Welfare Reform and Work Bill

Earl of Listowel Excerpts

Monday 21st December 2015 Lords Chamber

[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.

[The Earl of Listowel (CB)]

My Lords, I will speak briefly to my Amendment 104BB. I am grateful to the noble Earl and my noble friend Lady Meacher for adding their names to it, reflecting our earlier debates about the great concerns around increasing homelessness. Clearly these amendments are important because we wish to encourage landlords to take low-income tenants to address that homelessness. I declare my interests as noted in the register as a landlord.

I will not go into the details of this amendment because the noble Earl did that already. My concern is that paying HB directly to claimants may compound the homelessness issue we discussed earlier and contribute to a reduction in social housebuilding. Many of those receiving housing benefits may already be in debt, feel tempted to use their rent to pay off such debts and consequently become homeless. It may be that the eight-week limit that has been discussed will protect them from that. Social landlords are concerned that direct payment to tenants of HB may lead to tenants accruing arrears. Pursuing arrears is a costly business. Social landlords already face reduced incomes thanks to the reduced rents that this Bill introduces. Consequently, they may have less money to build more homes and we may see an impact on the building of social housing. I have two questions for the Minister on the effect of the move to direct payments of HB to claimants. What level of cost to social landlords does the Minister anticipate arising from that move to direct payments? What impact on homelessness, if any, does the Minister anticipate?

[Baroness Sherlock]

My Lords, Amendments 104BB in the names of the two noble Earls, Lord Listowel and Lord Cathcart, and the noble Baroness, Lady Meacher, would address the question of direct payment. Direct payment was the subject of considerable discussion during the passage of what became the Welfare Reform Act 2012, together with deliberations on the frequency of payments and split payments, not to mention jam-jar accounts.

My noble friend Lady Hollis asked about the research mentioned by the noble Earl, Lord Cathcart, from the National Federation of ALMOs and ARCH. It did indeed show that 89% of universal credit claimants were in arrears and that 34% of them were eight weeks in arrears, so they were in receipt of an APA. That is a significant proportion, so there clearly is an issue that they have picked up on about the extent of arrears—hence the question of direct payments.

We know that the Government’s starting point is that in the overwhelming majority of cases they want and expect universal credit to be paid as a single monthly payment in arrears to the claimant. But they have set down criteria for considering alternative payment arrangements in limited circumstances for the payment of the housing element of universal credit, invariably the first in order of priority. The guidance states that when arrears reach one month’s rent the DWP will review the situation, following notification by the claimant or the landlord, and when they hit two months or eight weeks, either the landlord or the claimant can request an APA. There is no automatic right to one because the Government are still clinging to the concept that managing benefits should mirror the choices in managing money that they say those in work have to make.

However, if an APA is in prospect, this would normally start with personal budget support followed by a managed payment to the landlord. The guidance sets out the tier 1 and tier 2 factors which will be considered for an APA. But having theoretical opportunities to have direct payments is one thing; what matters is how the rules are being applied in practice, so perhaps the Minister can help us here. We know that through to 3 December 2015, there have been 287,310 universal credit awards. Will the Minister tell us how many of them had a housing element included and how many have had an alternative payment arrangement? How many requests for direct payment to a landlord have been made by either landlord or claimant and, of those, how many were approved and how many rejected? I accept that the Minister may need to write to me on these points, but it would help us understand the scale of the problem and whether the research that has been identified is in fact representative of the situation for universal credit claimants more broadly.

Amendment 104BA in the name of the noble Earl, Lord Cathcart, seeks arrangements whereby payment of arrears in respect of a former property can be made by direct payment of a current universal credit claim. This has obvious difficulties because maintaining the current home should be the priority. There must be a risk that adopting that suggestion could lead to a round of evictions for rent arrears as arrears build up in a current tenancy in order to satisfy the arrears on a previous tenancy. There could be further complications because a universal credit award may not cover identical households for the current tenancy and the previous tenancy, so it is not clear how it might be apportioned.

Amendment 104B in the name of the noble Earl, Lord Cathcart, and the noble Lord, Lord Best, seeks a power for the Secretary of State or somebody else to supply information relating to any relevant social security benefit to a landlord, depending on the written authority of the tenant. Noble Lords will be aware of regulations enabling the limited supply of social security information to social landlords, which is governed by the Data Protection Act. I understand the potential benefit to landlords of this, but it raises issues of a different magnitude given the sheer number of private landlords, let alone the capacity issue, so I will be interested to know how the Minister thinks that that might be approached.

There may be an issue here with regard to arrears and universal credit, and if the Minister is not minded to accept this amendment, he needs to come back to the House to suggest how the Government are going to go about dealing with this. I look forward to hearing his reply.