Welfare Reform and Work Bill

Lord Beecham Excerpts

Tuesday 12th January 2016 Lords Chamber

I am told that, in exploring the opportunity to obtain a waiver from the rent cuts because the loss of rent would put them out of business, it has been suggested that the CLTs could ask much larger housing associations to absorb their modest stock of new homes. However, often after years of volunteer work in their village, these fledgling community land trusts are extremely reluctant to transfer their assets to a bigger organisation not necessarily based anywhere in their locality. Government has been supportive of these very local community-based initiatives and I am sure there is no desire to force them into insolvency or make them hand over their assets to a larger housing association. They have acted in good faith in securing local contributions of time, money and, above all, land and have been very prudent in their budgeting. Suddenly to face the prospect of a significant reduction in their income would be more than unfortunate and I know they would be very grateful for some reassurance from the Minister that these little enterprises will be outside the new measure.

[Lord Beecham (Lab)]

My Lords, I represent a ward in Newcastle-upon-Tyne—I declare my interest as a serving councillor there and as a vice-president of the LGA—which will be affected by various aspects of the Bill, but particularly by a matter that is the subject of an amendment in the name of the noble Lord, Lord Ramsbotham, who is not in his place, which deals with exceptions to rent reductions for registered providers of social housing which are almshouse charities. I have received two communications about that group, one from a London authority and another from a body called the Hospital of St Mary the Virgin in Newcastle, which operates two schemes, one in my ward—a place called Thomas Horsley House—and another in an adjoining ward. That body is very worried about the possibility of almshouses being forced to reduce the rents they charge. It provides homes for single, poor, older men and currently charges rents of £55 a week in one of the two homes and £57 a week in the home in my ward. Those charges include gas, electricity, water, TV licences for all the over-60s and all repairs and maintenance. The only things that are excluded are council tax, phone bills and TV licences for the under-60s. The body informs me that it has,

“been able to maintain these rents at considerably less than the market rate because we are beneficiaries of the related Estates Trust”.

I know that development well. It is a modern development with very nice accommodation and is on a bus route. It is adjacent to another very good scheme provided by Anchor Housing. For that very similar accommodation, Anchor Housing charges £101.20 per week, which is a considerable difference. The Hospital of St Mary the Virgin says:

“We have taken great care only to increase the rents … by c.£1-2 per week per year, to enable us to maintain the wages of staff at or above the Living Wage, to pay for any increases in utilities”,

and so on. However, the body says that it would find it very difficult indeed to continue to do that if it is compelled to reduce the rents.

I suspect that this is not a large group of social housing providers, but there will be almshouses up and down the country and if they follow the model followed by the body in my ward, they are providing very good value for a vulnerable group of people at a low cost which they will find difficult to sustain, and their tenants will have difficulty meeting higher payments should almshouses be affected by this measure. I very much hope that the Government will consider almshouses and housing co-operatives, which have also been mentioned, as bodies which should not be obliged to reduce their rents, with the implications that that would have.

It is estimated that, over time, Newcastle would lose some £529 million which would otherwise be invested, not just—I say “just”—in building new houses but in maintaining the existing stock. This poses a very considerable threat to the activities of an arm’s-length management company, Your Homes Newcastle, in regard to a substantial holding of houses. The problem here is that reductions in rents would affect not just the potential maintenance of the existing stock but the building of new houses, as noble Lords have mentioned. The impact is already being felt in the ward I represent. Two small schemes in the ward were going forward to tender. Two housing associations withdrew because they were concerned about the viability of the schemes and another is still on the margins of deciding whether to go ahead and, if it does go ahead, it will be on a somewhat different basis. Neither of these is a large scheme.

A relevant consideration is that the smaller the scheme, the bigger the potential impact on the housing association because it is less possible to provide cheaper housing if you are unable to compensate for that to some extent by providing housing that will attract a market rent or that can be sold. The impact of possible rent reductions and of right to buy is already visibly acting as a deterrent to the provision of new housing in my authority, where it is very much needed, and, I guess, in many authorities up and down the country. The Government really need to rethink the impact of this policy beyond the financial gain they will obtain from the reductions in housing benefit—a matter I first brought to light in a Written Question I tabled some months ago, and about which I have made previous mention. There is a very significant gain from that point of view but with very damaging implications for local housing and people who need it, including people who need it more than most—that is, the people catered for by the charities to which I have referred. I hope that the Government will look very sympathetically at the needs of those bodies but also at the impact of the measure on housing need generally in areas that are already hard pressed.

While the Government are doing that, they might take a look at what they are doing—if anything—about rents in the private sector, where, of course, a great deal of housing benefit goes. Today we read of very substantial private rented housing increases across the country. To my astonishment, the rise in Newcastle in percentage terms is the same as that in London. Rents in London have been, and are, going up very considerably. They are going up even higher, I understand, in some other places. I think rents in Bristol have been cited in the Guardian as going up by something like 18% in a year. That is very difficult for people to cope with but must necessarily impose a charge on the public purse as well. What do the Government propose to do to protect tenants in that sector from that kind of rent increase and, indeed, to protect the Exchequer’s interest, given the consequences of rent increases in that sector? None of that seems embodied in the legislation, yet it will have a significant impact on people’s lives and on communities in the areas where these circumstances are currently causing problems, and will continue to do so unless action is taken. I hope the Government will look at that matter as well.

--- Later in debate ---

[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?