them surviving on the remaining income within the cap, but the family concerned cannot do anything to rectify the situation. They have not chosen the accommodation but have been sent there by the council because nowhere else can be found for them. Yet, if they stay there, and pay the rent, they face destitution. We could bring back the bed-and-breakfast hotels that are becoming extinct, not least because they are so much more expensive than keeping people in rented homes, or we could revert to building hostels for these households, separating women and children from the men in the true “Cathy Come Home” style once again, but I know the Government are not thinking in such draconian terms, and anyway the problem would hit us long before we could recreate such hostels.
Lord Freud
My Lords, one can very easily see circumstances in which a local authority considers that to be a very sensible use of the discretionary housing payments. That is one reason why we have ramped up that amount. I am not saying that it will be every time, but that might be a solution. We are looking to redesign the process of finding temporary accommodation, which is the immediate problem that local authorities are faced with, so that we do not get caught in some Catch-22, which would obviously not be smart at all. That is where we are with that; we are very conscious of those issues and very comfortable that we have the legislative powers to develop effective solutions.
I pick up the important point from my noble friend Lady Thomas on the DLA and how the cap interacts with it. The DLA is there for those in receipt of DLA. That is how we have worded the illustrative regulations. A person whose DLA award is pending and who is serving what is now, and will remain, a three-month qualifying period, would not be covered by the exemption. That is the point in the question raised by my noble friend. It shows why this issue and other similar issues need to be dealt with in secondary legislation, so that we do not have the inflexibility that we would have if it was in primary legislation.
We are conscious of the concerns around the introduction of the cap. I can assure noble Lords that we are listening. We have said all along that we will introduce measures to ease the transition for families and provide assistance in hard cases. We are still considering our plans, and it is essential that we get them right. The clause has been drafted so that we have all the powers that we need to ensure through regulations that we provide the appropriate protections. I hope that that gives the noble Lord, Lord Best, a measure of reassurance.
Before I ask the noble Lord to withdraw the amendment, I would like to make it clear that the Government do not consider Amendments 60A and 61 to be directly consequential on Amendment 60. Further Divisions would be required should noble Lords wish to push those other two amendments in the group to a vote. I apologise for spelling that out, but we had a small frisson the other week. I ask the noble Lord to withdraw the amendment.
Lord Best
My Lords, I am sure talk of further Divisions will be unnecessary at this late hour. I am very grateful to many noble Lords, including the noble Baroness, Lady Drake, for supporting my amendment on the 26-week period of grace. She made the point that we cannot possibly require behavioural change from people who are already desperately seeking work, which is what we want them to do. I was also grateful for the support of the noble Lord, Lord Stoneham of Droxford, in backing this amendment. People with no history of benefit dependency should surely be given a period of grace to find work.
The noble Lord, Lord McKenzie of Luton, made the point that perhaps 52 weeks would be better than 26 as a period to allow people to get back into work, especially given the statistics we heard—that 50 per cent of people who go on to jobseeker’s allowance find a job within six months, but if we want to get 90 per cent back into work it may take a year in the current job market.
This remains a very important ingredient in the use of the cap. The Minister has promised that finding a solution is a priority and that a period of grace to ease the transition is one way of handling this, but there may be an even cleverer way. The Minister says that the issue still needs to be looked at very carefully but is confident that a way will be found. I must take this on trust, but with the expectation that there will indeed be measures that handle this transition and satisfy the House when the regulations, although those cannot be amended, are brought before us.
I am also grateful for noble Lords’ support on the amendment to make sure that temporary accommodation does not become a Catch-22 situation whereby homeless people are sent somewhere by the council, only to find when they get there that they are not able to pay the rent because the benefit cap has kicked in. That would be a calamity for them. I was grateful to the noble Baroness, Lady Hollis of Heigham, for weighing in on that one and to the noble Lord, Lord McKenzie, for asking for further clarification.
The Minister explained that we need to find a way, and he is confident we shall find one, of handling this exemption or exclusion, or in some way treating temporary accommodation differently and in a satisfactory way. I trust him to be as good as his word and I have pleasure in withdrawing these amendments.
Welfare Reform Bill
Lord Best Excerpts(12 years, 5 months ago)
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Lord McKenzie of Luton
My Lords, it seems that we are all, Lib Dems, Conservatives and ourselves, in favour of a benefit cap. Perhaps at some stage in the future, some analyst or academic might look back on these times and determine the origin of these policies, what analysis underpinned them and whether assuaging the court of public opinion played any role. It seems from what the Minister said a while ago that it played quite a considerable role.
But we are where we are. My party supports a benefit cap, but one based on fairness. A particular concern for us, as currently proposed, is its potential to drive increased homelessness, which is a major consequence of the cap—homelessness for vulnerable individuals, homelessness for families and homelessness for children. The way in which the cap is to be applied, albeit calculated by reference to a range of benefits, means that it is an effective second cap on housing support. It is a second cap on top of the range of reductions in housing support already introduced through the move to the 30th percentile of local market rents, uprating by CPI, a cap on rent levels and room sizes, and increases in scope of the shared room rate.
Not only will the overall cap dramatically increase the prospects of people becoming homeless but, in some cases, the Government will miss their target, and local authorities will bear the cost of the benefit cap, not the tenant. It will fall on council tax payers. If a family is already in accommodation provided for them under homelessness duties, no shortfall between housing benefit or housing allowance and actual rent will be payable by the tenant. Increasing the shortfall by the cap does not change this. There may be the opportunity to discharge the duty into cheaper accommodation, but this is increasingly unlikely to be available, certainly without significant migration to elsewhere in the UK, with all that that entails.
As Shelter points out, the reach of the household benefit cap goes way beyond the extreme cases generally associated with London, and it will be difficult for many households to afford to rent both in the private sector and at 80 per cent of market rents in the social sector across much of the south-east. It affects not only households with large families. Families in the private rented sector with just two children will be subject to the cap in all of central London. The DWP estimates that 50,000 households will be affected by this measure—I think that the estimate has been uprated to 75,000 households as a result of today’s news—and lose £83 a week on average, with 90,000 adults and 220,000 children affected by the measures. Fifteen per cent of those households will lose more than £150 a week. The Children’s Society has suggested that more than 82,000 children could lose their homes as a result of the cap. As the Children’s Commissioner pointed out in a recent report, the DWP’s own equality impact assessment sees homelessness, diversion of living costs benefits to housing costs and migration within the UK as primary effects of the cap. In a chillingly bland comment, the DWP states in the original impact assessment:
“The cap is likely to affect where different family types will be able to live”.
Housing benefit may no longer cover housing costs and some households may go into rent arrears. This will require expense and effort on the part of the landlords and the courts to evict and seek to recoup rent arrears. The impact assessment continues:
“Some households are likely to present as homeless, and may as a result need to move into more expensive temporary accommodation, at a cost to the local authority”.
It is an awful admission that by deliberate act of policy people are to be made homeless, are to run up rent arrears and are to be evicted; an admission also that reduced costs for the DWP will add cost to local authorities. Can the Minister say whether these increased burdens will be met by central government?
The Children’s Commissioner’s report concluded that the impact of the cap will be increased child poverty with associated poor health, educational and other outcomes. The report identified that in order to stay in their homes, parents who cannot or do not find work will have to divert large amounts of their living costs, the non-housing element of universal credit plus child benefit, to make up the shortfall. This will have obvious consequences for children’s well-being. For those who cannot bridge the loss of housing benefit, the loss of the family home will be severe. Local authorities may well have an obligation to rehouse but this may be in temporary accommodation and may require a move to cheaper areas, if they exist. As 70 per cent of those affected by the cap already live in social housing—that percentage may have been updated by today’s impact assessment—cheaper housing may not exist. Evicting families from such accommodation only to rehouse them in more expensive private sector or temporary accommodation would only add cost for local authorities.
The impact of such moves on families is traumatic, especially for children. We know that children from homeless and transient families are more likely to go missing from education. Uprooting families from support networks, friends and communities can have a severe impact on the emotional and physical well-being of parents and children, and for vulnerable people especially so.
There are a number of ways in which these dire consequences might be addressed and subsequent amendments cover a series of possible ameliorations. This amendment supports the amendment separately tabled by the noble Lord, Lord Best, concerning those owed a duty to be provided with interim or temporary accommodation as part of the homeless safety net. The amendment refers only to English legislation and I was advised today that it should also be extended to Scotland. We might bear that in mind for later stages. As the noble Lord explained in Committee, temporary accommodation tends to be more expensive than mainstream housing and local authorities will struggle to obtain suitable accommodation for homeless families. Our amendment goes further and seeks exemption from the cap for those accepted as homeless and in priority need and those threatened because of the cap with becoming homeless. This raises points of detail that would have to be settled in regulations.
If the cap was introduced, households for which a homeless duty has been assumed and which are in temporary accommodation face a shortfall in rent as well as council tax. Local authorities must either cover the shortfall from the general fund or secure alternative temporary accommodation elsewhere within the monetary limits. However, it takes a long time to procure temporary accommodation and some local authorities will be in longish contracts with owners. They will need a long transition and so it may not be possible. Any family in private accommodation entered into prior to the introduction of the household benefit cap that falls into arrears and is in priority need and threatened with homelessness will be able to apply as homeless to the local authority which can then discharge its duty into alternative private accommodation affordable for the family. In many areas there are already insufficient private rented homes that are affordable to people on the local housing allowance. But this does not relieve the local authority of its duty.
Any family with a secure assured tenancy and facing a shortfall—whether it is a council or housing association property—would in theory be able to ask the local authority to secure them affordable accommodation if they are threatened with homelessness due to arrears. However, as all local authorities have their own allocations procedure this would inevitably mean tenants in secure social housing exchanging these tenancies for assured shorthold private tenancies in cheaper parts of the country, again if they can be obtained. If not, the local authority will have to fund the shortfall.
What would be the effect of our amendment? It would relieve the pressure on local authorities currently housing homeless families which would face the cost of the shortfall in rent if there was no suitable cheaper alternative. It would avoid costs being transferred to the general fund, potentially costing some hard-pressed councils millions of pounds. It would stop some individuals and families being uprooted from their communities. This protection would apply not only to households with children but to vulnerable individuals; for example, those with mental health conditions, disabled people and people fleeing from domestic violence. It would not stop increased homelessness and migration within the UK driven by cuts already announced to housing benefits but it could help to stop it getting much worse. It would not facilitate people remaining in lavish up-market properties, so beloved of the press. The pre-cap housing support would be determined on the basis of the changes already being introduced.
The Minister will doubtless put another of his costings on this amendment. When he does, perhaps he will make sure that he includes the actual costs to local authorities in meeting rent shortfalls; the implications for a range of services in supporting the migration across the country which will flow from the cap; and, of course, the costs to landlords and the courts in pursuing evictions. Most of all, will he factor in the human misery that the cap will generate?
There are a range of other amendments suggesting carve outs for the cap, transitional measures and refining the basis of calculation which can sit perfectly well alongside this amendment. If for no other reason, this amendment can provide for those who seek, and have the leverage to encourage, concessions from the Government, but its primary purpose is to prevent the slide into further poverty and disadvantage that homelessness can bring and the multiple disadvantages that spring from poor housing to blight lives, particularly those of the young. I beg to move.
Lord Best
My Lords, I support the amendment. As we have heard, it would mean that families facing immediate homelessness because of the imposition of the benefit cap would be saved.
A major problem with the cap is that, as well as taking no account of the number of children in a family—a point which a later amendment in the name of the right reverend Prelate the Bishop of Ripon and Leeds and others will seek to address—it takes no account of the level of rent: that is, it takes no account of how much of the benefits within a £500 cap must go to the landlord not the tenant. The £500 cap looks relatively high in areas where housing costs are low. In Committee, I quoted £85 per week rent for a council house in the north-east or south Wales, leaving a headroom of £415 per week for benefits to cover all other expenditure. Indeed, the average cost of housing—the £500 is all about comparisons with average earnings—is some £87.50 per week. However, the same cap applies in all areas, including London and the south-east of England, where housing costs are much higher. I am not talking about the extreme cases of refugee families with 10 children living in Hampstead. A rent for a not very salubrious private sector flat in the east end of London can be £350 a week. A £500 cap will plunge a family with three children living there into poverty, with only, in this example, £150 per week left for food, clothing, ever rising fuel bills and the rest, instead of more than £300 as at present. It is not their fault that rents are so high in much of southern England, but clearly the family will have to move out if the application of the cap is not moderated as by this amendment.
However, it is very uncertain where those made homeless can be moved to. The logistics for local authorities of moving large numbers of families to cheaper areas will be extremely complex and expensive. Finding new homes for them, even in a much lower cost area, will not be easy. Most private landlords prefer not to take on tenants on housing benefit and local housing allowance, particularly those not known in the locality, not least because benefit is now seldom paid direct to the landlord. No one wants to send families to so-called benefit ghettos with the lowest quality housing which is bound to undermine the hopes, aspirations and life chances of those sent there. It should be remembered that the new benefits cap is in addition to the caps on rents in high-priced areas which have already been introduced and are now beginning to bite, as existing tenancies come to an end. Regrettably, we are just beginning to see a return to the use of expensive but seedy bed-and-breakfast hotels as the numbers of homeless families rise. The new cap will considerably compound the problem.
This morning on the radio I heard the Secretary of State, Iain Duncan Smith, suggesting that the definition of homelessness was that children would have to share a bedroom. That is a confusion with an earlier amendment which found favour with your Lordships concerning the underoccupation penalty—the so-called bedroom tax—which was not about homelessness at all. Families are deemed to be homeless if the local authority deems that unintentionally they have no place to go. That can happen if they can no longer pay the rent where they are because their benefits are cut drastically. The council is then required to step in to find them somewhere to live. Amendment 58D would avoid that miserable and expensive outcome for thousands of families and tens of thousands of children who will otherwise have to leave their current homes. Two later amendments in my name address two of the most extreme aspects of the imposition of the new cap. At this point, I am pleased to support Amendment 58D.