Housing Benefit (Amendment) Regulations 2010

Debate between Lord Bishop of Hereford and Lord German

Monday 24th January 2011 Lords Chamber

[Lord German]

My Lords, I thank the noble Lord, Lord Knight, for his agreement that he is not going to pursue the annulment and also for his support of the noble Lord, Lord Best. The Motion will meet the problem we are all facing—what might happen in the future. In some ways, it is like trying to judge between those who know the next winner of the Grand National and those who believe that it is an art form to study the form and decide which direction to take. Essentially, this whole issue rises or falls on an assessment of how the market will behave.

I want to consider the agreement between the former Labour Government and what the Government are trying to do today. The noble Lord, Lord Knight, said that we should go ahead with the £15 that was made available to people who could negotiate a smaller rent and we should take that away. That was a proposal that he quite rightly made while in government. There is a general agreement that the costs of local housing allowance and housing benefit must be reduced and contained. There is a question which we are all struggling with about the speed with which we do it. There probably will be a consensus in the overall ambition but a difference in the speed by which we achieve that.

There is an agreement that the current expenditure trends, as shown in the impact assessment by the DWP, are unacceptable and unsustainable. Continuing as we are from the evidence that we are given, private sector rents will be driven up, the gap between housing benefit paid in social housing and in the private housing sectors will be extended, and the difference between average earnings and private sector subsidised rents will be widened. That is unacceptable. We know from the figures that the average impact of these measures on households in the private sector will be £12 a week, but of course there are great disparities in that. The figure is £12 a week across the whole of Great Britain but if you look at the difference between Blackpool and London, you get a huge variation. That was a figure which the previous Labour Government alighted on as one of the reductions they would make, but for a much smaller group of people than that which is proposed now. So it sounds remarkably like we are moving in a direction in which people want to travel but not necessarily at the speed at which everybody wants to go.

There has been the critical Social Security Advisory Committee report and its priority is the impact of the regulations. That is its job, not dealing with deficit reduction. Nevertheless, the report quite rightly said, “Do not implement this, but if you are choosing to implement it, here is a range of things you should do to make these changes work”. I am pleased that the Government have accepted the majority of these, in particular the delaying and phasing for current recipients of housing benefit.

There is a quite distinct issue relating to London in this variation. One in four of housing benefit households in London is affected by these measures and the primary impact in London is that the average figure across London for the change in rent to be paid by these allowances is £22. However, 17,000 of the 21,000 losers as a result of a cap on the rent are located in London, so there is a London issue which is almost unique within Great Britain. I read in the other place the evidence given in the form of the committee report and the committee discussion and there was a sense that people were seeing the whole of Great Britain through the prism of London. That is a dangerous process and we may have to look at London separately because in the rest of Great Britain the average impact of these changes on rents is £9.84 a week. In a period when landlords have low interest rates on mortgages, this may be the right time for them to absorb this change.

I will return to the London problem later. First, I would like to look more closely at the impact this figure of £9.84 will have on household rentals around the rest of Great Britain. Essentially, the difference of view which I hear on this issue is around this central question. The noble Lord, Lord Best, said it just now. Will landlords reduce their rents to meet the new levels set by Government? This is fundamentally an issue about the operation of the private rented sector market.

The Government essentially influence about 40 per cent of rents in Great Britain. In terms of pure economics, the state must surely have a prime influence on the level of general rents because it pays the rents of 40 per cent of the properties. It is not quite a monopolistic situation, but the Government are a major purchaser of tenancies in the country.

How has this market operated until now? On the one hand, it seems that tenants have found properties for rents at levels which they know the Government will pay; on the other hand, landlords have set their rents at the level which the Government will pay. There is no incentive on either side to adjust or to deal with this matter. In straightforward terms, it is a market in which the principal and largest purchaser has not really had much influence over the price paid.

Will the changes make a difference? I sincerely hope so, but we are talking of market behaviour. It cannot be an exact science. That is why it is essential that the spirit of the Motion of the noble Lord, Lord Best, is followed and a full evaluation and measurement of the impact are carried out just as soon as the first complete annual cycle of the new regime has ended. We need to know whether the desired changes which it is assumed will be brought about as a result of the measures have taken place.

The market is more likely to work in the direction that the Government want if the state enters the market as a negotiator. Currently, there is no incentive for the state to get the best rental price. We are talking about an incentive that is, first, a copper-bottomed guarantee of rental income, which the Government can provide—the Government are backing the money being provided—and, secondly, a direct payment to the landlord if they accommodate the changes. That is an important concession which the Government have made as a result of the report by the Social Security Advisory Committee.

I welcome the additional funding for housing benefit specialists to intervene in negotiations with landlords, but I have to ask the Minister two questions. First, do those people have the right skills to enter a negotiation market where previously they dealt with a different set of criteria and a different environment? Secondly, is the funding which they are making available to enable the negotiation to take place sufficient?

The big question for London is: is there a ready supply of non-housing benefit tenants ready to fill the properties if landlords are not prepared to reduce their rents? That is why I suppose that such a huge portion of the new funding for discretionary housing benefit and assistance is going to London. Will the Minister confirm that the Government will ensure that the most vulnerable are protected and recognise the distinct market pressures which make London so different?

I accept, of course, that there is mobility of tenancies in London. As a relatively new Member here who has had to seek to rent a property in London during the week, I have found that tenancies move very quickly—you will not expect to take a long time looking over a property as you might normally do in other parts of the country. A quarter of a million moves take place each year in inner London alone, which demonstrates to me that people seem to want to move rapidly. Having moved several times in my life, I must say that it has been the most horrendous part of my life that I can remember; I would prefer not to move at all because it is such an unpleasant exercise. I suppose that there is a different quality to life in London which means that people like to move around more rapidly.

However we judge this matter, we have to recognise that the reason for pressure on the funding of private sector rents is a shortage of social housing in this country. I hope that the Government’s ambitions for the net number of new properties in the social sector will be achieved, but much more can be done in this field by way of other arrangements with private funding. Much more imaginative use of private funding can be made to create more units of social sector housing. We need to dwell on that matter because this is an equation. If we want to make sure that the balance of the equation is right, we need more social housing in our country. We must remember above all else that people need and deserve a proper roof over their heads. In all the initiatives that we take to keep public expenditure under control, we must not lose sight of this fundamental aspect of a decent society.

[The Lord Bishop of Hereford]

My Lords, I recognise with others who have spoken a need to reform the present arrangements for housing benefit but I also express my concern about the measures that are before us. The noble Lords, Lord Best and Lord Knight, presented some alarming figures which, even if we perhaps dismiss the more extreme end, nevertheless give rise to considerable grounds for concern.

The noble Lord, Lord Best, referred to a number of charities that have supplied him with briefing papers; I have been involved with a number of others. Housing Justice expresses fear that the arrangements being proposed would significantly increase the number of homeless people, particularly within London but elsewhere in the country as well.

A reduction in housing benefit at a time when we are facing all the uncertainty and the outworking of the comprehensive spending review compounds the complications of the system and risks therefore greater harm being done to those who are most vulnerable. It is so difficult, as I think everyone who has spoken already acknowledges, for us to assess the outcomes of the proposals both for those on housing benefit and for others in the system.