Welfare Reform and Work Bill

Earl of Listowel Excerpts

Wednesday 27th January 2016 Lords Chamber

[Lord Shipley (LD)]

My Lords, I will not detain the House that long, but I want first to pay tribute to the noble Lord, Lord Best, in particular and to other colleagues for the progress that has been made in discussions with the Minister on this important matter. Some associations would find it difficult to manage properly with such a reduction.

I received two letters this morning. One was from the Minister, the noble Lord, Lord Freud, explaining the policy the Government are now following, which is a welcome change and I thank him for that. I hope it will prove to be a durable, long-term solution to the problem. I also had a letter from the noble Baroness, Lady Williams of Trafford, also dated 27 January. I had asked a question about the cost of supported housing being exempt from the 1% rent reduction, and I had been told that the total sum involved was around £75 million a year. There has not been clarity about that sum. I am surprised that the Government do not seem to know the cost they will have to meet, given the decision not to implement the measure for one year and, hopefully, for longer. Is there a figure to which the Government are working? I look forward to the Minister’s reply because when we are discussing policy in your Lordships’ Chamber, it is important that we have some idea of the sums involved. If it proves to be true that the figure is £75 million, that is not in fact a significant sum.

As I say, I look forward to hearing the Minister’s reply. I welcome the progress that has been made on this matter, which will be very gratefully received by many people outside your Lordships’ House.

[The Earl of Listowel (CB)]

My Lords, having six weeks ago spoken to a mother who had just moved into a refuge with her daughter and granddaughter, and heard from her about the years of abuse she had experienced in her family home, I am very grateful to my noble friends, noble Lords and the Minister for the announcement that he has made today.

[Lord Kerslake (CB)]

My Lords, I declare my interest as chair of Peabody and president of the Local Government Association. I support Amendment 50 and wish to speak specifically to Amendments 53, 61 and 63. I will keep my comments brief as I am conscious of the hour.

I add my welcome to the movement and the moratorium referred to by other noble Lords. This is a demonstration of the Government listening and acting, which I welcome. I reinforce the importance of taking early decisions and not using the whole year for the review process, not just because of the uncertainty for existing schemes but for investment in new schemes that are so desperately needed.

Amendment 53 follows on from the debate we had in Committee, when we debated the very abrupt move from the 10-year plan of CPI plus 1% for rent increases to a four-year period when there would be a 1% reduction per annum. We had a considerable debate on what the impact of that change of policy would be. In tabling an amendment in Committee, I was ever hopeful that after the four-year period the Government might return to the original 10-year plan. However, the noble Baroness, Lady Williams, made it clear that that was not the Government’s intention and that they would take a decision on future rent movements in four years’ time. Given the difference of view on this issue, with the Institute for Fiscal Studies clearly saying that there will be a loss of housing association new build as a result of this policy and the Government’s view that the figure will be absorbed through efficiencies and reductions in surpluses, it seems to me imperative that an evaluation is undertaken before policy is set in four years’ time. I emphasise that it should be an evaluation, not simply monitoring the existing policies, and that that evaluation should be independently commissioned.

There is plenty of precedent in government for doing this—for example, with the new homes bonus, where such an independent evaluation was produced and published, and, indeed, influenced government policy on the bonus going forward. It is good practice for government when they introduce such a significant change to not just monitor the impact of that change but to evaluate its impact in the widest sense. That is why I think this amendment is so important. I would like to hear from the Minister what the Government’s view of this is but also how they expect to assess this impact.

Amendments 61 and 63 come together because they relate to social rents and affordable rent. I take very seriously the debate we had yesterday on the Housing and Planning Bill, and particularly the Minister’s view that we should do everything possible to maximise new housebuilding in this country. I endorse that view, whatever that new housing happens to be. This issue is specifically about new build schemes and the flexibility there has hitherto been for setting rents at the commencement of those schemes. This relates not to the viability of the housing association but to the individual schemes. It is why I have tabled the amendments which perhaps require a bit of elaboration.

When a housing association considers its investment programme in new supply, it looks at two things. First, it looks at its wider viability as a housing association and the risks attached to the scale of the programme it is undertaking. The second thing is to look at the viability of the individual scheme before it commits to it. In some cases the scheme will be highly viable and profitable and would go ahead regardless of this rent reduction. In other cases there will be schemes that were not viable before and with the rent reduction would most certainly not be viable now.

However, there is a small but important group of schemes which are on the margin of viability, with risks that are evenly balanced. Having the flexibility to start the rent at a slightly different point at the time the scheme starts will crucially influence whether those schemes go ahead and whether they do so now. This is the particular issue that I am focused on. It will not be a big cost but the numbers could be important. Given the crisis that we face on housing, “every little helps”. I hope that Ministers will hear this point and retain that flexibility. The small cost that is involved will be far outweighed by the confidence it gives to housing associations to go ahead with their schemes. I urge the Government to consider this carefully.