Welfare Reform and Work Bill

Baroness Williams of Trafford Excerpts

Tuesday 12th January 2016 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)]

My Lords, I thank all noble Lords who have spoken to these amendments. I have listened with care to the comments made and thought it might benefit the Committee if I quickly set out some general comments with regard to the purpose of the 1% rent reduction.

As my noble friend set out at Second Reading, this Bill, including these measures, is part of a broader package of reforms, one of the aims of which is to put spending on welfare on a more sustainable footing, but in a way that protects the most vulnerable. I hope that answers the point made by the noble Lord, Lord Scriven, and other noble Lords who asked the same question. The housing benefit bill for the social housing sector in England has risen by nearly a quarter over the past 10 years to £13 billion, and rising rents are a key part of the equation. Average rent increases in the social sector have been more than double those in the private sector over the past five years. That is why the Government have taken the decision to reduce social rents by 1% a year for four years from 2016. That will mean that by 2020 tenants will be paying around £12 per week less than they would pay under the current policy of CPI plus 1% increases.

I listened carefully to the points made by the noble Lord, Lord Kerslake, regarding Amendments 104C and 104D. The noble Lord brings a great deal of knowledge of these issues to this House—I had not realised he had been chief executive of Sheffield—but we cannot accept these amendments, which would reduce the number of years of the rent reduction from four years to three. The noble Lord asked why we have gone back on the 10-year rent settlement of CPI plus 1%. This measure is crucial to the Government’s drive to secure housing benefit savings in order to control the welfare bill. Moreover, it will reset levels of social rents, which have got out of kilter with the private rented sector over the past few years. Around 60% of social tenants receive housing benefit, and the housing benefit bill for England in the social sector stands at £13 billion, and has risen by a quarter over the past 10 years. Social rents have risen by around 60% over that period. The average weekly rent for housing associations has gone up from £58 a week to £92 a week over the past 10 years. In contrast, in the private rented sector, it is 23%. We recognise that social housing providers will have to manage these reductions, but the Government are committed to reducing welfare spending, and everyone has a part to play. Moreover, we are confident that social housing providers will be able to adapt.

The noble Lord, Lord Beecham, asks why, if we are doing this in the social sector, we cannot do it in the private sector. We believe it is important to allow market rents in the private rented sector so that we have a diverse supply of private rental accommodation available for a variety of different needs. A fundamental move away from market rents would hold investment back when we most need to encourage it, and the resulting shortage of rented accommodation would help neither tenants nor landlords.

We also cannot accept Amendment 104E, tabled by the noble Lord, Lord Kerslake. It would require registered providers to increase rents by CPI plus 1% each year. The amendment also seeks to require the Secretary of State to review whether, given the impact of the rent reduction measure, there should be additional flexibility for registered providers to increase rents above the noble Lord’s proposal for an increase of CPI plus 1%. This is an important point that also goes to the question from the noble Lord, Lord Scriven: the Government will determine rent policy after 2020 at a future fiscal event. When taking future rent policy decisions, the Secretary of State will have to consider a range of issues, and it would not be right to prejudge now what those issues might be.

The noble Lords, Lord Kerslake and Lord Best, talked about the OBR predictions of 43% fewer properties being built by providers. The Government believe that providers will make efficiencies to continue to release resources for new development. I remind noble Lords at this point that housing associations hold £2.4 billion in surpluses, which is a very similar amount to local authorities. In the spending review we secured over £20 billion for housebuilding over this Parliament, including £8 billion for 400,000 new affordable homes over the next five years, so the Government are playing our part in the provision of housing.

[Lord McKenzie of Luton]

How much of that £20 billion is going to be applied for social housing for rent?

[Baroness Williams of Trafford]

That will be £1.6 billion.

[Baroness Hollis of Heigham]

Of £20 billion?

[Baroness Williams of Trafford]

It will be £1.6 billion to provide 100,000 homes for rent.

[Baroness Hollis of Heigham]

So the Minister is saying that £20 billion is set aside for affordable housing, but only £1.6 billion of that £20 billion will be available for social housing to rent. Am I right?

[Baroness Williams of Trafford]

The £20 billion will be invested in housebuilding over this spending review, and £1.6 billion of that will be invested for 100,000 homes for rent.

The noble Lord, Lord Kerslake, makes the point that not many people pay their own rent. In fact, out of the 4 million households in the social sector, one-third actually pay their own rent, and the noble Baroness, Lady Hollis, alluded to that.

Amendments 108, 108A and 109A seek to place some exceptions in the Bill. Perhaps I can offer some reassurances in this area. The Government have made clear our intention to look to continue to accept those types of housing that are currently exempted from the rent standard, subject to determining whether the existing definitions are appropriate in the light of the revised policy. These include specialised supported housing, which provides support for the most vulnerable people and was developed in partnership with councils or the health service. We will bring forward regulations to set out these and any further exceptions needed under Clause 22.

I recognise that many noble Lords are keen to see further categories of housing or provider excepted. Noble Lords, including the noble Lord, Lord Beecham, in the absence of the noble Lord, Lord Ramsbotham, have spoken to amendments that would accept fully mutual housing co-operatives, homes for the elderly or disabled and almshouses. We are equally keen to understand noble Lords’ concerns and are keeping these matters under review. Nevertheless, the Government believe that most providers can find operational efficiencies to manage these reforms, and it is simply not appropriate to except large swathes of housing from the provisions to deal with a few hard cases.

We are also investing in specialised housing for older people, and in the spending review we have committed £400 million of funding to deliver 8,000 specialist homes for the vulnerable, the elderly and those with disabilities through the affordable homes programme, with a commitment to further funding from the Department of Health for specialist accommodation. We will continue to support local areas to meet their local needs by maximising funding flexibility.

I remind noble Lords that while the Government expect providers to make all possible efforts to manage the rent reductions and to plan on that basis, Clause 23 of the Bill allows for individual providers to apply for an exemption from the rent reductions if they face severe financial difficulties. Many noble Lords have alluded to that point. We do not expect providers to budget on the basis that an exemption will be automatically granted; as I said, they should be able to make all possible efforts to manage the reductions.

[Baroness Hollis of Heigham]

Will the Minister agree to the circulation before Report to all Members of your Lordships’ House of a list of the categories of social housing that are regarded by the Government as potentially exempt from the 1% cuts in rent, so that we know before Report exactly who will be affected and who will not?

[Baroness Williams of Trafford]

My Lords, I am afraid that I cannot give that level of comfort to the noble Baroness. As I say, we are very carefully keeping this under review, but I cannot commit to giving her that list before Report.

[Baroness Hollis of Heigham]

I—

[Baroness Williams of Trafford]

If I may finish, all I can say is that we take very seriously housing providers that might suffer financial difficulties because of the reductions. In those cases they will be able, under Clause 23, to apply for an exemption.

[Baroness Hollis of Heigham]

So what the Minister is saying is that the Government will come in after the event, when providers are already on their knees and some of them might be going under, as opposed to letting us know which categories may be exempt by virtue of their particular needs. These providers are offering supported housing, which has not only high physical building costs but high social costs in terms of supporting tenants.

[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.

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[Baroness Williams of Trafford]

The noble Lord has just read my mind. Doing so might be helpful because I think that we are now talking at cross purposes. An exemption relates to a provider, which is why I could not give the noble Baroness an assurance, because I do not know what providers might struggle because of rent reductions, whereas an exception relates to a sector, such as one that might provide for domestic refuges. Therefore an exemption is quite different from an exception, and I think we might have been talking a bit at cross purposes. I almost lost my train of thought there. However, I hope that with those reassurances, the noble Lord will feel—

[Lord Beecham]

Before the noble Baroness sits down, she referred to the private rented sector and implied that it was not as important as it would appear to be. However, has not the proportion of houses now in the private rented sector approximately doubled in the last few years, so that it now makes up 20% of total housing stock? How does that equate to her apparent fears for the viability of the sector if, for example, the Government take equivalent action with the rents they charge?

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[Baroness Williams of Trafford]

My Lords, I think I explained that the Government do not intend to take action on the private rented sector. In fact, the private rented sector being in a healthy position in terms of supply can only be good for the housing market. With those comments, will the noble Lord feel sufficiently reassured to withdraw his amendment?

[Lord Kerslake]

My Lords, first, I thank the Minister for her comprehensive response. I also thank my noble friend Lord Best, the noble Lords, Lord Beecham, Lord Horam and Lord Scriven, the noble Baroness, Lady Blackstone, the noble Lord, Lord Triesman, the noble Baroness, Lady Hollis, and the noble Lord, Lord McKenzie of Luton, for their helpful and supportive comments on the issues I raised in these amendments.

I will make a few points in response to the Minister. First, I was very clear in my presentation of the amendments that I recognised that government had determined the big picture of policy, and that we were therefore talking about appropriate amendments here. On that point the noble Lord, Lord Scriven, is correct. I have sought to set out a number of practical and realistic amendments that the Government could consider.

On social rents, it is worth saying that, yes, they have risen above inflation, but that has been a direct consequence of intended government policy to raise social rents. They have not gone up because of some wilful act by housing associations or local authorities; precisely because it is a controlled area, it comes from government policy. Previous Governments of different political persuasions have acknowledged the need to raise rents so that they are closer to market rents. Indeed, the affordable housing product introduced by the last Government was up to 80% of market rent. Therefore, there has been a clear consensus policy by Governments to raise social rents, and that is why they are as they are.

My second point is that in respect of new housing supply in the social sector, there is what is often called the three-legged stool: a combination of private borrowing, rents and government grant. Each of those needs to be clearly calibrated to deliver the best possible results. As the noble Lord, Lord Triesman, says, confidence about long-term returns is absolutely critical to this. That is how you get cheap private finance into the system. That is why I felt that the 10-year policy was an enlightened and sensible one that would encourage the development of new infrastructure. Because of the compelling demands of the welfare reform savings that the Government need to make, they have chosen to depart from that policy. The key question is, how do we get that confidence and certainty back into the system so that we can maintain the maximum level of supply? I have to tell noble Lords that there is clearly uncertainty in the sector about what will happen at the end of the four-year period; it needs to be addressed in a very clear way, and that cannot wait until 2020.

I am very reassured by the Minister that the exceptions, as we must now call them, will be considered sympathetically. It would perhaps help if it could be made clear how many of the exceptions we have proposed through the amendments will be covered by what the Government intend. I moved an amendment on housing specifically constructed for disabled and elderly needs. That is a crucial area, and we must keep the level of supply going. My noble friend Lord Best has identified other areas where this is critical.

Clearly, efficiencies can be made in housing associations. Anybody who suggests otherwise is being unrealistic. The key question is what you do with those efficiencies, and whether they are used to reinvest or to cover other government policies. We are left still with the question, raised by a number of noble Lords, of the balance between revenue savings and capital investment for the long term.

My last point concerns who benefits here. I was clear in my speech that two-thirds of tenants, not all of them, will benefit. The reality is that the bulk of the savings from this policy will benefit the Chancellor. That piece of arithmetic cannot be denied.

I welcome the debate we have had on some very important issues. I will withdraw my amendments in the light of the discussion and will return to some of the issues I have raised at a later stage.

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Moved by

[Baroness Williams of Trafford]

104DA: Clause 21, page 20, line 39, at end insert—
“( ) For the purposes of subsection (6), a private registered provider’s practice as regards its tenancies is to be determined by reference to its practice as regards the tenancies of its social housing in the year ending with 31 March 2016 (and a private registered provider which has no tenancies of its social housing in that year is to be regarded as having no practice as regards its tenancies).”

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[Baroness Williams of Trafford]

My Lords, Amendment 105 seeks to require the Secretary of State to produce a plan within 12 months to offset the impacts of the rent reductions on housing associations and local government. As my noble friend Lord Horam said, that is quite soon after the event.

Many private registered providers are in a strong financial position. Overall, the sector had a surplus of £2.4 billion in 2014, and local authorities had £2.2 billion in local authority housing reserves. However, it may be helpful if I recap some of the amendments made in another place which have been welcomed by housing providers. These include allowing providers with rent levels below formula to increase rent to the social rent rate when re-letting a property—that is formula less the appropriate annual reductions; and providing the Secretary of State with powers, by regulations under Clause 26, to allow rent setting for new tenancies in supported housing at up to 10% above the rate for general-needs housing. This should help providers of supported accommodation for vulnerable people to continue to provide that important housing.

Funding for supported housing is also part of the Government’s wider financial settlement to councils. This includes investing £5.3 billion in the better care fund in 2015-16 to deliver faster and deeper integration of health and social care. This will help councils to invest in early action to help people live in their own homes for longer and help prevent crises, as well as supporting councils to work more effectively together, deliver better outcomes for less money and drive integration across all local services.

Noble Lords have expressed concerns about the impact of these reforms on housing supply. Let me be absolutely clear that the Government remain committed to ensuring that there is housing for those who cannot access the market. The recent spending review further confirmed this Government’s commitment to housing provision. As I said in the debate on the previous group of amendments, we have £8 billion to deliver over 400,000 affordable housing starts; that is the largest affordable housebuilding programme by a Government since at least 1979. This includes around 100,000 homes for affordable or intermediate rent. However, we recognise that the rent reductions may have an impact on some registered providers. That is why the Bill provides for both exceptions to the policy, in Clause 22, and exemptions to the policy, in Clause 23, which we have debated previously.

The noble Earl, Lord Listowel, talked about the impact on child homelessness. I am sure he will forgive me if I say that the impact on the child will be the same as the impact on their family. The whole purpose of both this Bill and the housing Bill is to build a range of different types of houses for a range of different types of tenure, and for the social sector not to gallop out of kilter with the private rented sector, as it has. Of course, those children will grow into young people, and the Government have an ambition to provide 200,000 starter homes for people between the ages of 20 and 40.

[Baroness Hollis of Heigham]

I wonder whether the Minister could rephrase her comment about social rents being out of kilter with the private rented sector. She has heard the evidence in previous discussions: first, that those social rents rose because government required them to rise; and secondly, that social rents are on average about 40% or less of private sector rents. Therefore, the pressure on the housing benefit bill has come very substantially from the increase in the number of properties in the private rented sector. That is completely at odds with the position that the Minister keeps painting: that the justification for increasing social rents is that they are somehow out of kilter.

[The Earl of Listowel]

That is certainly my understanding too: that more and more the poorest people are being pushed into using the private rented sector as the supply of affordable social housing has dwindled. This has led to more insecure housing and, unfortunately, more and more homelessness. Of course, many of these people are parents, and therefore their children become homeless too. Perhaps the Minister might think of writing to me before Report, because I have not given her notice of my question. However, I am listening to what she has to say.

[Baroness Williams of Trafford]

I am very happy to write to the noble Earl. I do not make a judgment about why social rents have, in percentage terms, increased out of kilter with those in the private rented sector. The quantum might be different but, in percentage terms, they are out of kilter with the private rented sector.

[Baroness Hollis of Heigham]

My Lords, essentially, the Minister is saying that it is now acceptable to punish local authorities and housing associations for doing what the Government required them to do.

[Baroness Williams of Trafford]

No, my Lords; I am saying that we need to reset the picture for the social rented sector.

[Baroness Hollis of Heigham]

Does that mean that the Minister did not know a year ago what the effect of the policies would be?

[Baroness Williams of Trafford]

My Lords, I was not the Minister a year ago. However, I get the noble Baroness’s drift. The point is that we now have a majority Conservative Government and this policy has come out of that. I am not saying in any way, shape or form that it is the social rented sector’s fault. I am saying that that is the position in which we find ourselves, due to many different factors. Over the past few years, inflation has been one of the factors driving it up. However, I will correct that if I am wrong, given that I am saying it from the Dispatch Box.

The noble Lord, Lord McKenzie, asked about the guidance to social providers on maintaining surpluses. We feel that it is a matter for the housing association boards to run their businesses as they see fit. It is a well-regulated sector that, to date, has managed its finances magnificently. Boards have been advised to raise any anticipated exceptional challenges with the regulator to discuss any difficulties that they might anticipate.

[Lord McKenzie of Luton]

Is any guidance given to local authorities on prudent reserves?

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[Baroness Williams of Trafford]

As an ex-local authority leader, I can tell the noble Lord that we were always advised through CPA inspections and so on that reserves should be used in a managed spending process and not to prop up revenue deficits—they would be used for maintenance of properties and that sort of thing.

[Noble Lords]

Exactly.

[Baroness Williams of Trafford]

But they have revenue and capital reserves. I do understand local authority obligations on reserves.

The noble Baroness, Lady Blackstone, talked about the impact on tenants. The Government published an impact assessment, which included the impact on protected groups. A third of social renters actually pay less. However, I will write to the noble Baroness more fully on impact because I realise that I did not answer her question on the last group of amendments.

[Baroness Blackstone]

I am not sure that the Minister has understood my question. It was about the impact of a reduction in rent on the Government’s housebuilding targets. What is her view on that? The Government ought to have some idea now; although it also ought, along the lines of my noble friend Lord McKenzie’s amendment, to be monitoring this, perhaps not just over 12 months but over a longer period, to get some sort of understanding of what the impact is. No Government should come up with a proposal of this sort when they have committed to an increase in the number of houses being built without some understanding of what its impact will be.

[Baroness Williams of Trafford]

Perhaps I may write to the noble Baroness; I understand her point. However, I also understand the point made by my noble friend Lord Horam: it is difficult to assess an impact within 12 months. It will probably take longer.

The noble Lord, Lord McKenzie, asked about the high-income social tenants’ policy and its impact on housing. It is worth noting that we will have an opportunity to scrutinise this fully during the passage of the Housing and Planning Bill, when I will probably be the Minister standing at the Dispatch Box. However, at this point I hope the noble Lord will feel able to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I thank all noble Lords who have participated in this short debate. The noble Earl, Lord Listowel, expressed his concerns about the impact of the policy on children; the noble Baroness, Lady Manzoor, believed that we had a straightforward, simple proposition to put to the Government; and my noble friend Lady Blackstone still awaits an answer to the fundamental question she has now raised on the last two groups of amendments. We must hope that the correspondence from the Minister will elicit a response.

I accept the point that if particular issues arise, the route of exemptions and exceptions may be brought to bear to address them, but that does not substitute for the fundamental question my noble friend is asking: what is the Government’s assessment, in introducing these policies, of the impact they will have on the provision of housing and their targets for building houses? How will it be affected by this?

The noble Lord, Lord Horam, made a reasonable point about monitoring and said that one should do that after a period of longer than 12 months. I hang on to my point that we are looking for two things here: the Government’s current assessment of the impact on housebuilding of the introduction of the policy; and then monitoring what will happen in practice.

We have given this issue a good airing. For the time being, I beg leave to withdrawn the amendment.

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[Baroness Williams of Trafford]

My Lords, I have listened very carefully to the comments made by noble Lords this evening in debating the amendments that would extend the exceptions—which we were talking about two amendments ago—to the policy to specified or supported accommodation. I can offer some reassurances in this area at this stage. It may be helpful if I first recap the commitment made in another place, which was welcomed by housing providers, to continue to allow rent setting for new tenancies in supported housing at up to 10% above the rate for general-needs housing. This should help providers of supported housing for vulnerable people to continue to provide that important housing. We will put this in place by way of regulations under Section 26, the power to make alternative provision for excepted cases.

To address the point made by the noble Lord, Lord McKenzie, the Government have also made clear their intention to continue to except those types of housing that are currently exempted from the rent standard, subject to determining whether the existing definitions are appropriate in light of the revised policy. These include specialised supported housing, which provides support for the most vulnerable people and was developed in partnership with councils or the health service. We will bring forward regulations to set out these and any further exceptions needed, under Clause 22 or paragraph 5 of Schedule 2, as appropriate.

[Baroness Hollis of Heigham]

To go back to a question we asked about an hour ago, will the noble Baroness be providing those draft regulations before Report?

[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.

[Baroness Hollis of Heigham]

I am afraid that is not an accurate statement of where we are. The Minister has known for some time that this is on the agenda. She has known since before Christmas that this issue was coming up. She has talked to the providers; she knows the concern around this House; everyone in this Committee has requested, begged or asked the Minister. She knows what will happen on Report if she does not. Given her consensual style, her willingness to meet providers and her wish to respond to the sense of the Committee, I am sure that she must come back before Report to tell noble Lords what she will do about this, so that we can make a judgment. That would go a long way to abate the concerns which she recognises. If she has to tell the department that it has to change its timescale, so be it.

[Baroness Williams of Trafford]

My Lords, the noble Baroness has been in government and she knows the processes of government. She is right to say that I am a consensual politician, where I can be, but I will not stand at the Dispatch Box and give assurances that I cannot absolutely fulfil. I therefore have to say that I cannot do that but I will be doing all I can to make progress in this area. That is all I can say at this stage.

[Lord McKenzie of Luton]

My Lords, I thank the Minister as I thought that what she was beginning to say was encouraging, but can I clarify one point about the reference to specialised supported housing? This is really the nub of the issue. Is the definition which the Government are working towards the same as that exempting people from the benefit cap, or is it a different one?

[Baroness Williams of Trafford]

My Lords, it is different. We are looking at this whole area of provision but it is a different definition. The noble Lord asked whether we could include the exceptions on the face of the Bill. They would probably be too complex to include in the Bill, while regulations would provide more flexibility to effect better the appropriate definitions and make adjustments in due course.

Funding for supported housing is also part of the Government’s wider financial settlement to councils. This includes investing £5.3 billion in the better care fund in 2015-16 to deliver faster and deeper integration of health and social care. This will enable councils to invest in early action to help people live in their own homes for longer. It will also help prevent crises, as well as supporting councils to work more effectively together, deliver better outcomes for less money and drive integration across all local services. We are also investing in specialised housing for older people. In the spending review, we have committed £400 million of funding to deliver 8,000 specialised homes for the vulnerable, elderly and those with disabilities through the affordable homes programme, with a commitment to further funding from the DoH for specialist accommodation. We will continue to support local areas to meet their local needs by maximising funding flexibility.

I think it was the noble Lord, Lord McKenzie, who asked about the combined impact of the social rent reduction and capping the highest housing benefit awards for social renters, in line with caps applicable in the private rented sector, meaning that supported housing will be decimated. Now that I am looking at the noble Lord, I do not think it was him who asked this. But there was a noble Lord who asked that question, because I have written it down. Applying a cap on the highest social rents will mean that housing benefit will no longer subsidise families who take new tenancies in social houses that many working families cannot afford. The new cap will have effect only from 2018 for new or re-let social tenancies signed after 1 April 2016.

The noble Lord, Lord Shipley, asked whether the savings of £75 million were for supported housing. I do not know but I will write to him about it and I can come back to that question on Report, if he wishes. My noble friend Lord Young asked whether we can meet providers, as I think I have said. We have met providers and will meet them again.

Finally, I reiterate that while we expect providers to make all possible efforts to manage the rent reductions and plan on that basis, Clause 23 allows for individual providers to apply for an exemption from the rent reduction if they think that they will face severe financial difficulties.

[Baroness Hollis of Heigham]

Does the Minister think that it will remain private if any organisation comes to the Government saying, “We’re about to go bankrupt—please help us”? Do they think that the organisations will continue to get the confidence of their local authorities, or of the markets or investment? I am staggered by this approach of “Go to your knees, then we may help you out”, as though that is a way in which providers could continue to support some very vulnerable people.

[Baroness Williams of Trafford]

My Lords, providers have a very good track record both in managing their finances and in terms of the housing that they provide, and I do not expect that a housing provider will go to the Government only when it is on its knees. In well-run housing associations, I expect that forward planning would show what sort of difficulties might be coming up and that they might therefore apply for an exemption on that basis. I hope it would not be at the 11th hour, because that is not good financial planning. I hope I have provided some reassurances and that the noble Lord will feel able to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for a very comprehensive reply. There was a moment there where I thought some comfort was coming, but it disappeared relatively quickly. I thank all noble Lords who participated in this short debate—forgive me if I do not pick up on all the comments, because I believe that pretty much everyone who spoke on this issue shared the same view. I also believe that the Government did not intend this to happen. We will cling to that belief and hope that it sees us to a sensible solution at the end of the day.

There is an overwhelming recognition that supported housing of the type we have discussed is significantly needed in our country, and that if it is not provided, the cost to the rest of society will spill over and be much worse. We need to act quickly on this. The noble Lord, Lord Best, in his comprehensive argument in favour of the amendments, made the point that we need to pursue exceptions rather than exemptions. Exemptions will not be any use to those associations which embed provision within their business plans, and the uncertainty that having to seek an exemption will lead to is one that many will not be prepared to live with or cannot live with. Urgency on this is important.

I do not think we had an answer on whether the other components which are exempted from the rent standards at the moment, such as PFI schemes, temporary social housing and short-life leasing schemes for the homeless, are going to be replicated in some way. The important point is that if the definition of specialised supported housing is not going to be the broader one, then the job will not be done, and we will return to this if it is not. We look forward to continued engagement on this between now and Report, but in the mean time, I beg leave to withdraw.