Housing Benefit (Abolition of the Family Premium and Date of Claim Amendment) Regulations 2015

Lord Low of Dalston Excerpts

Wednesday 3rd February 2016 Lords Chamber

[Lord Low of Dalston (CB)]

My Lords, I support the Motion of the noble Lord, Lord Kirkwood. I will speak particularly on the backdating aspect of the regulations.

Limiting backdating of housing benefit payments to one month is likely to put vulnerable people at risk of rent arrears and subsequent eviction, and possibly homelessness. Crisis, the charity for single homeless people, wrote to tell me that it is concerned that the most vulnerable will be affected by this change, including those who have experienced homelessness. It says that many of the people it supports to find and sustain tenancies make successful backdating claims for housing benefit often for upward of 12 weeks. These are often the result of clients having additional support needs that make it difficult for them to navigate the benefits system. Consequently, they fail to claim the benefits to which they are entitled in time.

The Government dispute the suggestion that limiting the backdating period will lead to tenants falling into rent arrears but Crisis says that many of its clients accrue considerable arrears before they seek the support they need to backdate a claim. Backdating claims are often made following a change in circumstances that affect a person’s entitlement or because of failures in the system that lead to housing benefit not being paid. I will mention three examples of when people may need to make a backdated claim. There is where there are fluctuations in income. When someone finds a job their entitlement to housing benefit must be adjusted. If they enter casual work, such as on a zero-hours contract, their entitlement must be calculated on a weekly basis. This can lead to payments being stopped until the claimant can provide all necessary payslips. That causes delay and the need for a backdated claim. The ability to backdate by only one month may not be enough to cover that delay.

Housing benefit claim forms may be lost. Despite the best intentions of council staff, housing benefit claim forms can go missing or online submissions may not be received. I can empathise with this and can vouch for the fact that this kind of thing can happen through nobody’s fault. Today, I rang up to buy some more premium bonds, only to be told that I needed to provide a password. Apparently, one had been sent to me in the course of the last year but it never arrived. Getting back to housing benefit, resubmitting claim forms can cause serious delays at the beginning of a tenancy. We need a backdating period sufficient to cover such delays.

Again, housing benefit is sometimes stopped in error when someone is sanctioned. This can lead to arrears, particularly if the landlord is receiving direct payments and does not notify the tenant that the rent has not been paid.

The Social Security Advisory Committee advised that the case for this policy has not been made out and recommended that it should be possible to backdate housing benefit for at least three months. It says that inconsistencies between the rules attaching to different benefits are hard to defend and add to the complexity that claimants are required to navigate. For people whose rent is paid monthly or four-weekly in arrears, the proposal will mean that there is no slack in the current complex legacy benefit context for them to realise that there is a problem with their housing benefit entitlement and make a late claim. This presents a clear risk that the impact on landlord and tenant behaviour could result in upward pressure on homelessness among the more vulnerable, with attendant costs that could offset the projected savings. It is disappointing, the committee says, that there has been no cost-benefit analysis of these aspects. For people whose rent is paid monthly or four-weekly in arrears, the proposal will mean that the new rules will not provide sufficient time for a backdated claim to cover the delays that have taken place.

The fact that there has been no effective impact assessment makes it difficult to assess the effect of reducing backdating by different amounts from the current six months. Centrepoint undertook a survey of more than 800 young people using its services and found that 78% of those who made a late claim for housing benefit were not seeking backdating for longer than three months; the majority of backdating claims could therefore be accommodated within a three-month period, and reducing it further could have a financial impact on a sizeable group of vulnerable young people, potentially causing hardship to those least able to withstand it. The Committee highlighted the fact that the legacy benefits system is more complex than universal credit; that being the case, there is a strong case for maintaining a longer backdating period to account for these complexities. Removing the ability to back-date housing benefit claims for a sufficient period may deter landlords from letting to tenants in receipt of housing benefit. Landlords may be particularly reluctant to let to people who have experienced homelessness in the past, given that they may be vulnerable to falling into rent arrears, often through no fault of their own.

The committee concluded that the position faced by housing benefit legacy claimants, particularly the more vulnerable, is substantially different and more challenging than the position following migration on to universal credit. It added that in the absence of a robust impact assessment, the case for a simple alignment with a one-month backdating rule has not been made and that there is a significant risk of offsetting additional costs to the estimated one-year saving of £10 million if the proposal is pursued in this form. It therefore recommends that, if the Government still wish to make an early reduction in the backdating period, a three-month period would strike a better balance between the aim of securing an expenditure saving and recognition of the substantial differences between the housing benefit legacy and universal credit positions. With the noble Lord, Lord Kirkwood, I would want to maintain that the three-month compromise is the one that we should go for, and the Government should rethink.

[Lord McKenzie of Luton (Lab)]

My Lords, we should be grateful to the noble Lord, Lord Kirkwood, for giving us the opportunity to range over this issue this evening and to the noble Lord, Lord Low, for his very extensive analysis of some of the risks around homelessness that these changes will create. Given the hour and the business to follow, I shall raise one or two brief questions.

On the family premium, the Explanatory Note with the regulations says:

“Removing the Family Premium helps to simplify the overly-complex HB system … and should therefore reduce administration costs”.

Can the Minister seriously tell me how much of a reduction in administration costs is anticipated just from removing this one component of what is and can be quite a complex calculation? It seems to me that it should be built into the system, so whether it is there or removed would make very little difference to the cost.

As for backdating, we have heard the arguments against the Government’s position that effectively we want to get equality with universal credit and if universal credit only needs one month’s backdating why does the housing benefit system need longer? I should have thought that it was recognised—and the noble Lord, Lord Low, has made it clear—that the housing benefit system is more complex. Indeed, is that not one of the boasts of the Government about universal credit, which we have supported—that it is an easier system whether you are in or out of work? You simply move up the scale; you do not have to come off one system of benefits and go on to another, or seek to return to them in due course.

We are in danger of overlooking a fundamental point here—that this is about backdating if there can be shown to be good cause. It is not something that is awarded willy-nilly. There are particular concerns around people with mental health conditions and the extent to which they are supported to make the right sort of decisions and judgments about their claim for benefits. That seems to sweep aside that issue.

There is one technical issue that the Minister may be able to help with. If somebody is awarded JSA after making a claim, they would be entitled to a three-month backdating of that benefit. The award of that benefit could automatically transport somebody on to maximum housing benefit—somebody who was not previously eligible for housing benefit. So we get somebody on JSA with a three-month backdating, which opens up the opportunity for housing benefit for somebody not previously entitled. There is something in the text that suggests that that backdating would apply to housing benefit as well, but I cannot quite see technically how that comes about. I would be grateful if the Minister could clarify that on the record tonight, because clearly there would be an anomaly with accessing one benefit opening up the opportunity for another benefit and giving rise to different backdating results, as a result particularly of these regulations.

--- Later in debate ---

[Lord Freud]

My Lords, I ask noble Lords to forgive me for not keeping up with the exact floating role of the noble Lord, Lord McKenzie, as he moves forward and back on the Benches. I thank all noble Lords for their contributions which, as one would expect, covered a number of issues.

I start with the family premium, which will align housing benefit with universal credit, which does not have this process. As noble Lords will be well aware, it applies to new cases only. It will therefore not affect people in receipt of family premium on 30 April this year. They will continue to receive the family premium until they are no longer responsible for any children or young people under 20 or make a new claim for housing benefit. To avoid people dying at the stake for the sake of these premiums, I remind noble Lords of their very complicated history which started in 1988. With the reform of tax credits, they were removed from income support but not from housing benefit. I know there is a lot of historical nostalgia for bits of the benefit system, but this one reminds me more of an appendix than of anything else: it had a purpose at one time, but it is pretty odd to remember what it was and it can cause you problems, as I am discovering.

On the linking rules, where claimants are in receipt of housing benefit and subsequently move house into a different local authority, they are required to make a new claim for housing benefit. That has always been the case and the policy does not seek to change it. If the claimants were in receipt of the family premium before their move and they move after 30 April, they will no longer receive the family premium in their new housing benefit claim from their new local authority. That responds to the question from the noble Baroness, Lady Sherlock. I know that the noble Baroness likes to stretch out the period for which this will last, but universal credit will be coming in for new cases reasonably soon. It is simply not feasible to introduce linking rules for these cases because that really would introduce a level of complexity and cost.

I regret that I cannot answer the precise question from the noble Lord, Lord McKenzie, on the administration costs saved. When you go through the sums of how you reach that family premium amount and then do the taper with it, and you have to do that differently through every local authority, I have to believe that it genuinely saves some money. However, I cannot put any amount on that.

On the point about work incentives made by the noble Baroness, Lady Sherlock, the loss of family premium would be one factor among many others, including the financial gain and development prospects that would come from entering work. It is important to mention the likely behavioural change that could result from this policy, as the potential reduction in benefit may make claimants more likely to find work or increase their hours. Indeed, you see evidence of that in some of our welfare reforms already.

I turn to the issue of backdating, which noble Lords touched on. This change introduces equality for working-age claimants by aligning housing benefit rules with those in universal credit. Under current rules, as noble Lords have pointed out, the working-age housing benefit claimants may have their claim treated as made from a date up to six months before they actually make the claim. The backdating period will apply from the date of claim and is not dependent on the time that it takes to process claims. Our rationale is that the one month provides a reasonable period to seek assistance or to get claimant affairs in order for those who can demonstrate good reason as to why they did not claim more promptly. While claimants still receive legacy benefits before migration to UC, there is sense in preparing them for the transition to UC by, so far as practicable, equalising how they are treated. The other factor that is useful when we look at this is that our administrative data show that more than two-thirds of backdating claims for housing benefit are awarded for one month or less.

The noble Lords, Lord Kirkwood and Lord Low, asked why we rejected the three-month recommendation —although, interestingly, the numbers between the one-month figure and the three-month figure are actually not very great. We are aiming to change behaviours. If people want to claim benefits, one month allows sufficient time for them to register a claim in the first instance. It does not matter if it is a more complicated process, because the processing and getting the detail does not change the date of entitlement, which is established on the initial claim.

To respond to the noble Lord, Lord McKenzie, who as usual has excruciating detail at his fingertips, I confirm—and I am impressed that he has looked at this—that where a claim for housing benefit is linked to a claim for one of the legacy income-related benefits that applies the three-month backdating rule, entitlement to housing benefit will be linked back for the full three months if it is made within one month of the award for legacy benefit. So he got that spot on.

On the point from the noble Lords, Lord Kirkwood and Lord Low, we do not anticipate pressures on the homelessness front. I am slightly influenced by the fact that every time we make such a change we are warned about that but so far it has not come through.

[Lord Low of Dalston]

Does the Minister not agree that I gave some concrete and tangible examples where people might be justified in needing to have their claim backdated for longer than a month, through no fault of their own—for example, where forms have gone missing or where they have been sanctioned in error? Would it really mean any skin off the Government’s nose to include an element of flexibility to take account of those cases? If someone has lost a form or they have been sanctioned in error, those are not instances of behaviour that can be changed by limiting the backdating rules to one month.

[Lord Freud]

I listened very carefully to the noble Lord on those points. My response to that is, if the claim was made on that date and it was lost but it was made then, the issue is whether the bureaucracy accepts the claim that it is lost. The date is established then, and would be established in both of those cases. A lot of the problems may be through legacy benefits, where, as I just explained, the situation has not changed.

DHPs are designed to give additional support to claimants who need it. It is technically possible for DHPs to meet a historic need, although in practice we suspect that it is rather unlikely that a local authority would make this award for that reason, as the regulations state that a claimant should need further financial assistance with housing costs to receive a DHP. As the time period that they are applying for would have passed, it would be difficult to argue that there was a need for financial assistance with housing costs. Therefore it is unlikely but not impossible.