Welfare Reform Bill Debate
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Baroness Hollis of Heigham
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Welfare Reform Bill
Baroness Hollis of Heigham Excerpts(12 years, 6 months ago)
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The Lord Bishop of Ripon and Leeds
My Lords, I have added my name in support of the amendment of the noble Lord, Lord Best, because of my concern, and that of those of us on this Bench, for the needs of children as we pursue the move towards universal credit. I am fully aware that that concern is felt on the government Front Bench as well.
This is an area where a small change to the Bill will bring about help for a significant number of children who are under the most pressure in social housing. What is proposed by the noble Lord in the amendment—whether or not it is itself amended—is a definition of underoccupancy in line with that of Communities and Local Government and which simply reflects the reality of family life. Under the definitions of the Bill, a family with an eight year-old boy and a nine year-old girl in separate bedrooms would be deemed to be underoccupied. That cannot make sense.
There is every reason to discourage genuine underoccupancy. When people think about underoccupancy, on the whole, they think of where a single person or a couple are left in a larger house, probably because their children have moved away. Surely that should not apply to a disabled child, for example, who needs care during the night and therefore needs a separate room. It should not apply to a room used for access visits by children following marital breakdown. It should certainly not apply to foster carers between placements. There is real concern that the Bill, if unamended, will discourage foster caring because the carers will not be able to retain rooms in which to place foster children if the need should arise.
We—or, at least, the Members on this Bench—are going to hear a good deal over the next fortnight or so about there being no room in the inn. The amendment will provide the flexibility so that families can live the sort of lives that most of us take for granted. I hope that we will be able to enable this to happen by the pursuit of this or a similar amendment.
Baroness Hollis of Heigham
My Lords, I declare an interest as chair of Broadland Housing Association. I am delighted to support this amended amendment. DCLG says that you are underoccupying if you have two or more spare bedrooms; DWP, in the Bill, if you have more than one spare bedroom—a very tight definition. If you then do not move to somewhere smaller, you will be fined by having your housing benefit cut by 15 per cent.
As my noble friend has said, this is not about finding homes for the 3 per cent of families who are overcrowded in this country. We could solve that tomorrow if we built bungalows or suitable flats for the pensioners who are queuing up for them—full stop. No, this is about cutting the housing benefit bill, by telling a third of our tenants in social housing, most of them disabled, that they have to find somewhere smaller to live. A middle-aged couple with health problems who therefore need that second bedroom will be entitled to only one bedroom. The family of four with two teenage daughters in a three-bedroomed home must move to a two-bedroomed home even though the girls will then have nowhere to do their homework. A disabled woman who sometimes has a carer staying overnight in her two-bedroomed flat must move to a one-bedroomed flat. A couple in their 50s, in a two-bedroomed house, who care for their grandchildren when their daughter with mental health problems cannot—in other words, they are occasional kinship carers—will have to move to a one-bedroomed flat, possibly some distance away, and the whole fragile family arrangement will collapse.
In theory, all the people in these examples are expected to move. The children are expected to change school one year before GCSEs, the middle-aged woman is expected to move away from her mother whom she is keeping out of residential care by her support, the disabled woman to move away from the friends who help her cope by doing her shopping and laundry. Six hundred and seventy thousand families—between 30 and 40 per cent of all tenants in social housing, two-thirds of them with a degree of disability—are supposed to go on the move if they can. Fine, if they can; but for most, even if they want to downsize, they cannot. Even though they may be pensioners who cannot heat their homes, they cannot downsize, and the DWP knows it. The smaller flats are simply not there to move to and all the fulminations of the tabloid press—that Ministers expect them to downsize when the same Ministers know that they cannot—are therefore cruelly irrelevant.
The National Housing Federation says that 180,000 households in two-bedroomed flats would have needed a one-bedroomed flat last year, but just 68,000 such flats—about a third of the number needed—became vacant. In future, the needs of pensioners who really want to move can never be met because, as the noble Lord, Lord Best, said, absolutely rightly, any smaller place that becomes available will have to be offered to much larger families who, however, do not want to move, rather than to the single pensioner who does. It is a cruel nonsense.
The department admits that, in its own words, there is a mismatch, and that the smaller properties that people are expected to move to do not exist. The department expects that 85 per cent of all of these tenants will stay put and take the cut in housing benefit because they have no alternative, as the impact assessment admits at the bottom of page 2. The Government are counting on people not moving, despite telling them that they should. So the Government’s savings are going to come not because people do what the Government tell them to do, but because people do not do what the Government tell them to do: they stay put, because they have no option, and then they are fined for doing so.
What do the Government suggest that they should do to cover the shortfall? They should find work. Well, of course, if they could they would, and we welcome the support given for finding work within the universal credit system. Alternatively, it is suggested that they could take a lodger; but with small children I do not think that that will happen. The other suggestion is that they use—actually, use up—their savings. As the noble Lord, Lord Freud, reminded us on Monday, the average savings are only £300. That will last for four or five months of shortfall. After that, what then? It will be debts, arrears and pass-the-parcel. To pay the council tax, because their council tax benefit is being cut by 20 per cent, they will raid their housing benefit. However, that now does not pay the rent, so to pay that, they will fall behind on their utility bills, which are also on the rise. Threatened with their gas and electricity being cut off in winter, they will cut back on food, until ultimately the whole Ponzi debt pyramid created by this clause of the Bill will collapse. They will then face food parcels and eviction.
However, as the eviction is not their fault, as the Minister agreed in Committee, they will not be intentionally homeless, so they will be put into highly expensive B&B at taxpayers’ expense with all its cost and all its misery, as, with a history of arrears, they will not be accepted by any private landlord. In time, they will be rehoused—quite probably, if my housing association is anything to go by, in a house that is still too large, because that is all we have—and the whole vicious spiral one year on will start all over again, taking disabled adults and children through a relentless cycle of cuts and evictions.
The alternative, of course, is that housing associations such as mine carry the arrears because we know the social and financial costs of eviction and the awful stress that it involves. Then what? Over time, the housing association goes into the red or, alternatively, we stop building and save the debt charges on erecting new homes, the money being spent instead on debts that come from cuts in housing benefit, thus guaranteeing that the shortage of social housing that is undermining the housing market continues for the next decade.
It is so unfair. Let us take JSA as an example. If people break the rules on job search, we cut their benefit to change their behaviour. However, if they observe the rules and, after a proper job search, cannot find a job given the unemployment figures, we do not cut their benefit because it is not their fault and they cannot change their behaviour. That is the social contract of social security. You sanction people when they break the rules and should change their behaviour; you do not sanction or fine them but support them when that is not possible. It is what we do with JSA. The DWP is, in this clause, breaking that social contract with these changes to housing benefit. In all my time in the social security field, I have never known that contract to be broken in this way.
Grant Shapps said that we should not bully people out of their homes. He is right. Yet in this Bill we are saying to people who have lived in their homes all their lives, done what was asked of them and behaved responsibly—two-thirds of them having some disability—that their benefit is being cut from underneath them through no fault of their own but just because we in Westminster are changing the rules. We tell them to downsize while knowing that they cannot do so, so we fine them instead for what is not their fault and for what they cannot change. It is morally wrong to punish people for something that is not their fault and to punish them when they are innocent. That is not decent, it is profoundly unfair, and we should not do it. If noble Lords agree, they will support the amendment today.
Lord Freud
I am pleased to clarify that that is an annual figure that starts in the year 2013-14, when the actual provision comes in.
Next, I would like to clarify the rates of reduction to be applied under this measure. In setting the percentage reduction rates, we have considered the sorts of rent differentials seen in the social rented sector alongside the question of affordability for the taxpayer. We intend to set the percentage reduction rates at 14 per cent for underoccupiers with one additional bedroom, and 25 per cent for underoccupiers with two or more additional bedrooms.
We think that the average cost to affected claimants, in terms of reduced housing benefit entitlement, will be around £14 a week in 2013-14. The majority of claimants affected—just over three-quarters of the total—are underoccupying their accommodation by just one bedroom. For this group, the average reduction will be around £12 a week. For those underoccupying by two or more bedrooms, the average reduction will be around £22 a week.
I would like to assure noble Lords that discussions within the coalition Government in designing this measure were thorough and productive, and these will continue through implementation. My officials are working closely with the Department for Communities and Local Government, the Department for Education, and the devolved Administrations.
It is worth picking up the issue, which my noble friends Lord German and Lord Stoneham raised, of whether we can make the transition easier. It is technically possible to stagger implementation arrangements, based on the anniversary of the claimant’s tenancy, but this move is not cost-neutral, and the planned savings will be reduced, albeit modestly.
I must be clear that, principally, I am more concerned about the ability to deliver the proposal because it might be very difficult to police and monitor. I am concerned that some landlords will offer new tenancy agreements to existing tenants, so that implementation of this change is delayed, and then the costs would spiral very substantially.
We are, however, determined to make maximum use of the time available between now and the measure coming into force to help prepare local authorities and social landlords for the changes, which in turn will benefit those who are affected. I am sorry if I rather loosely used the term “two years”, on which my noble friend picked me up.
Amendments 14 and 49, from the noble Lord, Lord Best, would exempt claimants from the measure where they underoccupy by just one bedroom. Amendment 12 would appear to tie Amendment 14 in with the housing costs calculation for universal credit.
There is a tension here between the bedroom standard, which is a widely used standard which views underoccupation as having two or more extra bedrooms, and the local housing allowance size criteria, which we propose to use for housing benefit purposes and which we already use for the private rented sector.
Our size criteria take a more generous view on the age at which someone is entitled to their own bedroom. Since the deregulation of rents in 1989, we have been using 16 as the adult threshold in size criteria for housing benefit purposes. The bedroom standard, on the other hand, sets the threshold at 21. Against these stricter criteria, however, the English Housing Survey and other similar surveys then consider the household to be underoccupying their accommodation only if they have more than one additional bedroom above the bedroom standard, a point the noble Lord, Lord Best, made. The size criteria that we propose to introduce into the social sector consider any number of spare bedrooms to be underoccupation. Neither approach is right or wrong. In some cases, the bedroom standard plus one will be more generous than the local housing allowance size criteria, in some they will work out the same and in a few cases the LHA size criteria would actually prove to be more generous.
On the point made by the noble Baroness, Lady Hollis, about the person who needs an overnight carer, I need to make it clear to the House that where someone needs an overnight carer we allow an additional bedroom for that non-resident carer, and we have done so from June this year.
Baroness Hollis of Heigham
My Lords, I said that she would “occasionally” need—in other words, the assumption is that she would not normally need an overnight carer but occasionally might. The Minister has not covered that.
Lord Freud
I suspect that we can look at the difference between “occasional” and “regular” in detail outside the House. Maybe we can exchange letters on the matter.
In Grand Committee, the noble Lord, Lord Best, spoke of the experience of owner-occupiers, explaining that 83.9 per cent would fail against our definition of underoccupation. I put it on record, however, that a similar proportion of working-age owner-occupiers, 86.7 per cent, are in work. We are not suggesting that households in the social rented sector should live differently. We all share the aspiration for a home in which our children can thrive, concentrate on their homework or leave to study or find work, but still have the option of returning home sometimes. To realise that, though, must the taxpayer be expected to pay in full for those extra rooms just because those people live in the social housing sector? The Government believe that it is reasonable to ask for a contribution toward the rent where there is, by definition, some degree of underoccupation. It is not a change to the allocation rules; it is a measure for housing benefit purposes only.
The research from the Housing Futures Network explores how those claimants affected by the measure might respond. As well as the 29 per cent who were likely to try to find work or increase their earnings, around 15 per cent thought that they would take in a lodger or ask another family member to move in. Another sizable group, perhaps 20 per cent to 25 per cent, thought that they were likely to seek help to pay the rent from someone within or outside the household—someone they know. Around 25 per cent thought that they were likely to downsize. There were also those, as some noble Lords have pointed out, who feared that they were likely to get into arrears; that figure was around 35 per cent. We will do our utmost between now and the measure coming into force to minimise that risk. This is what we are looking at as part of our work with the implementation group.
That said, we cannot ignore the financial position. I emphasised at the beginning of my response that the introduction of size criteria is fundamentally about savings. Without the inclusion of those who underoccupy by one bedroom, we would not achieve the £500 million savings expected from 2013.
The noble Lord, Lord Best, challenges our savings estimate. As I have set out in the evidence, though, a majority of people will pay the additional amount for the larger property. The cost of renting in the private rented sector may generally be higher but those who choose to move out of the cheaper social housing into private housing because they are underoccupying will by definition free up accommodation in social housing that can be offered to those on the housing waiting list or those living in expensive temporary accommodation. That argument from the noble Lord simply does not stand. If we excluded one-bedroom underoccupiers, we would lose around £300 million of the estimated savings. The fiscal case driving this measure forward must not be underestimated.
“(4A) Regulations shall provide for a relevant change in circumstances to include a change in the claimant’s actual rent.”
Baroness Hollis of Heigham
Amendment 15 is a simple, genuinely probing amendment to get further clarity on the draft regs, given that they have now been published. Currently, a claimant’s housing benefit entitlement is reviewed on the anniversary of the claim or when there has been a material change of circumstances. The normal review would be 1 April annually. At the moment, if the rent is raised by the landlord between these annual reviews, the tenant must report this to the local authority as a material change of circumstances. Usually, although not always, the housing benefit would be raised to cover it. Under the new system, if the claimant’s tenancy is renewed and the rent increases at any point after April, then even though the rent would still be within the local housing allowance or the housing benefit cap, the claimant’s housing benefit will not be adjusted until the following April. It means, in other words, that they could go for 11 months with not enough housing benefit to cover their rent, even though they are entitled to it, and even though they would have got the full year’s increase in HB had the rent increase occurred a month before. Because of the timing of the accidents—of the rent increases, in other words—a tenant and his family could face real shortfalls and potential hardships: rent arrears and possible homelessness, with the usual problems that would result.
This amendment would require an increase in rent to be considered a relevant change in circumstance, which would be a simple way to avoid any potential hardship. It would ensure that housing benefit would continue to be reviewed in the light of a rent rise, as has occurred in the past. I am hoping that the noble Lord can give us that assurance.
Although Amendment 16 is on a different topic, I have grouped the two amendments to avoid going on for too long. In Committee, I ran an amendment because I was worried about the increased deduction that would come from housing benefit if a middle-aged couple had their adult son—a non-dependant adult, in the jargon—living at home with them. We noted then that the couple could face all of their housing benefit being wiped out because a son over the age of 18, who is perhaps on modest earnings, would be expected to contribute up to £90 a week. No deductions, of course, are made if he is in full-time education or on JSA. If he is in a minimum wage job, his parents could face losing virtually all their housing benefit, as he is expected to pay for his parents’ rent himself, even though he is not the tenant and even though he has no security of tenure. We feared either that he would drop out of work for their mutual financial advantage or that his parents might propose that he leave home and find a small place of his own to save their housing benefit, while leaving his parents underoccupying and being fined with a cut in their HB in turn. Either way, the family is damaged. Obviously the most satisfactory option would be for him to live at home, make the best use of the housing space and contribute—though not unreasonably so—to their housing costs. But can he do so if that is the sensible choice?
I have some questions for the Minister. In future, will the son, as a non-dependant, be counted as part of the household when DWP works out the space that the family are entitled to have for their HB? I would love to think that the amendment we have just passed has made that question redundant—touch wood that it has. As a couple, in future, will his parents be deemed to be underoccupying by one bedroom because of their adult son? Hopefully—touch wood—that question may now be redundant. However, there is a problem of the interplay of underoccupation and adult non-dependant deductions which the family could face. The Minister recognised this when we talked about it in Committee. He said:
“We need to look at the treatment of non-dependants … Furthermore, we need to ensure that there is some sensible fit with the provisions for underoccupancy … We want a scheme that provides incentives for tenant and non-dependants to work and at the same time preserve incentives for households to stay together”.—[Official Report, 20/10/11; col. GC113.]
The Minister was absolutely right. Could he clarify what his intentions would be in that situation? I beg to move.
Lord Freud
I thought that I would be self-deprecating and leave the “very” out.
The noble Baroness asked me to keep the House briefed on the thinking here and return at Report. The best that I can do now is to say that we have not changed our views. There is a lot of active work, and I know that the noble Baroness, Lady Meacher, also took a great deal of interest in this issue. The universal credit will recognise the general principle that adults who live in the household of people getting help with their housing costs should expect to make a contribution towards those costs. Not to do so would, in effect, mean that taxpayers would subsidise non-dependants through the benefits system. I think that that is common ground around the House.
It is also common ground that a reformed welfare system must make work in comparison to dependency benefits pay and be seen to be paid, and the current treatment of non-dependants can work against employment incentives for both the claimant and non-dependant. As I said, there are various factors that we have to juggle between decisions on non-dependants—the “touch wood” factor, taking in a lodger, and so on. These factors mean that the issue of non-dependants is complex.
I accept that the amendment is a probing one, but it would not work. However, we are considering it in detail, and it is an important area. It really goes to the heart of the simplicity agenda that we have, and I hope that as we flesh out the detail noble Lords will have something to which the expression “very intelligent” remains applicable. On that basis, I ask the noble Baroness to withdraw her amendment.
Baroness Hollis of Heigham
I am happy to withdraw my amendment. I absolutely understand that this is a work in progress, but we now have the draft regulations, which we did not have in Committee, which is why we are trying to probe to see where this goes. The problem could be that, were it not for the earlier amendment being passed, a couple in a two-bedroom place with an adult son could be regarded as underoccupied if the adult son was not counted as eligible for the room, whereupon their housing benefit would be cut—but, because he was in the House, he would be expected to cover not just their housing benefit but the cut as well. It is that Catch-22 situation that I am seeking to avoid.
It is not straightforward, and I understand that. I am grateful for the Minister’s response. I look forward to an appropriate, acceptable and welcome solution to these dilemmas. I beg leave to withdraw the amendment.
“(4A) Regulations shall provide for—
(a) the frequency with which reviews of the relationship between increases in the rental market and the CPI will be conducted;(b) the circumstances in which increases in the rental market and CPI will be deemed to have diverged;(c) the circumstances in which there will be considered to be a critical lack of affordable housing;(d) the circumstances in which this will lead to a change in the method used to uprate the housing component of universal credit.”
Baroness Hollis of Heigham
I have a series of amendments on housing. This amendment calls for periodic reviews of the interconnection between CPI and rent levels. This is an issue that has concerned the whole House at different stages, including on the CSR Statement as well as in Committee.
We know now that the proposed deficit reduction programme, according to the Chief Secretary, will extend for a further two years at least beyond the general election. This amendment now takes on the added urgency that perhaps did not exist at the time when we discussed it in Committee. Local housing allowance, which I will call housing benefit, in the private rented sector is based on the 50th percentile of private rents, which should mean that half of all private rents are affordable on HB and half are not. It is a median. The HB, in other words, covers the average rent. We also know that the Government are reducing that 50th percentile to the 30th percentile, which means that 70 per cent of properties would be unaffordable but 30 per cent should still be so. We have argued that and resisted it, but the Government have insisted on their proposals. That is bad enough and will make it much harder to find a private rented home. But, in addition, HB to cover your rents up to the 30th percentile will rise only by CPI, not by the actual increase in private sector rents. Yet according to Savills rents are rising at the moment by more than 7 per cent a year, and CPI is only half of that—not this year but we expect it to be. Rents are rising on average at double the rate of CPI, mainly because of additional demand for private flats from young people for whom originally the flat would have been a transit tenure but who now stay there while they seek to save their deposit for a home of their own.
The Minister used to argue that capping HB would drive down rents. That is not happening, nor will it, because no longer do landlords have to let to HB tenants. Just as there are eight people after every job, there are eight tenants after most lets. HB tenants will get only what no one else will take: the substandard, the squalid and the downright unsafe. Any complaints and you are evicted after six months. Tenants will be forced into poorer and poorer accommodation. Worse, as I say, rents are rising at double the rate of CPI, so whereas now your HB may theoretically cover 30 per cent of available rents, in three years’ time it may cover only 20 per cent, and in five years only 15 per cent. In more expensive towns such as Winchester, it is estimated that there will be nothing available to rent for anyone on HB within the next few years.
This amendment is very simple. It requires that the Government's original policy intent—that HB in the private sector will allow the tenant the choice of the bottom 30 per cent of properties—continues to be respected and that the widening gap between the CPI uplift in HB and the actual rise in private rents does not invalidate the Government's intentions. In other words, this amendment simply asks the Government to ensure that they do what they say they want to do—no more, no less—and that we keep clear the policy intent, and that it is delivered.
In the past, the Minister has decorously brushed this aside by saying that it is outside the CSR period, but given the Chief Secretary's remarks, it is not any more. He also helpfully said in Committee on 20 October that,
“if local housing allowance rates are clearly out of step with rents, they can be reconsidered”.—[Official Report, 20/10/11; col. GC 146.].
It would be very helpful to know how this would be done, given the vagueness of the draft regulations. The Government should confirm whether reviewing the operating method will occur periodically or, if not, what will trigger it. This amendment seeks to get greater clarity in the regulations in order to protect the Government’s own policy intent: that 30 per cent or so of private lettings should be affordable and available to those on local housing allowance. I beg to move.
Baroness Meacher
My Lords, I support Amendment 17, to which I added my name. As always, the noble Baroness, Lady Hollis, has comprehensively covered the issues and I will therefore take only a few moments of your Lordships’ time to express my personal concerns about the issue.
The Government have a policy to reduce over time the percentage of GDP paid out in benefits to those on low incomes and those out of work. Perhaps the main mechanisms by which this will be achieved, though by no means the only ones, are the range of housing allowance controls to which the noble Baroness referred and the linking of housing allowance to the CPI, rather than to the rate of increase of rents themselves. The problem I have with the CPI link in particular, along with all the other controls, is that it is beyond the control of government how this plays out; hence the importance of these monitoring mechanisms that the noble Baroness has spelt out.
For example, if the euro collapses—it seems ever more likely that it may—and we have several years of recession or, indeed, deep depression with falling prices, do the Government have any idea how rents will respond in that situation? Because of the pressures of a growing population with more and more single-person households, as well as the limited stock of properties, particularly in London and the south-east, it is possible that rents may remain static, or even rise in the south-east, while other prices are falling. The Government assume that the downward pressure on housing allowances will ensure that in fact rents fall as well, but I am not at all confident about that. There is a huge private rented sector out there and as fewer young people can afford to buy, more and more of them will indeed move into that rented sector.
A very different scenario will be that once the years of fiscal tightening are over inflation could return with a vengeance, leaving a soaring gap between the RPI and the CPI—the prices claimants will have to pay in the shops on the one hand, and the CPI which will determine their housing allowance levels on the other. Of course, all these uncertainties will be there alongside a benefits cap, which may or may not be inflation-proof, and the need for many vulnerable people to adjust to a move from higher ESA to lower-level JSA. The Minister knows that I fear many vulnerable people will be included within that group, going down the slope towards the cheaper JSA. There is also the loss of disability benefits for children, the loss of tax credits and so forth, and the move to monthly payments if we cannot persuade the Minister that this will be the last thing that people are going to cope with. For all these reasons, I agree with the noble Baroness, Lady Hollis, that the House needs some assurance that there will be systematic and regular monitoring of the consequences of linking rents to CPI and on how the situation will be assessed and in what circumstances a change of policy would be regarded as appropriate.
I would also be grateful if the Minister could inform the House on a particular aspect of this issue. Shelter and the Chartered Institute of Housing estimate that the link between local housing allowances and the CPI will, by 2030, result in 60 per cent of local authority areas being unaffordable for LHA claimants. Undoubtedly, these will be the areas with jobs. Can the Minister say whether the Government accept this estimate and, if not, what the Government’s estimate is? Whether or not he accepts the estimate, has the DWP undertaken an impact assessment of the housing allowances/CPI link on employment in this country? What particular impact on employment will this have?
If households have no option but to move to areas with very few employment opportunities, how much higher will unemployment be year on year than would otherwise be the case and what will be the costs of that higher unemployment for the taxpayer? These sorts of issues need to be incorporated within the ongoing monitoring and assessments of the impact of these policies, year by year. Within the Minister's response to this amendment, I would be most grateful if he could include some reference to the employment impact.
Lord Freud
Noble Lords will be aware that we propose to limit increasing the local housing allowance in line with the CPI index from April 2013. The aim here is to ensure that we continue to exert downward pressure on rents while looking at rent levels in local markets. The limit will apply only in areas where local market rent increases, at the 30th percentile, exceed the annual rate of CPI inflation. We have said that we are committed to making savings from this measure up to 2014-15. If it then becomes apparent that local allowance rates and rents are out of step, they can be reconsidered.
To prepare for this change, the Minister for Pensions set out in the uprating Statement the arrangements for fixing rates. The first uprating will be in April 2013. We have taken this step to ensure that CPI rating can commence from April 2013, but that nobody will see their ongoing award fall at that point as a result of LHA rates being uprated. As the annual rates will be set well in advance, we will be able to provide clarity and certainty to claimants and landlords. We will continue to monitor the path of market rents until 2015 and the Secretary of State will be able to review the LHA rate, or uprate it by some other method, should the need arise.
As the noble Baroness, Lady Meacher, pointed out, the future is uncertain. Clearly, you can draw any scenario you like; the point is that we need to watch it and we will watch it very closely. In particular, we may need to increase LHA rates if growth in rents and the CPI are so out of sync that there is a critical lack of affordable housing. To pick up on the noble Baroness’s other point on extrapolating out to 2013, clearly we all recognise that over any kind of longer-term run rents tends to move with average earnings, not with average prices. Any extrapolation out that long will have a big gap, but we are not talking about that here. We are talking about a measure which is locked in for that two-year period at a time of great difficulty when we are trying to bear down on prices. Therefore, I do not think it is relevant for me to hypothesise about employment levels. That is not what is happening here.
On the point about data and monitoring and what Parliament can expect from us, we will provide to Parliament on an annual basis from late 2012 the relevant CPI data and the data on the 30th percentile of market rents. In addition, noble Lords should be aware that the Valuation Office Agency currently makes available quarterly data on market rents by local authority.
I should point to the major piece of independent external research that is already underway to evaluate the impact of the reforms to housing benefit announced at the June Budget and the spending review. Indeed, I need to thank the noble Lord, Lord Best, for the way that he shaped that research effort. The research will be comprehensive and will be presented to both Houses and the public alongside a ministerial Statement. The department is currently considering how this research could be extended—subject, of course, to funding—to allow it to look at the impacts of changes to local housing allowance uprating over a longer period.
I hope that I have reassured noble Lords that we are committed to monitoring and evaluating this change really thoroughly. On that basis, I urge the noble Baroness to withdraw her amendment.
Baroness Hollis of Heigham
I am grateful to the noble Baroness, Lady Meacher, for her support and her additional probing and questions. I am more than satisfied with the Minister’s reply, apart from one word. I wonder whether I could invite him to change that one word. He said that if the two tests, rent levels and CPI, are out of step, then they “can be reconsidered”. I want “will be reconsidered”. I invite the Minister to strengthen his position on that point. Everything else was lovely.
Lord Freud
On the basis that the noble Baroness is going to be incredibly helpful to me in all the consequent amendments in the Bill, I will change the word from “can” to “will”.
Baroness Hollis of Heigham
I am very grateful and with great pleasure withdraw the amendment, knowing that our policy intent and the Government’s policy intent will now be met. Thank you.
Baroness Anelay of St Johns
My Lords, I shall respond in the same helpful measure. I am grateful to the noble Lord. The Chair put this as moved formally; that was the improper thing. I hasten to add that I know that the Chair was not trying to be improper.
Of course, I have to put on record that this is a separate matter. If the Opposition wish to press this to a Division, that is their absolute right, and I recognise that. However, the Government cannot accept Amendment 17A because it is not consequential, and the Minister clearly has not accepted it. I hope that that is an explanation which is a little clearer than mud.
Baroness Hollis of Heigham
My Lords, I am sorry to press this, but I understood that when the noble Lord, Lord Best, moved his original amendment, he accepted the additional amendments in the group as amendments to his amendment. He did this to ensure that his original intent regarding the one spare bedroom was modified by the extent to which there was available accommodation. If there was not, his standard would apply, but if there was, we would expect the tenant in due course to move. That was the debate.
Baroness Anelay of St Johns
May I very rudely interrupt the noble Baroness, Lady Hollis? I am reminded, of course, by those who know the rules well, that if we are to debate this amendment—which we are, albeit very briefly—it is right that the noble Lord, Lord McKenzie, should move it. I will, of course, be able in procedural terms to reply to the noble Baroness, Lady Hollis, and explain the position. However, perhaps the noble Lord, Lord McKenzie, for the sake of the formalities, might quickly like to move the amendment, and then we can deal with the process.
Lord McKenzie of Luton
If it has not been moved already, then I beg to move.
Baroness Hollis of Heigham
My Lords, my case then stands, in other words. I had understood that when the noble Lord, Lord McKenzie, spoke immediately after the noble Lord, Lord Best, he moved the additional amendments, which the noble Lord, Lord Best, had previously indicated he would accept as part of the position.
Baroness Anelay of St Johns
My Lords, I know that this is becoming an aficionado’s debate, and obviously we have to make sure that we understand what is going on.
The noble Lord, Lord Best, made claims about what he considered to be consequential, and I know that he did so in good faith. However, it is not for the noble Lord, Lord Best, to tell the Government what the Government believe is consequential. As a matter of fact, Amendment 17A is not consequential. The noble Baroness, Lady Hollis, might find that I am about to be helpful, so she might wish to hesitate for just one moment. At least, the noble Lord, Lord Bassam of Brighton, the Opposition Chief Whip, might find that I am about to be a little more helpful.
Clearly this is not a consequential amendment. The noble Lord, Lord Best, may want to accept it as such, but it is not procedurally. The Government’s view, if I can make it clear, is that the amendment is not consequential. We do not accept it as being consequential, and will not do so when these matters are debated in another place.
However, the Government have also seen the result earlier on. It is not the Government’s intention to try to unpick some of the debate that occurred earlier. During that debate, at no time did the Minister accept that Amendment 17A was consequential. The position is clearly that when the matter was debated earlier on, other noble Lords felt that if the matter were put to a vote, they might wish to vote along the same basis, but that did not happen.
I am sure it will be to the confusion of noble Lords opposite, but the position, quite simply, is that the Government will not call against Amendment 17A when it is put. I hope that is helpful. The important thing is on the record; I make it clear that the Government will not accept this in another place. I hope the noble Lord, Lord Bassam, finds that useful.
“(6) Regulations shall provide that where the award for housing costs is restricted to the shared accommodation rate, this shall not apply for a period of 52 weeks for any claimant aged between 25 years and 35 years, who is not an existing claimant of housing benefit.”
Baroness Hollis of Heigham
I would like to continue the argument with the Chief Whip, but we will move on. Perhaps we will have this discussion outside on the difference between consequential, and the mover of an amendment accepting an amendment to the amendment. That is where the confusion may arise. The noble Lord, Lord Best, certainly did do so.
We discussed shared accommodation rent in Committee, and I have to say that one’s worries remain. At the moment, if you are under 25, you are eligible for Housing Benefit for a room in a shared house. If you are over 25, you are eligible for Housing Benefit for a one-bedroom flat. The Government are proposing that from next month, if you are aged up to 35 rather than 25, after 13 weeks you will get housing benefit only for a room in a shared house, a house in multiple occupation. Some 62,500 people will be affected, losing on average over £40 a week—in London, over £100 a week.
Lord Freud
My Lords, Amendment 19 from the noble Baronesses, Lady Hollis and Lady Meacher, deals with a subject that we have debated at considerable length—the shared accommodation rate. In case there is any doubt, let me be clear: the shared accommodation rate is what we pay people to share accommodation, not to share rooms, as some people think. We do not expect people to share one room or a bedroom, but to share accommodation.
Baroness Hollis of Heigham
My Lords, I do not think anyone disputes that, but at the bottom end of the market it will be a room in a shared house, which means sharing a kitchen and bathroom, as we have discussed.
Lord Freud
My Lords, it is rather interesting to look at the actual rates. If you take two people, each with their own shared accommodation rate of housing benefit, that covers or exceeds the two-bedroom rate in 60 per cent of localities. We are not talking about a dramatic cut in much of the country. Indeed, if three or four people choose to share a house, taking their own shared accommodation rates, the amount of money that they get would cover the rate for three or four-bedroom properties in 90 per cent of localities. We are not talking about a hugely draconian cut in that context.
If we look at the amendment itself, it is not altogether obvious what rate of housing costs the noble Baronesses are proposing should be paid during the 52-week period of exemption. Since the amendment applies to new claims only, perhaps it seeks to ensure that new claimants have their full contractual rent met for the first 52 weeks, rather than being paid the local housing allowance. If it is the latter, we covered those points in Committee. We debated whether the current 13-week exemption from rent restrictions for claimants who could afford their rent when they first took on that commitment should be extended to 52 weeks.
I need to make clear that rent can be met in full for up to 13 weeks for those who could afford their rent when they first took on the tenancy and have not been in receipt of housing benefit in the past year. This means that those claimants who experience a short spell of unemployment are not forced to move, and it gives others time to consider their housing options. Around 40 per cent of JSA claimants aged between 25 and 49 have been claiming for less than three months, and around 60 per cent for less than six months. For completeness, I should add that there is a 12-month protection for people who have recently been bereaved.
As I said at the time, most claims for housing benefit are for short periods. The 13-week exemption protects a person’s ability to pay their rent during that time. Half of jobseeker’s allowance claimants aged between 18 and 24 have been claiming for less than 13 weeks and less than 5 per cent have been claiming for more than 52 weeks. We already know that more than a third of those who claim housing benefit choose shared accommodation. These are people who could be in either separate-bedroom accommodation or shared accommodation and choose the shared accommodation rate. Of the people who are not on HB, 40 per cent of 25 to 34 year-olds share. I am excluding students from this. This is not a form of housing that is unusual or imposed on people; it is an absolutely normal form of housing.
I accept that there is real concern about the impact of the shared accommodation rate and particularly about the availability of accommodation. I said in Committee that the market will not remain static and that I believe it will respond in time to the increased demand for this type of accommodation. The feedback that I had from officials following their recent meeting with a Methodist housing association suggests that this is already happening. The association is already converting some of its property into shared accommodation. I am also reassured by meetings that I have had with stakeholders that a number of support organisations are helping to match tenants to shared accommodation.
Baroness Hollis of Heigham
I thank noble Lords for taking part. There are very real concerns, not just for women who are going into an HMO where there may be people who appear to them threatening, but also for those who appear to be the threatening ones, for whom it is also difficult. Both sides find this unacceptable. I am also grateful to my noble friends Lady Lister and Lady Hayter who helped to spell this out.
To some extent, the Minister missed our point. None of us has any problem whatever with people who choose to share. It is fine when you choose to share with people you know or when you have gone through an ad in the local paper and gone in to see them. It is fine if it is a salubrious flat and together you can pool your resources. Some may be in work, some may not, but you can manage the rent. That is fine. That is not what we are arguing about. We are arguing about someone who has lost their job and is in a one-bedroom flat for which they are currently able to pay. After 13 weeks, their HB expires and they are only entitled to LHA at a shared room rent. They are forced, against their will, to move into accommodation with strangers at the very same time as we are expecting them and needing them—and they want—to prioritise their search for a job. It is simply silly to undermine their work ethic and their work efforts. Instead, we are diverting and deflecting them into the search for a home which is safe, salubrious and affordable. This is silly and stupid, which is not a charge I would normally address to the Minister, because he is neither of those things.
On cost, I put it to the Minister that it would be reasonable to assume that a woman who had lost her job as, say, a secretary in a firm that had closed would get back to work within six months if her housing position was unaffected. If her housing situation was affected and she had to go in search of new accommodation, possibly ending up in another area, it might take her 12 months. That is not an unreasonable supposition; six months if we accept my amendment, 12 months in the existing situation. The cost of the extra three months of HB is £1,300, based on the assumption of an extra £100 a week. If, however, she did not spend a further six months on benefit, because she got back into work within six months as opposed to a year, she would save the DWP £3,900. Subtract those two, and the additional savings to the DWP, by supporting this amendment, for that one individual person, is £2,500, and that is before you get money from taxes and national insurance. Multiply that by, say, 15,000 people out of the group of 62,000 and the Government would save an additional £40 million. That is where the savings lie.
You can challenge my behavioural assumptions—that you go back to work within six months if you do not have to find another home and that it takes you 12 months if you do—but, from what I know in my city about how long it takes people to find work as the situation worsens, I do not think they are unreasonable. If the assumption is right, and 15,000 of that client group come into that category, the Government will save an additional £40 million, not halve the savings as the Minister suggested. That is nonsense on any behavioural assumptions. He is assuming that what he is doing will make no difference to people’s propensity or ability to come back into work. That is simply untrue, particularly as the economic situation gets worse, and he must know it. He can make savings from the amendment if he chooses to work it through further.
My final point is about safety. A member of my family was in a room in such a situation. There was thumping at his door and he opened it. This person in my family—who is six feet tall and strong—faced, as he opened the door, somebody who was naked with a knife in his hand. Do not tell me it cannot happen, because I know it has and it does. I therefore suggest, on grounds of decency, safety and cost effectiveness, that the Minister consider this amendment further, even if he is not willing to do so today. I beg leave to withdraw the amendment.
“(6) Within one year of these regulations coming into force, an independent research review of their impact shall be laid before Parliament, and such a review to include the effects of such measures on the reduced incomes of social housing tenants and their families, the security of the rent roll of their social landlords, the depletion of tenants’ savings, levels of arrears, levels of eviction, any increased homelessness and use of temporary accommodation, the reduced prospects of pensioners for rehousing, and the likely availability of housing stock to meet the new underoccupancy standards, and related matters.”
Baroness Hollis of Heigham
My Lords, I will be very brief. The amendment indicates our very real concerns about the effect of all these cuts to housing benefit. We fear that if there is any reverse in our decision today on underoccupancy, housing associations will face mounting arrears, and spend more time and employ more staff chasing deficits in rent. As a result, there will be even less chance for those housing associations to build the new housing stock we badly need. I know the Minister thinks my fears are exaggerated. I hope he is right. The House has alleviated most of my concerns, but we cannot properly calculate the behavioural effect of all these changes on tenants. The Minister is evidence based—something we all welcome and respect—and he wants UC to work, as we do. I therefore hope that by the time the Bill has gone through its full passage in both Houses he will, if it is appropriate, find the resources to ensure that we have the research to undertake an independent review of its effects on tenants in social housing. Frankly, if we do not have that protection, I fear the worst. I beg to move.
Lord Best
I support the amendment. We already have up and running, thanks to the good work of the Minister, a really first-class piece of research looking at the impact of the housing benefit changes on families, poverty and a whole range of issues. I strongly congratulate him on taking that suggestion seriously and bringing forward a significant piece of research. It engaged a consortium of the top people at Oxford University, Sheffield Hallam University, Ipsos MORI polling and the IFS. I wondered whether that team might have its work somewhat extended to embrace the research suggested by the noble Baroness. It would not involve quite as much work because it would examine the 150,000 or so households that will now be affected by the underoccupancy arrangements. There is much important research to take place.
Baroness Hollis of Heigham
I am grateful to the Minister and to our noble colleague—I was going to say our noble friend—the noble Lord, Lord Best. If I may say so, the Minister enhances an already high reputation by his openness to the information that will come from research. We should give him credit for that and I am very grateful. I beg leave to withdraw the amendment.
Baroness Hollis of Heigham
My Lords, I would prefer housing benefit to be part of UC and to be paid to the tenant, because I think that that strengthens UC and makes it easier for one simple calculation to be made for the family. However, I support the amendment because, until the Government have rock-solid arrangements in place to ensure that the rent element in UC is immediately paid to the landlord, both tenant and landlord will, as the noble Lord, Lord Best, said, suffer.
Why would the tenant suffer? He may have to pay transaction costs. If it is looped through his bank account and there are any outstanding overdrafts, debts, or whatever, his UC, including the housing element, will be top-sliced. That is when there is no temptation to spend it on other things. I checked with my housing association. Even with direct debits from tenants in work, those direct debits go astray—deliberately or otherwise—and intensive work has to be done in housing management to reconstruct them again. Tenants can risk losing their home if rent payments are not made automatically to their landlord. For some tenants, that will be a real struggle. If tenants wish to have their rent paid directly to their landlord, but that choice is being denied them, they will suffer.
Why will the landlord suffer? Arrears will undoubtedly arise. I have doubled the amount in my housing association accounts because of potential arrears that I suspect will follow from this change, as have other housing associations. We will then also have to increase staff resources to try to collect those arrears. Private landlords, already reluctant to take DWP tenants, will certainly refuse. One reason for extending direct payments in the first place was to make it a more attractive option for landlords in the private sector, who have been notoriously reluctant since the 1950s to make accommodation available. They used to say, “No Irish, no blacks, no DSS, no dogs”. Versions of that scrutiny, that winnowing out, I fear regrettably still apply.
Ultimately, landlords may need to face evicting tenants. As many of those who cannot manage their money will be vulnerable, they may or may not be regarded as intentionally homeless. If they have children, they are a real problem for all parties, including social services.
Furthermore, housing associations, including mine, are seeking to raise money from private sources, from banks—even, we hope, from pension funds, which is under negotiation at the moment—for building programmes. Our asset is the security of our rent roll. If tenants instead have money paid to them which is not rock-solidly paid immediately to the housing association or the local authority, that rock-solid asset base will no longer be as valued. We estimate that the proposal will cost us something like 50 base points extra on all the loans we raise. We become a worse risk and, as a result, fewer homes will be built. An amendment putting the decision in the hands of not the DWP or landlords but in the hands of tenants is surely the right way forward.
Baroness Lister of Burtersett
My Lords, I shall speak briefly in support of the amendment moved by the noble Lord, Lord Best, from a slightly different perspective, and repeat what I said in Grand Committee. In Grand Committee, I congratulated the Government on their research, Perceptions on Welfare Reform and Universal Credit, which sounded out various stakeholders about what they thought about some of the reforms. One thing that came from that from people who will be affected was that although they welcomed the one-stop shop approach of universal credit—to the extent that it is a one-stop shop—there were real fears about putting all the eggs in one basket. If all the money goes together in one lump sum, if anything goes wrong, people are left insecure—high and dry. If some of the rent payment is going to the landlord, where the tenant wishes it, that is mitigated. That is why that choice should remain
Not expressed in this research but by a number of outside organisations is the worry about what happens to the money in the family. I know that the Minister argues that budgeting accounts will sort this out. I hope that they will, but I think that he knows that I am still slightly sceptical about the magical powers of the budgetary accounts. There are fears that the money may not be paid into the account of the person responsible for paying the rent and that they may not then have control over how the money is spent by their partner. That is a slightly different perspective from that of the noble Lord, Lord Best, who understandably and powerfully is relaying some of the concerns about housing providers, but we have to think about the extra burden that this might be placing on some families.