Welfare Reform and Work Bill

Lord Best Excerpts

Wednesday 27th January 2016 Lords Chamber

Moved by

[Lord Best]

50: Clause 22, page 21, line 8, at end insert—
“(c) the accommodation is owned by a fully mutual housing co-operative within the meaning of paragraph 12(1)(h) of Schedule 1 to the Housing Act 1988 (local authority tenancies etc);(d) the accommodation is owned by a community land trust within the meaning of section 79 of the Housing and Regeneration Act 2008 (English bodies).”

[Lord Best (CB)]

My Lords, I rise to speak to Amendments 50 and 51, the first two amendments in the group, in my name and those of the noble Lords, Lord McKenzie of Luton, Lord Shipley and Lord Kerslake, and to support the other amendments in the group that follow in the names of the noble Lords, Lord Ramsbotham and Lord Kerslake, and the noble Baroness, Lady Meacher.

We return to the rent cuts of 12% over four years for the housing associations and councils. This will achieve savings for the Treasury in housing benefit of approaching £2 billion per annum by 2020 and every year thereafter. The problem is that, although the major developing housing providers can absorb this unwelcome loss of income by reducing the extra services they supply, and/or doing a bit less new building, and/or running down their reserves, some housing bodies cannot take the hit. The aim of Amendments 50 and 51 is to prevent the rent cuts impeding the vital work of these organisations.

There is no margin for a rent cut where the organisation, or the specialist part of a larger housing provider, does not currently make any surplus to set aside, either because rents are carefully kept at a level that covers only loan costs and management and maintenance costs—as with the co-ops and community land trusts covered by Amendment 50—or because the provision of extra services means that existing rents are barely enough, as with the supported housing and extra care housing for older people covered by Amendment 51. The 12% rent cut would clobber the housing associations in these categories for very slim pickings for the Treasury.

I couple my comments on these proposed rent cuts with an equal concern about the proposal that housing benefits for all social housing tenants should be capped at the level for private sector tenants—that is, at the local housing allowance ceilings. Again, the tenants of the major housing providers, whose rents are mostly way below those in the private sector, should not be too hard hit—although, as an aside, I am very worried about some of those aged under 35 who would suddenly get only the shared accommodation rate. But, the biggest problem of the LHA rent cap is, again, supported housing and extra care schemes for older people, where the rents are much higher than for a similar home let by a private landlord because, of course, the work of the provider of supported housing goes far beyond simple property management and maintenance. The LHA private sector cap is clearly entirely inappropriate for supported housing. Applying it in April 2018 for all those who become tenants after 1 April 2016 would mean that very few of the residents who move in just two months from now could continue to stay in this specialist accommodation in two years’ time. Where would they all go if the projects have to close or the supported accommodation has to be switched to general needs housing?

In response to these points on rent cuts and benefit caps, and following representations from many charities working in this field, including Riverside, St Mungo’s Broadway, YMCA, Crisis, Homeless Link and the National Housing Federation, the Minister has taken some very constructive decisions that he will, no doubt, spell out tonight. I am delighted that the noble Lord has determined that housing under all the categories in my amendments—including the housing co-operatives, community land trusts and almshouses, which were of special concern to the noble Lord, Lord Ramsbotham—are to be taken out of the rent cuts while better arrangements are determined, with increases in rent permitted in line with the existing regulations for the time being.

I welcome the Minister’s decision to work in close collaboration with the relevant specialist providers to use a one-year moratorium on rent cuts to devise a satisfactory basis for determining the funding arrangements for supported housing. This is entirely sensible and the Minister will be able to take into account the findings from an important supported housing review by Ipsos MORI, which he has instigated. I am grateful to him for the care and attention he has given to this matter and for today’s important announcement.

--- Later in debate ---

[Lord Kerslake]

The proposal with regard to the exemption and flexibility for the regulator in those difficult circumstances is entirely welcome. Although it does not go as far as I sought, it is a very helpful move indeed, so I thank the Minister.

[Lord Best]

My Lords, this has been an excellent debate. Many thanks to the noble Lord, Lord Shipley, my noble friends Lord Listowel and Lord Kerslake—I was pleased to hear him say that he welcomed the announcement by the Minister—and the noble Baroness, Lady Hollis, who may have been satisfied to some extent on the process. We should have a chance to debate these things in the future. I thank the right reverend Prelate the Bishop of Durham, who told us about the work of Framework, a typical housing association, which is feeling very nervous and which, I hope we are pretty well fully reassured, will not go out of business as a result of these measures—that will just not happen. I also thank the noble Baroness, Lady Manzoor, my noble friend Lord Ramsbotham, for championing the cause of the almshouses, the noble Lord, Lord Young of Cookham, for joining in very helpfully; and the noble Baroness, Lady Warwick. She continues to feel fearful but I hope that she gained the distinct impression that it would be a bad idea to hold back on the basis of thinking, “The Government will probably let us down; the rents won’t meet what is required”.

For some years I chaired one of the housing associations—Hanover, which runs the most extra care housing schemes in the country. I thought to myself, “Knowing what I know, would I say to my board that it is too risky to go ahead with an extra care scheme in these circumstances, because by 2018 we may find that there is no money on the table and we will go out of business?”. I would say from the chair, “Let’s go for it. I don’t believe we’re going to be put out of business”, but I fully accept that some of my fellow board members might take a more cautious view. That is the anxiety that remains until the Minister is able to come up with something that has a watertight guarantee. However, his words tonight were as reassuring as we could expect them to be.

I echo the Minister’s tribute to the many organisations that have beaten a path to his door. I am sure that they were much more influential than myself or anyone else in this House because they bring the real experience of the front line through to the ministerial office. I am delighted that he is deeply committed to engaging those same organisations in the process that now follows to find a permanent solution.

However, best of all, I am very pleased that the Minister has been able to announce that, while the review takes place and Ipsos MORI comes up with its research, with the providers being part of the process of finding a permanent solution, rents can be increased by CPI plus 1% in these schemes. That will keep the wolf from the door. I have pleasure in begging leave to withdraw the amendment.

Amendment 50 withdrawn.