Housing: Spending Review

Lord Best Excerpts

Thursday 4th November 2010 Lords Chamber

[Lord Best]

My Lords, I am grateful to the noble Baroness, Lady Hollis, for securing this debate and for her very important speech. In my few minutes I shall concentrate on the key issue of housing benefit. I have been able to draw, with gratitude, on the invaluable guidance of experts from the Chartered Institute of Housing, Shelter, Citizens Advice, Crisis, the National Housing Federation and the Local Government Association, with input from the Residential Landlords Association and individual private sector landlords as well as the top academics in the field: Professor Peter Kemp from Oxford and Professor Steve Wilcox from York. I declare my housing interests as in the register, and shall pick up one or two of the issues that have not been fully covered so far.

My first question is whether these cuts will achieve the desired savings in public expenditure. First, if there are a lot of evictions—which I feel sure, regrettably, there will be, and which will produce costs for landlords—the resulting homelessness will lead to huge cost increases for the state. Secondly, and related, if there is a return to putting people in bed and breakfast hotels—and in one London borough it has been announced that 20 such places have just been taken, the first time those hotels have been used for some years for this purpose, because a major private landlord has pulled out of catering for those who are on the local housing allowance—then the cost of B&B in place of private rented sector flats will produce additional expenditure for the state.

Thirdly, an influx of new tenants from high-value localities into lower-value areas could cause rents for all local housing allowance tenants to rise, not just for the new tenants moving in. Those rent increases could wipe out savings from the movers. Fourthly, if people move from higher-value areas where jobs are plentiful to low-value areas where they are not, it may be more difficult for the movers to find employment, and costs to the state may well be higher. This is to say nothing about the ill effects on aspirations and life chances of concentrating poorer households in the same place, rather than having a mix of income levels and tenures in all areas.

It is worth noting that the power of cuts to galvanise recipients into taking up employment may be quite limited. Only one in eight housing benefit claimants of working age is unemployed. The others include pensioners, the 26 per cent who are in low-paid jobs, single parents and disabled people. Finally, if there is withdrawal and disinvestment by private sector landlords in homes that might have been occupied by those on housing benefit, a corresponding increase in government funding will become even more necessary for the social housing to which those people will have to go.

What can be done to ease the potential hardships that these reductions in housing benefit seem destined to create? First, surely we cannot hit households next spring with a new cap based on the number of bedrooms in high-value areas and then again in the autumn when the change from the 50 to the 30 percentile maximum kicks in. One October start date for both these changes would surely be far less disruptive and far less expensive to administer. Secondly, the new caps expressed in cash—for example, £290 a week for two-bedroom flats—need to be uprated annually or they will gradually cover more and more tenants.

Thirdly, the enforced move out of central London for several thousand families could be eased through concerted efforts by the local authorities involved. Advice and guidance, help with moving costs and deposits, negotiating with landlords in the recipient areas to ensure that the rents and conditions are satisfactory, which could achieve better rent levels in return for security of income for those landlords—all this effort by councils could make moves more bearable and will be well worth funding.

Fifthly, through use of much enhanced levels of discretionary housing payments, those administering benefit, local housing allowance, should enable households with a clear local claim to stay put for the time being. I refer, for instance, to a family with a child regularly attending a central London hospital; to a working mother in a low-paid, local job who could not cover lengthy travel costs and extra child care if moved well away from the area, and so on.

Sixthly, I want to echo the point made by the noble Baroness, Lady Quin, that 10 per cent cuts in benefit for those who do not find a job within 12 months should be moderated to exclude those for whom the jobcentre declares that the claimant has done everything in their power to get a job.

Seventhly, some people up to the age of 35 who lose their job will have to move from their flat where they may have lived for many years to a place they can share with others. Bearing in mind the total absence of such accommodation in large parts of the UK, and also that 87 per cent of those currently in single rooms of this kind—that is, single tenants under 25—already have to find an average of £27 per week from their microscopic incomes because the local housing allowance fails to cover their rent, surely the overarching reduction in the maximum from the 50 to the 30 percentile rule should not be applied in those cases.

I hope the Government will give some indication of whether they can accept these and perhaps other ways of reducing the burden of these fierce cuts so that they can be explained, phased, moderated and mitigated. I look forward to hearing the Minister’s response.