Housing Benefit (Amendment) Regulations 2012

Baroness Hollis of Heigham Excerpts

Monday 15th October 2012 Grand Committee

[Lord Kirkwood of Kirkhope]

My Lords, perhaps I may make a brief intervention at this stage. It is right not to dredge back over the painful territory of the policy intent, because we discussed it at great length in another context earlier in the year. We should use our time this afternoon to look at some of the detailed implementation questions that arise from the policy. Actually, we should be thinking about getting a housing policy for the United Kingdom that is worthy of the name when trying to sort some of this out.

People have been asking me some of the practical questions about this and I just do not know the answers. I am nervous that we are getting towards a single implementation date, 1 April 2013, when there will remain a great deal of uncertainty on the back of the substantial change. If people get substantial change and are not prepared for it, they are even more badly affected by it. We must avoid that at all stages, if we can.

Has the department any confidence in working with local authorities and local housing associations? I was interested to hear the Minister talk about the work done in Liverpool and the Midlands on the home swap direct scheme. That is entirely healthy and welcome. However, if we had taken this at a slower pace and worked with local authorities and local housing associations across the length and breadth of the United Kingdom, a lot of that would have been in place before 1 April. I have no confidence, even if everyone works hard—and I am sure that they are working hard—that we will get proper home swap direct-type arrangements in place across the United Kingdom.

Are there sufficient co-ordination mechanisms in place between the DWP and the other constituent nations of the United Kingdom—Scotland, Wales and Northern Ireland? Presumably, they are making their own arrangements in their own ways. Is the department confident that there is a proper exchange of information and swap of best practice, and that the circumstances north of the border, and in Wales and Northern Ireland, will be as fit for purpose as they can be, come 1 April next year? That is a very important question.

Discretionary housing payment distribution is an important element of that. I understand the Minister to have just said that decisions will be taken later about how it is to be rolled out. However, I say to him that only last week someone in a local authority tenancy came to me. He is in a two-bedroom property, had some adaptations made to the premises and signed a letter of undertaking to the local authority to say that he would stay in that property for a one-year or two-year period. Therefore, he is locked into that tenancy and cannot move. He was prepared in principle to consider moving but he is now caught both ways.

That is just one example of, I am sure, many detailed questions that are arising which would have been better addressed if we had had a more measured transitional phase in the policy’s implementation. Following our important debates on the Bill earlier in the year—it is now an Act—does the department have any further research on the availability of single and two-bedroom properties? Is the map any clearer as regards where the accessibility lies so that people can make a decision about whether there are appropriate smaller properties into which to downsize? It would be reassuring to know that some work had been done and that people were being helped to understand where to start looking for some of these properties.

I concur with what the noble Lord, Lord McKenzie, said about the disability issue. When looking at the impact assessment and the briefing that we received last week, I missed the significance of that. I am not a disability expert; a lot of people know a lot more than I do about this technical and politically very important problem. I was taken aback by the extent to which the client group will be affected by this policy change. I did not know that. I wish that I had known it during the passage of the Bill.

[Baroness Hollis of Heigham]

The figure is two-thirds.

[Lord Kirkwood of Kirkhope]

Yes, it is two-thirds. I would not have guessed that. That is new and it is deeply concerning. I hope that the Minister will help us to understand what is being done about that.

During the passage of the Bill, the noble Baroness, Lady Hollis, kept referring to rurality. Another point that was driven home to me over the summer, coming from south-east Scotland, is that people are panicking about where they should begin to look for appropriately sized accommodation if they are to avoid the penalties that these policy changes introduce. There are no real alternatives in many cases, which is a problem.

A lot of us are relying heavily on the review. I was reassured that the Minister committed himself to conduct a proper review working with the noble Lord, Lord Best. I think that he made that commitment on his own initiative. Therefore, we are entitled to be confident about the review. However, if the review shows that the policy intent has not been delivered in some of these important areas, which I am sure are causing concern to other Members of the Committee as well as to the noble Lord, Lord McKenzie, and me, I would like him to reassure me that action will follow as a result of the review, so that this is not an academic piece of work that says, “On the one hand or on the other hand”, but will say, “Actually, we did not think that would happen. The culture has not changed in the way that we expected it would and therefore we are going to do something different and perhaps even change the policy”.

Of course, housing benefit needs to be constrained; it is a very big number and it is getting bigger. However, I think that we are grabbing at this policy. Irrespective of whether you think that the policy is right or wrong, the process is being carried out far too fast. Doing it all on one day—1 April next year—is a very unsafe thing to do in my view. I hope that we get this right and that the review will lead to some amelioration of some of the problems that are bound to come out of the woodwork when these policy changes are implemented.

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[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.

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On my noble friend’s concern about rural areas, that again comes down to the kind of choices that people will need to make. Clearly, in rural areas people will have to look at their lifestyles and what they can afford, as they do elsewhere.

[Baroness Hollis of Heigham]

That will not do.

[Lord Freud]

I could go on for longer about this. Rural areas will need to look hard at the options of adaptations to property, lodging, moving or paying for the extra room. One issue raised by the noble Baroness, Lady Hollis, is that this is not directed at pensioners who want to move down. The reason for that is the concern that it is pretty stressful for very old people to have these kinds of pressures on them. If we are to have this decision that we cannot afford to support people with extra bedrooms—they can of course have them, if they can find a way of paying for them—and have that mechanism happen to people who are still of working age and capable of making the adjustment, rather than to pensioners, then as time moves on you will move the cohort up into the pensioner group. That is what is happening with that particular issue. It is a timing issue.

On the sums and my noble friend’s question about what will be available, I will try to give a few figures for context. We expect probably around 400,000 underoccupiers to need the one-bedroom properties according to these size criteria. If we look at surveys that have been done—I am thinking particularly of the Housing Futures Network survey—around 25% of those people are likely to look for an actual move. In the previous financial year, there were about 100,000 new lettings of one-bedroom properties in the social rented sector in England and around 25,000 new dwellings completed.

[Baroness Hollis of Heigham]

And about double that on the waiting list.

[Lord Freud]

There is an implication in that: who takes priority for those new houses and then who do you take off the waiting list for the larger properties? There is then a kind of order of position that becomes somewhat more manageable. Do not forget some of the examples given, such as that there would be children in these rooms. The reality is that for the bulk of people affected by this, their children have left home. That is why they have too many bedrooms. I think the figure is—I am plucking a number from my memory—70% of the people affected by this. I will be hit hard by someone if I have the wrong figure and I will get the right one in a second but, from memory, 70% of these people do not have their children at home. That is obvious because of the underoccupancy effect.

I responded to the question on DHP use from the noble Lord, Lord Best. We are not talking about a ring-fence system with the DHPs. When you have very hard cases, of the kind discussed this afternoon, local authorities can move in and help.

As to the total figure, I have already given that as £165 million for next year. That is made up of the baseline funding of £20 million, £40 million from the LHA reforms, £30 million from the social sector—under the size criteria that we are talking about—and £75 million from the benefit cap. These are the kind of figures for people who have multiple effects.

I must correct my earlier figure of 70%. My memory was just slightly faulty; the figure is actually 66%, not 70%. I apologise.

This is a good time to answer the question of the noble Lord, Lord Best, about making an assurance. Actually, it was not Lord Best. Who wanted that assurance?

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[Baroness Hollis of Heigham]

I understand the noble Lord’s dilemma about housing benefit, but the problem is caused because there is no capacity of demand to buy property and to fuel new building. As a result, the pressure is going on private rents, which as a result means the housing benefits bill will continue to go up, without even considering what is happening in the social housing sector. He will not succeed—he cannot succeed—in part because of the policies of his neighbouring government department.