Welfare Reform and Work Bill

Baroness Manzoor Excerpts

Tuesday 12th January 2016 Lords Chamber

[Baroness Williams of Trafford]

My Lords, exemptions will apply to providers that demonstrate to the Government that they will face financial difficulties because of the reductions. I cannot prescribe from the Dispatch Box who those providers will be; it is for them to come forward to the Government. However, in the main we will expect providers to be able to cope with the reductions.

[Baroness Manzoor (LD)]

My apologies; my throat is not very good, so I hope that noble Lords can hear me. What is the Government’s view of the organisations that are currently supported and are exempt from these specifications but will not be covered by universal credit?

[Baroness Williams of Trafford]

My Lords, there are several different types of accommodation. There is supported housing, which is a general term for housing that supports vulnerable people and covers a huge number in this sector. There is accessible housing, which is adapted or modified housing, and specified accommodation, which is accommodation used for housing benefit purposes. So there are different types of accommodation but, in terms of an exemption, it is up to a provider to come forward to the Government and say why they might face financial difficulties because of the reductions.

[Baroness Manzoor]

Forgive me for having to get up again; after all, we are coming to this subject on Amendments 107 and 109 so we will debate it then. However, I think there needs to be greater clarification regarding exemptions. There are currently organisations that are very vulnerable and provide housing services for some of the most vulnerable in our society to prevent people from becoming homeless, as well as those that provide refuge for domestic violence victims and so forth. I will not pre-empt the discussion that we will inevitably have, but I am looking for some reassurance from the Minister regarding whether these exemptions will continue to apply to those organisations that currently seem to be exempted. These rent reductions will have an impact because the providers will not be able to continue to provide those services, particularly to help and manage those kinds of conditions.

[Lord McKenzie of Luton]

Might the noble Baroness take the opportunity to clarify the distinction between exceptions and exemptions? I think she has been talking about exemptions today—exceptions are something else.

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[Baroness Manzoor]

I add my support for the amendment. I do not have much to add to what has already been said by the noble Lord, Lord McKenzie, and the noble Earl, Lord Listowel, except to say that it is a very simple amendment but a very important one. It simply says:

“The Secretary of State must, within 12 months of this section coming into force, produce a plan to offset the impact of lower social rents on housing associations and local government”.

To my mind, that seems very practical, very reasonable and very fair. Surely the Government and the Minister would want to understand the impact of their policy and to have an option B. If they have an understanding of the potential impact of the reduction in social rents, the Government and others can mitigate it and put in place proposals to amend the measure. Therefore, from the perspective of these Benches, the amendment seems absolutely reasonable and sensible. If the Minister did not accept it, we would not understand why, for all the reasons that have been articulated and which I shall not repeat.

When we come to Amendments 107 and 109 we will be looking at issues around homelessness and, in particular, at the impact on the generation of young people who will not get housing benefit. A policy of having an impact assessment will clearly go a long way towards at least gaining an understanding of the people who will be affected by the reduction in social rents, and I therefore wholeheartedly support the amendment.

[Baroness Blackstone]

My Lords, I did not get up again and ask the Minister for a reply to the question that I put at the end of the last group of amendments about the impact of the reductions in rent on the number of houses being built and on the Government’s targets, but I shall do so now as it is extremely relevant to my noble friend’s amendment.

When Governments introduce a policy of this sort—a rather unusual policy in some respects—it is right to then try to evaluate the impact and to monitor a change of this sort. It is simply a matter of good government. Therefore, I hope that, even if the Minister does not want to accept the precise wording of my noble friend’s amendment, she will at least come back to us and say, “Yes, of course, this should be evaluated and monitored. We will do it”. Above all, I would like an answer to my question about the Government’s current position on the effects of the reduction in rent on the longer-term targets that they want to achieve for housebuilding by 2020.

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[Baroness Warwick of Undercliffe (Lab)]

My Lords, I support these two amendments, and I declare an interest as chair of the National Housing Federation.

I support so many of the arguments that have been made throughout the debates this evening. I am extremely concerned about the impact of the 1% rent reduction on housing associations and their tenants. The federation estimates that the 1% cut year on year will mean a loss of £3.85 billion in rental income over the proposed four-year period. As has already been said, the Office for Budget Responsibility has warned the Government that the result will be 43,000 fewer homes than housing associations would otherwise have been expected to build.

The irony of this is that associations want to build homes, and they will be doing their utmost to manage the cuts and to strive for the efficiencies that the Minister has already referred to, but this is presenting them with an absolutely huge hurdle. It is also ironic—and others have made this point—that the Government, too, are ambitious. Given their ambition, and the urgency of that ambition, to build 1 million more homes over exactly that same four-year period, I agree with others that this policy seems somewhat perverse.

Even more perverse is the impact of the 1% cut on the provision of social housing for the most vulnerable people referred to in these amendments, including those escaping domestic abuse, veterans, people with disabilities and the homeless. All fall under the heading, which the Minister referred to, of specified accommodation. In speaking to these amendments, I want strongly to urge the Government, even if they change nothing else, to change their mind on this issue and to exclude this highly specialised, challenging and much more cost-intensive provision from the rent reduction requirement.

The Government will know that the purpose behind these amendments has support from all corners of the House. Indeed, the letter to the Times, which many of us signed and has already been mentioned, urged just such a reprieve for supported housing. I also believe that the Government did not intend to harm vulnerable people or to increase homelessness, yet that is exactly what this policy will do, and indeed it is already doing it.

Make no mistake: if the Government are to avoid what is likely to be a catastrophe for these very vulnerable people, they need to act now. I cannot overstate the urgency because, in the next few weeks, associations will be sending out thousands of letters about rent levels from 1 April. They will need to know what the position is for supported housing. Indeed, many of them have already discussed plans for closing down these facilities—these homes—because the financial risk would be too great to sustain them. They are making these plans with heavy hearts. These homes are a fundamental part of their social mission and charitable purpose. These are the very people associations were set up to house.

The sector has spoken with one voice on this issue and the message delivered to government could not be clearer. Providers of supported housing are united in their commitment to care and support for these vulnerable groups and equally united in their concern about the impact the rent reduction will have on their ability to develop and provide housing and services for these people in the future. It is worth emphasising that, unless the Government commit to this change, there will inevitably be much greater pressure on the NHS and a rise in homelessness.

On any count, this policy does not make financial sense. If it were excluded from the rent reduction measure, as we urge, it would reduce savings on that policy overall by £93.5 million, but the Homes and Communities Agency has estimated that the provision of specialised housing for vulnerable and older people saves the public purse £640 million—more than six times more. That is real value for money.

The Government have acknowledged that the rent reduction may cause a reduction in service provision, but their proposed solution is no solution at all—neither an organisational waiver, which the Minister referred to in her response to the previous amendment, nor a partial waiver, also mooted, offers a viable solution to a sector-wide problem. Indeed, one of the issues has again been referred to: since these schemes are higher and the margins much tighter, the rent reduction may sometimes push supported housing into deficit while not pushing the whole organisation into financial deficit. They may be abandoned to sustain financial viability. That is an important point that the Government need to take into account. It would certainly be extremely expensive and time-consuming to establish. I do not see how either of these would offer providers the certainty that they need to take the financial risks involved in continuing this provision.

I have had the opportunity to talk to the Minister and I am most grateful to her for engaging with me on this issue. I, like others, very much hope that she can today commit to bringing forward an amendment to address these concerns on Report. Providers stand ready to help the Government find the right way forward, but above all we expect to see the Government commit to what they have promised: to ensure that the provisions in the Bill do not have unintended harmful, even disastrous, consequences for the care and housing of some of the most vulnerable people in our society.

[Baroness Manzoor]

I rise just briefly, because I am an optimist and I do not want to delay the Committee further, to say that I totally concur with Amendments 107 and 109—they are one and the same—and the issues surrounding them relating to supported housing. I commend the Government on keeping supported housing out of universal credit and other benefits when they did their calculations. To my mind this is very similar. There needs to be clarity. As I said, I am an optimist; I do not for one minute think that the Government intended for these negative consequences to occur for supported housing where it is particularly needed for young people and people who may be homeless, and where crisis housing and services are needed.

I concur with everything that has been said and will add just one last point: if an organisation is totally on its knees, it will not think about investing for the future or how to improve. If an organisation has to come cap in hand back to the Government to say, “We need to be exempted now”, that will be too late because those services will have been lost for the future. That will invariably have an adverse effect on service standards. People may well end up being homeless. We must not forget that these organisations are there because we need crisis management for these people, whether they are drug users, young people on benefits, women fleeing domestic violence and so forth. I ask the Minister to answer the questions that were put so well by the noble Lord, Lord Best, to clarify whether specific accommodation and supported accommodation will be exempt from the measures in the Bill.

[Lord Kirkwood of Kirkhope]

My Lords, I should like to add a codicil to the debate. I hesitate to join in this interesting discussion and I have listened very carefully to what has been said. I come from Scotland. North of the border, this debate and the Government’s proposals for the housing association social rented sector in general, particularly the supported part of that important contribution to our housing capacity, are viewed with total disbelief. People north of the border would consider that this debate, while taking into consideration the economic case, omits the social ethic and commitment that housing associations and supported housing organisations bring to the provision of accommodation units in the United Kingdom. There is a separate way of looking at things, and that ethic is being put at risk by some of these policies.

We have heard the Prime Minister say that he will address poverty by addressing what he calls its root causes. Some of that is absolutely embedded in the homes of challenged families, with drug abuse and people who are recidivists and serial offenders who come out of prison, and all of that kind of thing. The housing association supported sector as it is deployed in the United Kingdom is absolutely at the centre of supplying some of the solutions that the Prime Minister is aiming for in other aspects of government policy. That includes the Work Programme and universal credit. Housing associations are playing a very engaged and positive role in the rollout of universal credit, as I have seen for myself when visiting some of them. So I am puzzled that this supported sector is being put at risk—and I think that it is being put at risk.

We have heard evidence from some very powerful people with professional understanding of this issue. The right reverend Prelate and his colleagues also have personal experience of the consequences of a failure to support, care for and supervise some of the clients who use supported accommodation. It is clear to me that there is a real and present danger that we will end up reducing the sector’s capacity to operate. To my mind that case has been absolutely made. The noble Lord, Lord Young, referred to a powerful meeting attended by people who will be affected by these changes, which he and I both attended.

How I approach this issue on Report will depend a lot on whether I can understand the Government’s position with regard to the future risk to supported accommodation but, more importantly, with regard to exemptions. If we do not know what the Government are willing to do—if anything—by way of exemptions, we will be left to our devices in coming up with amendments, which will be pressed. Speaking for myself, although I am from Scotland, if some of the issues that have been so powerfully argued this evening are put to the vote, I will have no hesitation in supporting attempts to mitigate the Government’s policy.

The approach of the noble Lord, Lord Kerslake, is absolutely right. The Government have made their position clear and no one is trying to stop that happening, but mitigation is possible, constructive and available if the Government are willing to discuss and treat. The only way they can begin to help us do that is by making their policy clear this evening, as Committee ends. Then we can go away and discuss the options collectively and respectively so that we can get the best outcome in the remaining stages of the Bill. The Minister needs to make clear the Government’s position on exemptions for supported accommodation. Otherwise, we will meet her in the Lobbies on Report later in the month.

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[Baroness Williams of Trafford]

I cannot give that commitment at this stage, but as soon as we can make any progress on it we will.

[Baroness Manzoor]

I understand that the Minister cannot give the commitment now, but can she assure the Committee that, having reflected upon it, she will undertake to write to us to say how soon that could take place?

[Baroness Williams of Trafford]

My noble friends Lord Freud and Lady Evans and I have already been speaking to providers and my noble friend Lord Young brought this point up. I undertake that we will continue to speak to providers, but I simply cannot make a commitment from the Dispatch Box at this stage. We are doing all that we can to work with providers.