Welfare Reform and Work Bill

Earl Cathcart Excerpts

Monday 21st December 2015 Lords Chamber

Moved by

[Earl Cathcart]

104B: After Clause 20, insert the following new Clause—
“Power to supply relevant social security information to accommodation provider
(1) The Secretary of State, or a person providing services to the Secretary of State, shall have power to supply information relating to any relevant social security benefit to a person who provides accommodation to the claimant for the relevant benefit so long as the claimant has given written authority for the provider of the accommodation to receive such information.
(2) “Relevant social security benefit” has the same meaning as in section 121DA(7) of the Social Security Administration Act 1992 (interpretation of Part VI).”

[Earl Cathcart (Con)]

My Lords, the three amendments in this group all relate to private landlords, who now account for 4.2 million properties for rent and more than half of all rented properties. However, as of August, less than a third of all housing benefit claimants lived in private rented accommodation. Why so few? Why is there this bottleneck deterring private landlords from taking on benefit claimants? As a landlord, I have claimants in my properties, but it is not made easy. Given the choice of a couple in work or a couple on benefits, for the landlord it is a no-brainer. Why take the risk, the hassle and the uncertainty of renting to the couple on benefits?

As the rental market tightens due to increased demand, it is important to encourage and support private landlords to house those in receipt of universal credit so that they can access accommodation, otherwise they will find themselves at the back of the queue. These amendments explore ways to do just that.

The first amendment is about giving the power to give the relevant universal credit information to the landlord. Landlords need assurances that tenants have the funds available to pay their rent. Without these, renting to them becomes a risky business. Currently, the private landlord can get no information about the amount of universal credit and when it will be paid. For those tenants in work, landlords will always ask for references from employers to establish their income to ensure that the funds are available to cover the rent. Surely it must be common sense for landlords to be able to do likewise for those in receipt of benefits. I understand that social landlords are able to gain such information, so why not private landlords? Surely what is good for the goose must be good for the gander. I acknowledge that it is quite difficult to find out how much benefit will be available before the tenant moves in, but it is not beyond the wit of man to publish a ready reckoner to help everyone see where they stand, according to each local housing area’s allowances.

Amendment 104B would insert a new clause to ensure that there is a legal power, where the tenant provides written consent, for the Department for Work and Pensions to disclose to all landlords information on the housing element of the tenant’s universal credit, including the amount, or approximate amount, and when it will get paid.

The second amendment relates to rent arrears. As benefit claimants may often move home, including to seek work, landlords need the security of knowing that tenants in receipt of benefit cannot simply stop paying their rent and leave their property. Currently, rent arrears can be recouped where a benefit claimant is still living in the house to which the arrears apply. There is, however, little or no opportunity for the landlord to recoup when such tenants move house, unless they are prepared to go through a lengthy and costly court process.

I cannot see the logic in allowing the landlord to recoup the arrears if a tenant is still in the landlord’s property, but not if the tenant has moved. I realise that there will probably be a hierarchy of deductions that can be made from future universal credit—no doubt future rents, council tax, utility bills, et cetera, would come first—but if even only a percentage of the arrears was paid each month, it would act as a disincentive to tenants to rack up the arrears in the first place and ensure that the landlord was not left high and dry once the tenant had jumped ship. Amendment 104BA would insert a new clause requiring the Secretary of State to make regulations to ensure that rent arrears follow a tenant in receipt of universal credit and that landlords affected have a clear route to reclaim lost rent in such circumstances.

The third amendment concerns making payment of the housing element of universal credit direct to the landlord, with the written consent of the tenant. It is vital that landlords have full confidence that they will be paid in full and on time if vulnerable tenants are to have access to the rented homes they need. This is especially important since the Government took away the option for tenants to ask that the housing element of universal credit be paid directly to the landlord, as was formerly allowed under housing benefit. At first, I thought that that omission was an oversight, but I now understand that the Secretary of State wants all the money to be paid to the tenants so that they learn to become responsible for managing their money—a great idea but, sadly, I do not think it is working.

A survey conducted this year by the Residential Landlords Association found that of those private sector landlords who had tenants on universal credit, 63% had tenants in arrears on their rent. Of this group of landlords, 85% had contacted the Department for Work and Pensions to have a tenants’ housing element of universal credit paid directly to them after eight weeks of arrears, as is their entitlement. More than 57% of this group said that it had taken the department more than five weeks to respond to the request, with all the consequent difficulties this caused the landlords in not getting paid.

I understand that the problem is even worse when one looks at social housing. A survey carried out by the National Federation of ALMOs and ARCH—the Association of Retained Council Housing—found that nearly 90% of council house tenants in receipt of universal credit are in arrears. I had to look that up again: I could not believe it, but apparently it is so.

[Baroness Hollis of Heigham]

I declare an interest as a former chair of both a local housing committee and a housing association. Given that universal credit is paid at the end of the month and this might not be coterminous with housing associations or social housing, what does the noble Lord regard as an arrears? Is he talking about more than eight weeks’ failure to pay the rent, because five to six weeks might simply be the failure to co-ordinate payments, given the move, unfortunately, to monthly payments?

[Earl Cathcart]

I think that I caught the noble Baroness’s question. I do not think it is after eight weeks: I think it is in arrears—that is, they have not paid the monthly rent on time and they have not paid the next month’s rent on time, et cetera. I hope that that answers the noble Baroness’s question.

[Baroness Hollis of Heigham]

I meant that the arrears might simply be a technical cash-flow issue, and not a legitimate arrear, because if, for example, the rent is due before the payment of universal credit, there will be a period when there will be arrears. The noble Earl will understand my point, but the arrears that matter are the arrears that become irrecoverable, which usually, in my experience, means eight weeks.

--- Later in debate ---

[Earl Cathcart]

Yes, I imagine that it is before the eight weeks as well. As I said, I found the figure of 90% to be quite extraordinary, so I do not believe that it is working in the social housing sector either. All this could have been avoided if the rent had been paid direct to the landlord.

In addition, in October 2012, a survey of more than 1,000 landlords carried out by the Residential Landlords Association and the Scottish Association of Landlords found that more than 91% of landlords were less likely to rent to tenants on benefit as a result of the decision not to automatically make the payment of the benefits direct to the landlord. Not making the payment direct to the landlord is not helping the landlords and not helping the tenants; indeed, all the evidence backed by Shelter, Crisis and the Money Advice Trust has been that paying it direct to the landlord was popular with tenants. They were assured that their rent was covered before they decided how else to spend their money.

I believe that in Northern Ireland the benefit is to be paid direct to the landlords, as, too, in Scotland. Therefore, why not in England? Amendment 104BB would give tenants the free choice to have the housing element of their universal credit paid direct to their landlord. I hope my noble friend will look favourably on these three amendments, and give landlords, tenants and, indeed, me an early Christmas present. I beg to move.

[Lord Best (CB)]

My Lords, I support Amendment 104B in the name of the noble Earl, Lord Cathcart, to which I have added my name. This would empower local authorities and the DWP to give landlords details of entitlement to housing benefit—in future to the housing element in universal credit—where a prospective tenant gives written consent for this information to be imparted. In parallel to efforts to come down heavily on so-called rogue landlords, the Government should try wherever possible to be supportive of good landlords, of which there are, thank goodness, plenty of examples. The nation needs a strong, responsible private rented sector. Legislation should surely be supportive of those willing to invest in decent rented housing, perhaps particularly in rural areas, where some large landowners often act in a similar way to a local housing association.

However, we know that many landlords are nervous of offering a tenancy to those on low incomes who could have difficulty paying the rent, particularly now that welfare reforms have diminished benefit support for these households. Landlords who want to do the right thing, who charge reasonable rents and who are keen to help those in their local communities should not be deterred; they can be reassured that prospective tenants have an entitlement to universal credit and can afford to take on a tenancy, so long as those responsible for administering benefits are willing to explain the position. If officials administering benefit do not feel able to discuss an individual case—even where, as in the amendment, the individual gave written consent for this—I commend the idea that they be required to share enough information with each landlord to enable them to make an informed decision.

Perhaps I could also stand in for my noble friend Lady Meacher and add support to Amendment 104BB, which is also in the names of the two noble Earls, Lord Listowel and Lord Cathcart. This also addresses a new barrier to private landlords accepting low-income tenants. It calls for the facility for payment of the housing element in universal credit to be made direct to landlords where the tenant requests it. I know the Minister was able to give some reassurance on this score to councils and housing associations by ruling that direct payments should be made easy where a tenant is eight weeks or more in arrears, and also by allowing direct payment of rent from day one for the most vulnerable tenants. However, a lot of private landlords will simply not let to anyone on benefits—that is, in receipt of the housing element of universal credit—if there is the prospect of an eight-week loss of rent before a tenant’s request for direct payment can be activated. For the private rented sector, direct payments seem sensible from the perspective of tenants as well as all those who want to encourage private landlords to be helpful and supportive to those in receipt of benefits. I support these amendments.

--- Later in debate ---

[Lord Freud]

I will not resist the temptation of pointing out that there is no such thing as a bedroom tax; it is the removal of the spare room subsidy, and I will be answering a Question on that tomorrow. Interestingly, the direct payments project provided a lot of insight into this issue. It started off with direct payments and then people started taking on the removal of the spare room subsidy as well. I will try to find the precise figures for the noble Baroness, as I am speaking slightly from memory. We found that the people who had learned how to go through the direct payment process were able to handle the removal of the spare room subsidy more efficiently than others. I will aim to get the noble Baroness chapter and verse on that.

[Earl Cathcart]

My Lords, I am disappointed by my noble friend’s response to these three amendments. He seems to have said no to all three of them and I find that very disappointing. I do not think he has said anything this evening that has given any encouragement to private landlords to take on people who are on universal credit. In fact, he has probably reinforced the idea that one should not take on people who are on benefits, but that is not what my amendments are trying to do; they are intended to get people on benefits to go into private rented accommodation. I do not think that my noble friend has helped at all this evening, but I will read what he has said more carefully tomorrow or over the holiday period. At this stage, I beg leave to withdraw the amendment.

Amendment 104B withdrawn.