Housing Benefit

Lord Freud Excerpts

Tuesday 3rd May 2011 Lords Chamber

[Lord Kennedy of Southwark]

To ask Her Majesty’s Government what are the implications of housing benefit reform for the geographic distribution of low-income families.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, our published impact documents specify average losses by local authority. We expect that a very small proportion of people may have to move as a result of the housing benefit reforms, with a minimal impact on the geographic distribution of low-income families. My department has commissioned a consortium of leading research organisations to comprehensively evaluate the effects of recent local housing allowance changes. Further information on that will be available from the Library today.

[Lord Kennedy of Southwark]

I thank the Minister for his response. Does he agree with me that the success of UK cities is that people from all walks of life live and work together and that introducing a policy that forces low-income families to move to the suburbs, as happened in Paris, would lead to alienation and social unrest and contradict the Government’s belief in the big society?

[Lord Freud]

My Lords, the comparison of London with Paris, which has been made quite widely, is very misleading. The structure of London is very different from that of Paris. London is made up of a collection of villages and is quite unlike the doughnut of Paris. I would not agree with that assertion.

[Baroness Gardner of Parkes]

My Lords, is the Minister aware of the aggravation in London caused in the past couple of years, particularly under the previous Government, when people received letters from councils stating that they could have much higher rents than those that they were receiving and that the council would pay for them? That pushed rents up artificially. I know personally of two cases that were directly affected. Now landlords are unwilling to take rents that previously they thought were very fair.

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[Lord Freud]

My Lords, there seems to be some evidence that landlords were able to benefit from the local housing allowance regime in that we saw its rates go up rather faster than rents for non-housing benefit recipients.

[Lord Best]

May I underline the thanks of everybody who is worried about the impact of housing benefit cuts for the Minister’s action in setting up this independent and rigorous review of the housing benefit consequences? Will he tell the House when it will start, who will be carrying out the review and whether it will include not just people who have to leave because they are evicted or cannot afford the new rent but those who stay put and may face considerable hardship finding the rent from their other benefits and allowances?

[Lord Freud]

My Lords, I am pleased that we have a stunning consortium to do this work. It is led by Ian Cole from the Centre for Regional Economic and Social Research at Sheffield Hallam University, with other key team members being Peter Kemp of the Oxford Institute of Social Policy, Carl Emmerson of the Institute for Fiscal Studies and Ben Marshall from IPSO Mori. It is a stunning group and is going to build an understanding of the impacts of the housing benefit changes right the way through from people who move to those who stay—the noble Lord was concerned about them—at national and local levels, and it will integrate that with wider housing and labour-market evidence. A lot of this will be econometric analysis. The group will report the findings to me finally, as agreed, in spring 2013, but there will be interim reports next year.

[Lord German]

My Lords, I congratulate the Minister on such a comprehensive independent review. Will he indicate the geographic spread of areas which will be covered? Will it include hard-to-let difficult areas as well as rural and urban areas in the whole of the country?

[Lord Freud]

My Lords, I am really pleased that we will have a lot of review for the amount of money that we have. We will cover no fewer than 19 carefully selected case study areas, which will include three each in Scotland and Wales, and 13 in England. Clearly, there will be a concentration on the key area of London and the south-east but we will cover representative areas right through the country.

[Lord Knight of Weymouth]

My Lords, the Government’s change of heart on cutting housing benefit for the long-term unemployed was most welcome. It reflects the possibility that the Minister is compassionate and listening. In that spirit, will he now listen to my noble friends Lord Kennedy and Lord Best, and to the University of Cambridge research which estimates that within five years almost the whole of inner London will be unaffordable to those in receipt of benefits? Will he even listen to the Mayor of London who described these reforms most colourfully as Kosovo-style ethnic cleansing? If the consortium finds that it is right and that he is wrong, what will he do?

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[Lord Freud]

I assure the noble Lord that I am very pleased to be a listening Minister. Some of the forecasts clearly are misrepresented in the sense that the Mayor of London most certainly did not mean that he expected Kosovo-style cleansing. He actually said that we would not see such cleansing—and we will not see such cleansing. But we now will have a review to establish exactly what is happening. Clearly, we will watch what is happening very closely and take any steps that we need to if we find things happening that should not be.

[Lord Boswell of Aynho]

My Lords, we all welcome the review. Is it not important that it should also take account of long-term factors in conjunction with the other aspects of benefit reform? This is not merely a snapshot for now, trying to allay the apprehensions that some noble Lords have expressed. It is also very important to keep a continuing handle on the changing social balance and whether it is being influenced by the benefits system.

[Lord Freud]

My Lords, the key principle behind these housing benefit reforms is that people who are benefit recipients should experience the same kind of pressures as everyone else. That is the way to integrate them back into the world of work, which is one of the fundamentals of our whole welfare reform strategy.

[The Earl of Listowel]

Is the Minister aware that there is a concern that some families may be moved to different areas, which will put additional pressure on children’s services? Is there a mechanism to give additional support to local authorities if there is an additional burden on those services?

[Lord Freud]

My Lords, yes, the system works so that, as families move to different areas, funding follows those families. There may however be lags, which clearly is an issue of some concern. The fundamental principle is that funding follows the requirement.