Welfare Reform and Work Bill (Tenth sitting)

Debbie Abrahams Excerpts

Thursday 15th October 2015 Public Bill Committees

[Mr Vara]

It is good see you this afternoon, Mr Owen, as it was this morning.

We recognise that tenancies will start at different points in the four years of rent reductions and that providers will want to know what rent is set on re-lets for new social housing and for conversions to affordable rent. First, I turn to the more substantial amendments in the group, which make more detailed provision for this situation than clause 19 as introduced. They enable a provider to determine the amount of rent that is initially payable when a tenancy begins after 8 July 2015. The cases are not covered by clause 19(1), which applies to the generality of tenants who were tenants of their social housing on 8 July. Clause 19(1) also governs the future rent reductions for all tenants whose tenancies began after 8 July 2015, once they have been tenants for a full relevant year.

New schedule 1 sets out the details of how rent should be set for different types of new tenancies starting after 8 July 2015. It also provides for exceptions, exemptions and enforcement of the schedule. Part 1 provisions are intended to clarify how the rent reduction requirements should be applied in relation to new tenancies after 8 July, whether that is a re-let of existing housing, new social housing or letting at affordable rent. In the first of those instances, re-lets that exist in social housing will be able to be let at the greater of a social rent or an assumed rent rate.

The social rent rate, which is prescribed in sub-paragraph (4) of new schedule 1, is set in relation to a formula that will be set out in regulations. Sub-paragraphs (7) and (8) provide that the Secretary of State may define “formula rate” in the regulations. Our intention is that the regulations will mirror the formula set out in the rent standard guidance and the Government’s guidance on rent. For supported housing, we will continue to allow rents to be set at up to 10% above formula. I appreciate that these are important issues for social housing providers, so I draw Members’ attention to this change.

The assumed rent rate, which is prescribed in sub-paragraph (5), is based on the rent that was payable under a tenancy in place on 8 July, but the calculation reflects the rent reduction requirement. This is important for providers whose rents have historically been set higher than the formula rent at 8 July 2015. In those circumstances, we do not want providers losing more than 1% year-on-year in rent reductions, which would have been the case if rents for all new tenancies were set with reference to the social rent rate.

Sub-paragraph (6) clarifies that, if the tenant is in that social housing for a part of the year only, or if the requirement ceases to apply because of an exception or exemption, the reduction in rent applies on a pro rata basis. In instances of new social housing, the rent will be set with reference to the social rent rate as described above. Paragraph 3 sets out the case for a person becoming a tenant of affordable rent housing after 8 July 2015.

Sub-paragraphs (2) to (4) provide that the rent payable by that tenant should be set at no more than 80% of what would be the market rent for that social housing and that, in the following years, a reduction of 1% per annum applies. Again, such rents will be on a pro rata basis if appropriate. What constitutes affordable rent housing will be set out in regulations made under paragraph 4. The intention is to mirror the existing policy that homes should be let at affordable rent levels only in certain circumstances, including where there are agreements or arrangements with the Homes and Communities Agency, the Greater London Authority and the Secretary of State, to control housing benefit costs.

Part 2 of the new schedule sets out exceptions to, exemptions from, and the enforcement of, the requirements in part 1. Paragraph 5 makes provision for exceptions that mirror those set out in clause 20, namely low-cost home ownership and shared home ownership accommodation, and various exceptions applicable to mortgagees and other lenders when those persons take steps to enforce a security. Paragraph 5(4) gives the Secretary of State a power to make regulations to disapply the requirements of part 1 in other cases, set out in sub-paragraph (5). In particular, the regulations may include provisions on tenants, tenancies, accommodation and events. They may also include provisions on high-income social tenants and on periods when a tenant’s rent is temporarily reduced or waived.

Paragraph 6 of the new schedule relates to the granting of exemptions by the regulator or the Secretary of State and makes equivalent provision to that in clause 22. Paragraph 7 gives the Secretary of State a power to make provision about the enforcement of the schedule, including provisions to apply part 2 of the Housing and Regeneration Act 2008 with modifications.

Part 3 of the new schedule sets out the conditions relating to regulations made under the schedule. Paragraph 9(2) provides that providers must have regard to guidance when determining assumed rent in cases of properties that were not tenanted on 8 July 2015.

Amendment 172 removes the provision made for other cases in the Bill as introduced. Amendment 174 is a drafting amendment linked to new clause 20 on excepted cases under the new schedule and new clause 19, and is necessary to introduce the new schedule. Amendments 175, 178 and 179 are minor technical amendments consequential on new clause 22 and, in the case of amendment 175, on new clause 21.

New clause 21 expands the provision in clause 19(9) of the Bill as introduced. Sections 194(2A) and 198(3) of the 2008 Act give the regulator of social housing the powers to set and revise standards relating to levels of rent. The new clause ensures that the regulator may not issue standards inconsistent with the provisions on social housing rent in the Bill.

New clause 22 simply gives the meaning of various terms set out in the provisions on social housing rent in the Bill. In particular, subsections (3) and (4) clarify when a tenancy begins, when a tenancy is to be treated as continuing although a new tenancy has been granted, and when a tenancy that has been assigned should be treated as coming to an end. The new clause clarifies the position in respect of new grants of tenancies to the same tenant, including at least one of the tenants who formerly held a joint tenancy, as well as certain changes of tenancy under schedule 1 of the Rent Act 1977 and assignments by way of exchange.

I turn briefly now to new clause 20, which provides the Secretary of State with a power to make regulations regarding the maximum amount of rent payable by a tenant in a category excepted by regulations under clause 20 or the new schedule. It also enables the Secretary of State to make provision regarding the maximum amount of rent payable by a tenant who ceases to be excepted from the rent reduction provisions. Those powers are important as they enable the Secretary of State to make regulations to establish the appropriate rent regime for such excepted cases. In so doing, they give flexibility to make provision for special cases—for example, supported accommodation and tenants whose rent has been temporarily reduced. Providers, at present, have discretion to charge high-income social tenants a higher rent, and it is the Government’s intention to except such tenants from the rent reduction provisions. It is important to ensure, however, that if a tenant’s income drops below the high-income threshold, they will no longer be required to pay a higher rent, and the Secretary of State will be able to require that under the regulations.

We also recognise that providers’ individual circumstances will differ significantly, and the new clause will give the Secretary of State power to provide in regulations for an exemption regime if a provider needs it. The new clause will also enable regulations to provide for enforcement of the regulations by the regulator. Amendment 180 is consequential on the addition of the new clauses and the new schedule to the Bill.

Amendments 181 to 183 are technical and relate to the date upon which the various provisions come into force. Amendment 181 will ensure that the provisions exempting a registered provider from the rent-reduction measures can come into force from the date of Royal Assent. Although we do not expect registered providers to plan on the basis that an exemption will be granted, it is nevertheless important that a provision is put in place quickly where it is needed. Amendment 182 is consequential on amendment 181. Amendment 183 is consequential on the addition of the new clauses and the new schedule and will enable the Secretary of State to introduce regulations quickly following Royal Assent. The Bill provides that such regulations will come into force on other appointed days for other purposes. The intention is to bring the Bill’s provisions into force on 1 April 2016.

I wish to make a clarification. Earlier, I said that paragraph 6 relates to the granting of exemptions by the regulator or the Secretary of State. I said that it makes equivalent provision to that in clause 22. I should have said clause 21.

I thank you, Mr Owen, and colleagues for forbearing in listening to these detailed, technical and necessary comments. I am sure everyone will appreciate that it is necessary to provide such detail on the changes.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

As I said this morning, I accept that these are technical amendments. We will scrutinise them in detail, but I will make more general remarks in relation to my own amendments.

Amendment 172 agreed to.

Amendments made: 147, in clause 19, page 19, line 9, after “a” insert “private”.

This amendment and amendment 148 secure that only private registered providers may have relevant years starting on a date other than 1 April.

Amendment 173, in clause 19, page 19, line 10, leave out “tenants” and insert “tenancies”.

This amendment secures that a private registered provider’s usual practice is determined by reference to numbers of tenancies.

Amendment 148, in clause 19, page 19, line 19, after “A” insert “private”.

Amendment 174, in clause 19, page 19, line 22, at end insert—

“( ) This section is subject to—

(a) section (Provision for excepted cases) (provision for excepted cases);

(b) Schedule (Further provision about social housing rents) (further provision about social housing rents).”

This amendment is a drafting change linked to amendment NC20 (a new clause about excepted cases) and amendment NS1 (a new Schedule making provision about initial levels of rent for tenancies beginning after the beginning of 8 July 2015).

Amendment 175, in clause 19, page 19, line 23, leave out subsections (9) and (10).—(Guy Opperman.)

This amendment and amendments NC21 and NC22 secure that the provision in subsections (9) to (10) is also applied to the provision about levels of rent that appears in the new clause and new Schedule added by amendments NC20 and NS1.

[Debbie Abrahams]

I beg to move amendment 21, in clause 19, page 19, line 25, at end insert—

“(9A) 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 require the Secretary of State to produce a plan to offset the impact of lower social rents on housing associations, so that their ability to build new affordable homes is not affected.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 85, in clause 19, page 19, line 25, at end insert—

“(9A) The Secretary of State must, within 12 months of this section coming into force, produce a report outlining the impact of the reduction in social housing rents on the availability of accessible and supported housing.”

To require the Secretary of State to report on the impact of lower social rents on the availability of accessible and supported housing.

Amendment 184, in clause 19, page 19, line 35, at end insert—

“(11) Sections 19 to 22 will cease to have effect on 1 April 2020.”

The Bill as currently drafted does not explicitly provide for the end of the rent reduction policy in 2020. This amendment would clarify this.

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[Debbie Abrahams]

I hope everyone has had a good lunch. The amendments are in my name and those of my hon. Friends.

Clause 19 requires registered social housing providers to reduce the amount of rent payable by a tenant in social housing in England by 1% a year for four years from 1 April 2016. The Government argue that the measure will save money paid on housing benefits. They estimate in the impact assessment that the saving will be approximately £1.995 billion, which, on the surface, seems like a good deal for social tenants. However, there are significant implications for current and future renters.

The Local Government Association has estimated that councils in England will lose more than £2.6 billion, and that 19,000 fewer affordable homes will be built by 2019-20 as a result of the measure. I will come to what that will mean in terms of fewer homes in my area of Oldham, but for housing associations in general, the situation is even worse. The National Housing Federation calculation is that housing association income, collectively, will reduce by £3.85 billion over the next four years, resulting in 27,000 fewer homes being built. That contrasts markedly with the Office for Budget Responsibility assessment in the Budget, which predicts 14,000 fewer affordable homes being built.

Will the Minister confirm how that discrepancy has arisen? Is there a calculation that we are not aware of? Exactly how has that difference come up between the OBR’s 14,000 and the figures of the LGA and the NHF? May I also ask why that was not included in the impact assessment process? At the same time, will he confirm the actual figure for loss of income to be suffered by housing associations by 2020? My colleagues will want to comment about their own areas, but in my area the estimate for loss of income is £15 million. In places such as Oldham, that has significant implications for affordable homes.

In May 2014, following the 2013 spending review, the Government committed to a 10-year rent settlement, which was meant to introduce the necessary long-term certainty needed to attract private investment into building new affordable homes. What has changed? As a result of the longer-term planning with assumptions about what rental incomes they would be receiving, housing associations have been able to borrow for house building at reasonable rates, attracting £6 from the private sector for every £1 of public money, as the Minister said this morning. Moody’s, the rating agency for the social landlords, commented that the change to the 10-year rent settlement and long-term planning came out of the blue, without any consultation, and is making things incredibly difficult, threatening the viability of many housing associations. We will debate that under a subsequent clause. The OBR acknowledged the difficulty caused by such a sudden change—it is due to be implemented next year. It also said—this is absolutely key—that:

“We do not expect private sector house-builders to offset this effect to any material degree.”

That is in paragraph 3.84 of the OBR publication accompanying the July Budget.

The ability of housing associations to borrow and the effect of the measure on their ability to build more affordable homes are key concerns not only of housing commentators, but of the 1.38 million or so people who are on local authority housing lists—that is a 2014 figure, the latest produced by the Government—71% of whom are in receipt of housing benefit. I will be grateful if the Minister confirms what assessment has been undertaken. How will the provision affect social housing waiting lists? We know from last year’s Work and Pensions Committee report on affordable housing that there are considerable issues for people in receipt of housing benefit in being taken on by private sector landlords. What will be the impact of the measure on social housing waiting lists and people’s ability to move into the private rented sector?

It is important that we look at what the Government are proposing in the context of the housing market as a whole. Most people recognise—possibly the Government do not—that there is a housing crisis in this country, and this measure will make it worse. The Government’s own figures show that from 2012 onwards there has been a huge decline in affordable homes being built, from 37,680 in 2012 to 10,840 in 2014. That brings it to a 20-year low.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

My hon. Friend may be aware that my local authority, Southwark, is the largest landlord in London. In the previous Parliament, it was able to build more affordable homes than any other local authority, and it has a commitment to 11,000 new council homes in a welcome house building programme. However, the measures in the Bill would leave Southwark Council’s housing revenue account with a loss of £62.5 million by 2019-20, and in that year it would lose £28.2 million, with a knock-on effect on its ability to provide sufficient accommodation. I hope the Minister will commit to meeting my council to address those concerns, and I would welcome my hon. Friend encouraging him to do so.

[Debbie Abrahams]

As my hon. Friend rightly says, Southwark is the largest housing provider in London, and London faces particular issues.

Policy measures that have already been implemented have exacerbated the problems that we face on affordable homes. For example, the Government waived the mandatory quota for building affordable homes in new developments, which has further contributed to the poor quantity of affordable homes. The coalition Government allow developers to build more properties for rent in the private rented market, and by deregulating what was already the least regulated private rental sector in Europe, they open the door to rogue landlords.

The Government used £12 billion of taxpayers’ money to guarantee £130 billion of new mortgage lending in the form of the Help to Buy scheme. That has done little to help renters become buyers and homeowners. Instead, it has fuelled increases in new house prices and private sector rents, as many owners either sell or rent their properties as soon as the subsidies run out, and the increase in private sector rents has fuelled the increase in the housing benefit bill over the past five years. It has gone up from £4.4 billion in 2009-10 to £24 billion in 2014-15.

[Neil Coyle]

To further demonstrate the Government’s inability to understand the housing crisis in London in particular, is my hon. Friend aware that the Help to Buy scheme helped a very round number of people in the run-up to May 2015—an incredibly round number of zero—and that I have written to the Government to ask for improvements to the scheme? Unfortunately, no sufficient response was forthcoming.

[Debbie Abrahams]

My hon. Friend makes an important point. To be honest, I am not surprised. The Minister this morning was unclear about the rise in the housing benefit bill. As I was saying, it is up from £4.4 billion in 2009-10 to £24 billion in 2014-15—those are the actual figures. I know my hon. Friends will want to raise this point, but I will bring it up first: the number of people in work and claiming housing benefit has doubled to 1.1 million since May 2010.

[Neil Coyle]

Those people in work are also paying taxes. There seems to be some misunderstanding on the Government Benches about who pays taxes in this country.

[Debbie Abrahams]

Absolutely. The language used is sometimes unfortunate; it leads to a misconception that is commonly put out to the public arena. We all have an obligation to not mislead the public.

Extending the right to buy, which was mooted in the Tory party manifesto and set out this week in the Housing and Planning Bill, may increase homeownership —we all want to encourage homeownership—but without building more social housing, the extension will just reduce the supply of affordable homes for people on low income to rent. What will happen then? The average house price in the UK is more than £180,000. In London, it is more than £460,000. It has been estimated that it would take 22 years for people on low and middle incomes to save for a deposit.

I remind the Government of all the warm words from last week’s Tory party conference about helping people in poverty and with low incomes. There is a practical measure that the Government can take to do something about that, and I challenge them to do so. Housing is one of the biggest costs families face, and the Government’s plan will make the situation worse. Many young people, but not exclusively young people, are living with their parents or renting—the so-called “generation rent”. Inequalities are unfortunately increasing, not only in income but in wealth and assets, such as housing and land. Those inequalities, including the cost and availability of land, are key to addressing the housing crisis.

In addition to the effects of the plans on the building of affordable homes, there will undoubtedly be an impact on housing repair and regeneration programmes. The Local Government Association estimates that the loss in income from rent is equivalent to 60% of all local authorities’ total housing maintenance budget. That is significant. Ultimately, there will be an impact on both the integrity and the condition of the stock, and on maintaining decent home standards.

[Peter Dowd (Bootle) (Lab)]

Is my hon. Friend aware of any Government assessment of the medium to longer-term impact of the policy? If they denude associations of cash now, it saves the Government their £250 million or £300 million, but in the longer term, trying to claw back the lack of investment and denuding of the infrastructure might cost double or triple that.

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[Debbie Abrahams]

My hon. Friend makes a valid point that needs to be driven home. There is such a poor evidence base to justify the policy. The Government have calculated the savings to the housing benefit bill, but the potential impact in other areas is significant. As a former public health consultant—I qualified in the ‘90s—I can remember the housing issues such as the need for rehousing on medical grounds, which was commonplace due to the poor quality of housing. A lot has been done to improve housing conditions though the decent homes programme and so on, and we do not want to reverse that. It would be particularly harmful to tenants, and particularly the young.

[Naz Shah (Bradford West) (Lab)]

Is the Minister aware that the measure will disproportionately affect certain housing associations in my constituency that cater for larger families? We have had the bedroom tax, and these measures feel like an extension of that sanction, which particularly affects more vulnerable people, such as women fleeing domestic violence. The Black Women’s Support Project in Bradford will suffer; I know because had a conversation with the chief executive, as I have served on the board in the past.

[Debbie Abrahams]

Again, my hon. Friend makes a valid point. Yes, there will be a small reduction in rent, which will be reflected in a reduction in housing benefit, but the cumulative impacts on individual families and in other spending areas will be considerable.

My point is that the measures will particularly affect the very young, the very old and people with existing health conditions and disabilities. As we anticipate, that is a logical consequence of reducing the maintenance budget, because the quality of housing will be affected. What assessment has been made? It is clear that the provision will push more households into the private rented sector, where there are currently 1.5 million families with insecure tenancies who could be evicted with as little as two months’ notice. Homelessness and rough sleeping have risen over the past five years, with 54,000 accepted as homeless, up 36% since 2010, and 920 families with children being illegally housed in bed and breakfasts for longer than six weeks because there is no affordable housing. That figure has risen by 820%. Again, how is it anticipated the measures will affect the homelessness figures?

[Neil Coyle]

On the point about homelessness, is my hon. Friend aware that in London since 2010, the number of former armed forces members sleeping rough has risen elevenfold, and does she agree that that heaps shame on the Government’s attitude towards those who have served in our country’s armed forces?

[Debbie Abrahams]

My hon. Friend makes a valid point. People whom we should be supporting after their service to our country are unfortunately finding themselves without a roof over their head. I say “unfortunately”; there are means to prevent it. The measure will stop the roll-out of the affordable homes programme and have an impact on armed forces personnel and people leaving care, who are more likely to need affordable homes. A whole host of people will be impacted.

What assessment has been undertaken of the viability of registered social landlords? I know that we will debate that when we come to a later clause, but given the risks that people already face, for example from the introduction of universal credit and the lowering of the benefit cap, housing associations have a genuine concern about how they will measure it in practice. I refer to one of my own local housing associations. I mentioned the £15 million reduction in income from rent; it will have to deal with that, including through redundancies and by rowing back on some of the programmes by which it hoped to upgrade accommodation. What assessment has been made of the risks being shifted to housing associations?

Amendment 21 would compel the Secretary of State to produce a plan within 12 months of the provision coming into force to offset the impact of the reduction in rent, so that the building of affordable homes is not affected. We are asking the Government to say within 12 months how they will stop the building of affordable homes being pared back, as the LGA and the NHF anticipate.

[Peter Dowd]

I am sure that my hon. Friend is not aware of this; I do not know whether the Minister is aware, but it would be interesting if my hon. Friend could check it out in due course. Riverside Housing Association, which is one of my local housing associations, estimates that the rent reductions will require an additional internal subsidy of £12,000 per home built for rent, and an additional internal subsidy of £12 million for the current programme—a 50% increase. Are the Government aware of the implications for building when they take that much money out of the system in one fell swoop? Do they seriously believe that that will not have an impact on housing in the medium term?

[The Chair]

Order. Before I ask the hon. Member for Oldham East and Saddleworth to continue her speech, may I say that the Minister will be on his feet later, so if Back-Bench Members wish to ask him aw question they will be able to do so directly?

[Debbie Abrahams]

Thank you, Mr Owen, for that clarification. My hon. Friend makes a relevant point, and perhaps he will ask the Minister directly.

Amendment 85 would require the Secretary of State to produce a report on the availability of accessible and supported housing. Finally, amendment 184 would introduce a sunset clause so that there would be no further reductions in rent after 2020. These things have a way of continuing, so we want to ensure that it is clear that the Government intend there to be no further rent reductions after 2020.

[Mr Vara]

I am grateful to the hon. Lady for the measured way she has approached the debate and presented the case for her amendments. I am grateful to her for moving amendments 21 and 85, because they give me the opportunity to set out clearly why we have put these measures in the Bill.

The housing benefit bill for England in the social sector now stands at £13 billion, having risen by nearly a fifth over the past ten years. Rising rents in the social housing sector are fuelling that increase, with average rent increases in the social sector more than double those in the private sector over the past five years. The Government are determined to put welfare spending on a sustainable footing and reduce the deficit while protecting the most vulnerable. We made commitments to deliver £12 billion of welfare savings, and the scale of the housing benefit bill means that we must address it, including through social rents, if we are to reduce the deficit.

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[Mr Vara]

I appreciate that the hon. Gentleman is still reading the Bill, but when he gets further on he will find a subsequent clause that deals with exemptions, including local authorities or housing associations that might be in financial difficulty, and there are measures to deal with them.

To help further, the regulator will be on hand to assist housing associations in considering how they can deliver more efficiency and better value for money. My colleagues at the Department for Communities and Local Government continue to engage with all those concerned as they develop plans to meet the reductions. We acknowledge, however, that there might be some circumstances in which the reduction policy should not apply. Clause 20 therefore provides some statutory exceptions and for further provision to be set out in regulation. In clause 21 we have also allowed for circumstances in which the financial viability of a private registered provider might be jeopardised. In such circumstances a provider may apply to be exempt from the rent reductions; similar provision is made for local authorities.

As for the number of new homes being built, the Government remain absolutely committed to ensuring housing for those who cannot access the market, and we support the ongoing role that the housing association sector has to play in the supply of affordable housing, as well as driving more home ownership. There continues to be a role for housing associations in delivering the mix of housing supply that the country needs, as we have already seen with the delivery of 260,000 new affordable homes over the past five years. We are committed to delivering 275,000 homes by 2020.

We do not believe that there is a need for a plan or a report, as suggested in the amendments. Our approach is measured and will be good for tenants and taxpayers while building in safeguards for supported accommodation and the financial viability of private registered providers. On amendment 184, the Government have made a commitment to reduce rents for a period of four years from April 2016, which is made clear in clause 19 and the new schedule. I hope amendment 21 will be withdrawn.

[Debbie Abrahams]

The amendments have been drafted in consultation with a number of agencies, housing associations, the National Housing Federation and the Local Government Association. Moody’s has also criticised the Government’s measures. The Minister said that my right hon. Friend the Member for East Ham supports this measure, but he supports and has put his name to amendments 21 and 85.

[Mr Vara]

To clarify, I was simply saying that, on Second Reading, the right hon. Member for East Ham did not disagree with the 1% reduction. He agreed with it, but with caveats.

[Debbie Abrahams]

Amendment 21 reflects the concern about the affordable homes building programme, which is why we have asked for a plan. We are not convinced that the Government will follow through, which is why I have moved the amendment.

On the other, more general points, I gently refer the Minister to the Government’s own data on house building performance, which were published this summer. Unfortunately, since 2010 the Government have presided over the lowest level of house building in peacetime since the ’20s—those are the Government’s own figures. I will not press the amendment but, again, I refer the Minister to the figures on affordable homes. We are really concerned about what is happening. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Neil Coyle]

On a point of order, Mr Owen. I raised a point of order on Tuesday about a letter promised by the Minister for Employment. I now have a copy of the letter, for which I am grateful. There was clearly a mix-up, because it was sent some time ago. However, the letter does not answer the specific point about how the Government will assess the impact on disabled people in different areas.

On 17 September we discussed the impact on disabled people and carers and how to assess that impact more effectively. The Minister committed to providing an explanation of how that will be done. The letter I received talks about how Dr Simon Duffy has not responded to something for which the Department has asked—that is the block. I expected that the Department would outline what it is doing, not what it is not doing. I am keen to get more information on how the Government will address that.

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[Mr Vara]

The amendments relate to clause 20, which provides for an exception from the rent reduction requirements when a mortgagee takes possession of a property, or when a receiver is appointed by the mortgagee or the court, or where a property is sold by a mortgagee in possession or the receiver. This exception is intended to protect the value of stock held by all private registered provider landlords, to ensure that they can continue to use their assets as security for borrowing in the same way that applies in similar circumstances under the existing rent policy.

Our intention is that the rent reduction measures should be aligned as far as possible with existing policy on social housing, currently set out in the regulator of social housing’s rent standard guidance and the Government’s guidance for local authorities. Amendment 176 expands the exception from the rent reduction requirements in clause 19 so that it also includes cases where steps are taken to realise security under a different form of security, and where any person is appointed under a mortgage or different form of security arrangement to administer or sell the property.

Amendment 177 provides that the exception applicable to a sale by a mortgagee in possession or a receiver is not limited to the first person or body becoming successor in title of the registered provider on the sale or transfer of the property by a mortgagee or receiver, but extends to all subsequent purchasers or owners. It also expands the exception to cases in which the property is sold under a different form of security arrangement.

Amendment 149 clarifies that events for which the regulations may provide may include periods when the rent payable by a social tenant is temporarily reduced or waived. Such provision could be used to clarify how the rent reduction should apply when a registered provider has temporarily reduced or waived a tenant’s rent—for example, because they are making repairs to the property.

The details will be set out in the regulations. Without these amendments, there would be an impact on the private registered provider sector, potentially reducing the value of all social housing assets currently being used for security for borrowing, which would lead to a need for more security, and preventing them from borrowing more to build the homes that we need.

[Debbie Abrahams]

I should like to make a reference to my amendment, if I may.

[The Chair]

We will be coming to that in the next group.

[Debbie Abrahams]

In which case I will leave my remarks until then.

Amendment 176 agreed to.

Amendment made: 177, in clause 20, page 19, line 47, leave out paragraph (d) and insert—

‘( ) If a registered provider’s interest in property that consists of or includes social housing—

(a) was mortgaged or made subject to an arrangement other than a mortgage under which the interest in property was security for the payment of a sum or sums, and

(b) is sold or otherwise disposed of after the coming into force of section19 by—

(i) the mortgagee or a person entitled under the arrangement to do so,

(ii) a receiver appointed by the mortgagee, by a person entitled under the arrangement to do so or by the court to receive the rents and profits of the interest in property, or

(iii) a person appointed under or because of the mortgage or the arrangement to exercise powers that consist of or include the sale or other disposal of the interest in property,

section 19 ceases at that time to apply in relation to that social housing.”—(Guy Opperman.)

This amendment expands the exception so that, where there is a sale of a registered provider’s property by a mortgagee or receiver, the purchaser and all subsequent purchasers are excepted from the rent reduction requirements in clause 19. It also expands the exception to cases where the property is sold or otherwise disposed of under a different form of security.

[Debbie Abrahams]

I beg to move amendment 109, in clause 20, page 20, line 5, at end insert—

“(e) the accommodation is specified accommodation, as defined in the Housing Benefit and Universal Credit (Supported Accommodation) (Amendment) Regulations 2014.”

To provide that the mandatory 1% annual reduction in social housing rents will not apply to the tenants of “specified accommodation”.

I apologise for the confusion earlier, Mr Owen. Clause 20 sets out certain exemptions to the 1% reduction in rent for social housing providers, but the Opposition believe that there has been a major omission, which amendment 109 would address. It would include “specified accommodation” as defined in the Housing Benefit and Universal Credit (Supported Accommodation) (Amendment) Regulations 2014. I am grateful to Women’s Aid, Homeless Link, Sitra, Unison, St Mungo’s, the National Housing Federation, the Housing and Support Alliance, YMCA, Crisis, the Salvation Army and Centrepoint, which have all made a compelling case for the amendment.

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[Peter Dowd]

Does my hon. Friend agree that Government policy on parity of esteem for people with mental health problems, which is trumpeted in relation to health, is not only about health, but about a range of social services, including housing? The Government proposal potentially directly affects parity of esteem for people with mental health problems.

[Debbie Abrahams]

Absolutely. My hon. Friend makes a powerful point. Those housing providers provide housing and support to a very vulnerable group, including people with mental health conditions. The measure will affect their opportunity and ability to live independently and well.

The impact on accommodation for homeless people with support needs demonstrates how damaging the change would be for supported housing as a whole. Over 90% of residential homelessness services rely on housing benefit as a key funding stream. One homeless organisation in the north-east of England has modelled the impact of the change on the 300 beds of supported accommodation that it provides, which accommodate 1,400 disadvantaged people a year. The impact of the 1% rent reduction, assuming that other costs increase by 2% or 3% a year, is that 50% of its accommodation projects will be financially unviable in 2016-17. It is absolutely imminent. That is key. The pace of the clause’s implementation means that we will be facing problems in the next few months and I hope the Minister responds appropriately. It gets worse, I am afraid: the organisation has mentioned 100% financial unviability by 2017-18. What will happen to that vulnerable group of people?

A second organisation, St Mungo’s Broadway, provides accommodation support to 3,800 people each year across London and the south-east of England. I have visited the project here and in the midlands. St Mungo’s estimates that the 1% annual rent reduction requirement will result in it losing £1.25 million in rental income by year 4—between £250,000 and £300,000 each year. Taking into account the rental income that the organisation anticipates over that period, the overall impact on its finances over the four-year period is a loss of £4 million. That loss of income will force some projects to close, resulting in the loss of accommodation for homeless and disadvantaged people.

Mr Owen, I expect that you have experienced an increase in rough sleeping in your constituency. I was shocked recently, in the last month or so, when I arrived back in Manchester from Parliament late one night. Every 50 metres there was somebody sleeping rough. The fact that the measures will affect organisations such as St Mungo’s is serious. I have mentioned the groups of people supported by those housing providers. The providers have estimated who will be affected in percentage terms. They expect that people with learning disabilities and physical health problems, people who have slept rough and people with a history of offending, and people with alcohol, drug and mental health problems who have been accessing their services for support needs, will be affected.

As has been mentioned, the measures will have an enormous impact on services working with other disadvantaged people. A large national provider of supported housing has estimated that the change will lead to the loss of 104 schemes, removing 1,969 support spaces for clients, including 228 spaces for people experiencing domestic violence. A small specialist learning disability provider will have its operating margins reduced to 0.2% and will be forced to cancel all proposed development of learning difficulty schemes. A large national organisation will be forced to reduce planned development of extra care by 400 units, including units specifically to help people home from hospital. Such organisations reduce the pressures that our beleaguered NHS is experiencing—the measures will have a direct impact on the NHS.

There is a precedent. The principle of treating supported housing separately from other social housing for welfare reform purposes was recognised in the previous Government’s proactive decision to keep housing costs for specified accommodation out of universal credit and the benefit cap calculations.

[Jess Phillips]

Does my hon. Friend want to pay credit to Ministers for removing specified accommodation during the previous Government? It most certainly meant that, at the refuge where I worked at the time, we could maintain operations exactly as they were, and in fact develop some others. The Minister spoke earlier about listening. Perhaps we should pay credit to the Government for listening on that occasion.

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[Debbie Abrahams]

My hon. Friend is absolutely right. That is a valid point, and I hope the Minister can do so. On that note, I will stop there.

[Neil Coyle]

In rising to speak to the amendment, I just want to say that I welcome the Minister’s commitment this morning to write to me so I can find out a bit more information. He suggested that I was trying to make a name for myself—I believe that was the term he used. I certainly do not intend to upset him in any way, not least because I understand he has a black belt in martial arts.

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[Mr Vara]

That issue commands huge respect across Government and on both sides of the political argument. There is discussion and debate across Government to make sure that brave men and women who are prepared to put their lives on the line for our safety and security get the best possible treatment. There are clearly still issues that need to be resolved. It is an ongoing debate. I am very aware of the situation to which the hon. Gentleman refers; there are RAF bases in my constituency, and I am only too aware of how we need to look after those people a lot better. We have made progress in the past five years, but we need to do more and should remain vigilant.

I believe that there are sufficient safeguards in place to ensure the continued financial viability of housing providers while balancing the need to support tenants who should benefit from a reduction in their rent. I urge the Opposition to withdraw the amendment.

[Debbie Abrahams]

I am grateful to the Minister for that positive response and look forward to the regulations he mentioned setting out the criteria on requests for exemptions that providers of supported housing may put to the regulator. I believe that the Minister recognises the dire situation those providers are in. I also thank my hon. Friend the Member for Bermondsey and Old Southwark, who provided us with the wider context about, for example, how the end of the independent living fund will affect local authorities’ provision for supported accommodation; that is very relevant.

I differ from the Minister in my interpretation of the homelessness situation at the moment. We can trade off figures, which I do not think is helpful. We need to move beyond that. I have the Government figures here, and in the past five years, for example, there has been an 840% increase in the number of families with children who have been declared homeless and are living in bed-and-breakfast accommodation. The situation is certainly not rosy. We have anecdotal evidence of that ourselves. However, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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[Mr Vara]

We have recently been talking about exceptions and exemptions and it might be helpful if I clarify the position. We will set out the criteria for exceptions in the regulations. When we talk about exemptions, the financial viability conditions are in the Bill. We can also set out other conditions for an exemption in the regulations. I hope that that is helpful in drawing a distinction.

The amendments seek to introduce flexibility into the exemption process in relation to clause 19. Amendments 154 and 161 allow a direction to be made in relation to only some of the social housing that a private registered provider or a local authority have, ensuring that exemption can be targeted. Amendment 155 enables the regulator of social housing, the Homes and Communities Agency, to publish guidance on steps that a private registered provider should take before seeking an exemption. Amendments 156 and 162 give the Secretary of State power to prescribe conditions other than serious financial difficulties in which an exemption may be granted to a local authority.

Amendment 154, 155 and 161 recognise that exemption is a tool of last resort and, if needed, should be used in as targeted a way as possible. Amendments 156 and 162 provide for greater flexibility in the exemption regime.

[Debbie Abrahams]

I am grateful to the Minister for his clarification. We are talking about the financial viability of supported housing providers and, more broadly, housing associations. The Government are considering the problems that they face, so has there been any assessment of the housing providers whose viability could be threatened as a result of the measures? Will one be undertaken? I am grateful for the detail on the amendment, but it seems that implementation is already anticipated. Should there not be a step before that?

[Mr Vara]

We are not anticipating difficulty. We are trying to recognise what might happen in future, so we are making it absolutely clear that, although we propose a 1% reduction, where financial viability is threatened, there are measures in place to deal with it.

We must recognise that the regulator is there to help, assist and advise. Its job is to assist, but as a default mechanism we have those provisions. However, as far as I am aware, we do not anticipate anyone having difficulty. I reiterate that we are confident that housing associations and local authorities are robust organisations that can deal with the 1% reduction. It must be considered in the wider context. Individuals and other organisations throughout the country are having to put up with difficulties. We are asking for a 1% reduction. I repeat the comments made by David Orr, chief executive of the National Housing Federation. I will not repeat the whole quote, as I gave it earlier, but simply two lines. He said that

“in truth, there is no sector anywhere that is not still capable of making further efficiency savings. That is as true in our sector as it is anywhere else.––[Official Report, Welfare Reform and Work Public Bill Committee, 15 September 2015; c. 91, Q144.]

Amendment 154 agreed to.

Amendments made: 155, in clause 21, page 21, line 11, at end insert—

“( ) The regulator may publish a document about the measures that the regulator considers could be taken by a private registered provider to comply with section 19 and to avoid jeopardising its financial viability.”

This amendment enables the Regulator of Social Housing to publish documents relating to the condition in clause 21(4).

Amendment 156, in clause 21, page 21, line 13, after “(9)” insert “or (9A)”.

This amendment and amendment 162 provide that the Secretary of State may issue a direction if an alternative condition is met, that is, a condition that the circumstances of the local authority must satisfy requirements prescribed in regulations by the Secretary of State.

Amendment 157, in clause 21, page 21, line 18, after “for” insert ““at least”.

This amendment and amendment 158 permit a local authority to which a direction in the terms of clause 21(7)(b) is issued to make a reduction in rent, instead of keeping the rent the same.

Amendment 158, in clause 21, page 21, line 19, for “the same as” substitute “no more than”.

Amendment 159, in clause 21, page 21, line 21, after “required” insert “at least”.

This amendment permits a local authority to which a direction in the terms of clause 21(7)(c) is issued to make a greater reduction in rent than the reduction specified in the direction.

Amendment 160, in clause 21, page 21, line 22, at end insert—

“(d) a direction that section19 is to have effect in relation to a local authority specified in the direction as if section19(1) required the authority to secure that the amount of rent payable by tenants of their social housing increased by no more than the percentage specified in the direction.”

This amendment provides for directions that exempt a local authority from the rent reduction requirements in clause 19 but limit what increase in rent the authority may impose.

Amendment 161, in clause 21, page 21, line 24, at end insert—

“, and

(b) the social housing in relation to which it is to have effect.”

This amendment enables a direction to affect only some social housing of a local authority.

Amendment 162, in clause 21, page 21, line 27, at end insert—

“(9A) The condition in this subsection is that the circumstances of the local authority satisfy requirements prescribed in regulations made by the Secretary of State.”

Amendment 179, in clause 21, page 21, line 31, leave out subsection (11).—(Guy Opperman.)

This amendment is consequential on amendment NC22.

Question put, That the clause, as amended, stand part of the Bill.

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[Debbie Abrahams]

New clause 14 and amendment 130 make provision for the Department to recover costs made in administering the payments to relevant providers for the lease or hire-purchase of motor vehicles for those in receipt of the higher rate mobility component of disability living allowance or the enhanced mobility component of PIP.

Currently, around 620,000 people lease vehicles through the Motability scheme for an average of £3,000 a year over three years. Concerns have been expressed about the number of people who previously qualified for the higher rate mobility component of DLA, but who failed to qualify for the enhanced rate of the mobility component of PIP and so no longer qualify for the scheme. As the Minister is aware, about 360,000 current Motability scheme users will be reassessed between October 2013 and 2018.

What assessment has the Minister made of the numbers of people who to date will no longer be eligible for the Motability scheme? In addition, will the Minister inform the Committee of the cost to the Department of administering payments to providers, as outlined in the new clause? Will she estimate how much per lease the recovery of DWP expenses will cost? Furthermore, what estimate has she made of the recoverable expenses as a percentage of the overall average leasing or hire-purchase agreement? When will the Government produce an impact assessment for the provision?

I am sure we all recognise the importance of the vehicle-hire schemes to disabled people, and of the benefits that the independence of having a suitable vehicle brings in health, social, work and financial terms. My father-in-law was registered blind and, through a mobility scheme, my mother-in-law was able to drive him around. The independence that that gave him was very important to him.

Opposition Members would welcome the Minister’s assurance that the changes outlined in new clause 14 and amendment 130 will not negatively impact on a disabled person’s ability to secure access to vehicle leases and rental agreements, and the independence and the lifeline that they provide. We would also like assurances that there will be no further shifting of costs to disabled people.

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[Priti Patel]

Let me start by thanking the hon. Members for Bermondsey and Old Southwark and for Bootle for their contributions, and particularly the hon. Member for Bermondsey and Old Southwark, who has experience in this area from his professional background. For the record, I also thank the third party organisations that have submitted written statements to the Committee and its members. The hon. Gentleman gave some examples—not attributable ones—but I repeat my offer to the Committee: if there are cases that he or any other member would like me to look at, I would be happy to do that and to meet them to give support and assurance.

New clause 18 seeks to create a duty to increase the rates of disability living allowance and PIP by the highest of the CPI, the rise in average earnings or 2.5%. DLA and PIP are benefits that offer support, as we have heard, for those needing care or supervision as a result of their disability. New clause 18 would require the Secretary of State to review those rates every tax year, considering the effect on them if they were increased by earnings, prices or 2.5%, and, within three months of concluding that review, to lay an order increasing them by the highest of earnings, prices or 2.5%.

Making this change to the Welfare Reform Act 2012, rather than to the Social Security Administration Act 1992, would create a second review process of DLA and PIP rates, which would overlap with the general review of benefits conducted by the Secretary of State every tax year. That would create uncertainty for benefit recipients, who may find their benefit rates reviewed and announced at different times. Furthermore, the change would remove the alignment between the rates of the care components of DLA and the daily living components of PIP, and those of the attendance allowance, causing further confusion for recipients between working and pensioner age.

This discussion has been highly relevant, however, because we all understand and share the desire of hon. Members who have contributed to the debate to protect and to support those in receipt of DLA and PIP. That is why we have in place many protections, which I would like to set out. We already continue to uprate DLA and PIP by price inflation; specifically, we have exempted certain benefits relating to the additional costs of disability and care from the benefits freeze. Those include DLA and PIP, as well as carer’s allowance, attendance allowance and the support group component of ESA. We have also exempted recipients of DLA and PIP from the benefits cap. The welfare system continues to provide support and to protect those recipients. As we have heard, there are families who cannot work and require the support of DLA and PIP, which is why we have these exemptions. We have also ensured that both DLA and PIP remain universally accessible benefits and have committed not to means-test either. We have also committed to keep them non-taxable. We have built extra protections into the system for claimants who may need extra support.

That brings me on to new clause 4. During the course of our welfare reform programme, the Government have always made it clear that, in our steps to achieve a higher-wage, low-tax and low-welfare society, we will always provide support for those with the greatest needs. In particular, PIP recognises the unique challenges of claimants who are terminally ill. Special rules and criteria for the terminally ill have been introduced to ensure that the PIP system handles such cases both efficiently and sensitively to reduce burdens on individuals and their families at what is inevitably a difficult time. PIP has a fast-track system to allow us to process special rules claims more quickly, with claims, on average, being cleared within six working days. Some 99% of those who apply under the special rules are awarded the benefit, and we have ensured that each of those individuals is guaranteed the enhanced rate of the daily living component.

Evidence for special rules cases is reviewed on a paper basis, and we do not expect individuals applying in such circumstances to undertake any face-to-face assessments. We have worked closely with stakeholder organisations to design a system that allows us to make the correct decisions in such instances without the need for a face-to-face assessment, thereby reducing intrusion and stress for claimants and families. It also helps us to deliver vital support for claimants in the most practical way as soon as possible.

In many cases where an individual may not be aware of their prognosis, or where that might be a particularly distressing subject to discuss, we have worked to design the system to support family members, or representative third party organisations, through the claims process to ensure that individuals can still access the support to which they are rightly entitled in a way that is sensitive to their needs. Through those steps, we have a clear focus on delivery for the individual. It is also important that case managers still have sufficient time in which to consider an individual’s case to ensure that they are being awarded the correct level of support and benefits. Reducing that time, as suggested, would potentially increase the risk of an incorrect payment being made. In such cases, the claimant would either be left with less support or little support. Obviously, we want to ensure that we are not creating any arduous or difficult processes. We are focused on supporting individuals.

[Debbie Abrahams]

Will the Minister clarify that point? My hon. Friend the Member for Bermondsey and Old Southwark has said that that happens automatically in the current DLA system. It happens in the DLA system, but not in the PIP system. Why would there be an issue if it is transferred to the PIP system?

[Priti Patel]

As I have just said, that would undermine its value. The best way to put this is that, importantly, it is about the individual and ensuring that we have the right rules so that we can support the individual in the right way.