Welfare Reform Bill Debate
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Lord Freud
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Welfare Reform Bill
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Lord McKenzie of Luton
My Lords, I shall endeavour to speak up, George. I am not sure whether it is this camera that you want me to speak to.
This is by way of a probing amendment. It was prompted by an article in the Times of 14 October. The article suggested that people were to be denied their benefits if they appealed against the determination. That seemed to be in the context of the reassessment of incapacity benefit claimants, particularly those who were denied ESA— the work-related activity group— who could therefore qualify for jobseeker’s allowance. The article stated:
“Hundreds of thousands of welfare claimants face losing their benefits for months if they challenge a ruling that they are fit to work. Ministers are looking at removing payments during the appeals process in an attempt to slash the number of challenges that are threatening to derail the Government’s benefits reforms. The unprecedented move is being considered as one way to unclog the courts which are set to be inundated with appeals as the Government attempts to reduce the annual £7 billion incapacity benefit bill. A reassessment of all 1.6 million incapacity benefit claimants began in April, with ministers promising to move them on to a new system with narrower eligibility criteria for the sick and stricter requirements to find work. However, concerns over both the reliability of the test to find out whether people are ready for work and the scale of the project has prompted fears of a mountain of appeals. Judges have said privately that they could be facing 500,000 cases a year, some taking more than nine months to resolve”.
In view of the concerns that an article like that can generate, we consider it appropriate to give the Minister an early opportunity to set the record straight, and hopefully deny that that is the Government’s intent. To be clear, do the Government have any plans or otherwise contemplate, by amendment to this Bill or otherwise through regulation, the prospect of denying individuals their benefit should they appeal against a determination that denies them incapacity benefits or employment and support allowance?
At present, where there is an appeal against a decision not to include somebody in the work-related activity group, that causes benefit to be paid at the assessment period rate only, which is the JSA rate. Is this the type of arrangement which the Government are seeking to replicate, or are they proposing to go further and to deny benefit altogether? This raises wider issues which we shall come on to in subsequent clauses, but what conditionality would apply during the period when the appeal is outstanding? I hope that the Minister can set the record straight and clear on this. If he proposes to confirm that the article has some validity, we have some additional questions which we would pose to him. I will give him the opportunity to set the record straight and deny that this article identifies something which the Government propose to take forward. I beg to move.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, the amendment is slightly different from the question posed, and I shall deal with the question posed. The changes to the current appeal system are being taken forward in this Bill, as expressed in Clauses 99 and 100, so we will have an opportunity to discuss those in that consideration. We are, in those clauses, looking to introduce a period of reconsideration, or a reconsideration process, prior to a full appeal. We can have further discussion at that point, but regardless of what an article in a newspaper might say, clearly the practical difference, if one was to be extended in the way described, is purely a difference of conditionality, because as the noble Lord, Lord McKenzie, pointed out, the actual payment rate of the assessment phase of ESA is the same as JSA. That article has put out a lot of misinformation.
Lord McKenzie of Luton
My Lords, I am grateful to the Minister if he is saying that what is being contemplated in effect replicates what currently exists. When an appeal is outstanding, the assessment period rate, which I think is the JSA rate, applies. If that is what is going to be replicated in the new world, I understand that and can see that the article was misleading on that basis. Broader questions are raised, however, given that there is going to be a universal credit, components of which would in due course be held back during an appeal. If we are talking just about the work-related activity equivalent components, I can understand parity with the existing situation, but obviously other components will go into that, including housing issues. However, I am happy to leave that debate for when we reach Clauses 99 and 100, supposing that we do reach them at some stage in our deliberations. I think the Minister has dealt fairly with the principal concern that the article generated, and I beg leave to withdraw.
Lord Freud
My Lords, the size criteria measure marks a significant change in our approach to housing benefit for claimants living in the social rented sector. The current housing benefit system is not fair; it is not right that families on benefit in the private rented sector have been able to live in homes that most working families could not afford, and we have already begun to tackle that unfairness through changes to the local housing allowance. It is also not fair that, in the social rented sector, housing benefit pays out the full rent on properties that are larger than required by those who live in them, while at the same time over 250,000 households in England are overcrowded.
To pick up one of the many points made by the noble Baroness, Lady Hollis, on the bedroom standard, that standard actually expects children aged over 16 to share a room with children of the same gender until they are 21. That is a rather tougher requirement than that of the DWP and the LHA, which allows separate bedrooms for a child of the same gender, aged 16 and over.
Baroness Hollis of Heigham
My Lords, that was why I specified a 15 year-old in my illustration of bedroom size.
Lord Freud
I shall continue. By 2014-15, the annual savings achieved as a result of housing benefit reform as a whole will exceed £2 billion. It is right that the social rented sector plays its part in achieving those savings. The size criteria measure itself will achieve around £0.5 billion of savings each year from 2013-14.
On the point made by the noble Lord, Lord McAvoy, about room size—the example that he used was his nearby city of Glasgow and its tenements—the size of rooms is something that we are looking at with stakeholders as part of the implementation planning. That concern is shared by the noble Baroness, Lady Hollis. It is an issue that we are looking at.
Lord Foulkes of Cumnock
Could the Minister describe what he means by a bedroom?
Lord Freud
My Lords, I am tempted to ask the noble Baroness, Lady Thomas, to come and save me from bullying by the noble Lord, Lord Foulkes.
Lord Foulkes of Cumnock
I will make it easier for the Minister then, since he is finding it difficult. In my city of Edinburgh, there are a lot of houses with rooms that do not have external windows—they are box rooms. Some occasionally have a small skylight. Is that within the definition of a bedroom? Another example might be studio flats, or studio flats that may then have an extra bedroom attached to them. Is that a two-bedroom or a one-bedroom flat? Another might be my study. Is my study a bedroom or is it a study? It was used as a bedroom by the previous occupier, but now it is a study. These are just three examples of difficulties from the very start and the most simple part of the Bill: that is, the description of a bedroom.
Lord Freud
Certainly, the study of the noble Lord, Lord Foulkes, would seem to me to be a bedroom. However, box rooms without opening windows normally would not count as bedrooms. There is a series of rules that we will go through as we work through the implementation planning with stakeholders.
Lord Foulkes of Cumnock
Then you tempt tenants to board up their windows, as some owners used to do when there were window taxes.
Lord Freud
The coalition Government, my Lords, are not Queen Anne and we will resist any of those blocked up windows, which still blight many villages and which I know the noble Lord is very concerned about.
This is more than just a savings exercise. Housing benefit payments in both sectors will become more balanced in a way that will restore fairness, encourage better use of our existing social housing stock and encourage more people into employment.
The noble Baroness, Lady Sherlock, asked about the impact on children in particular. The impact assessment shows that claimants with children are less likely to be affected by the measure than those without children. Only around a third of the claimants potentially affected have children living with them. DWP officials have been working very closely in this area with officials from DCLG, the Department for Education and HMT.
It is reasonable to expect people living in the social rented sector to make choices about the affordability and the size of their accommodation, just as those in the private sector, and those who are not on benefit, have to.
My noble friend Lord Kirkwood spoke about transition and phasing. I should remind the Committee that these measures were announced in the summer of 2010 with a view to their taking effect, as has been observed, in April 2013. We think that this provides adequate lead-in time and we aim to have regulations in place by April 2012 to allow for a full year of implementation. If you like, you can look at that period as the transition phase, as people make appropriate arrangements.
Let me move on to Amendment 48, which comes in two parts. The first part would place a duty on social landlords to find suitable alternative accommodation for claimants who are underoccupying their property. If a smaller property cannot be offered to the claimant’s household, the size criteria measure would not apply. The second part relates to those who live in significantly adapted accommodation, and I will come on to that shortly. We are working closely with the Department for Communities and Local Government, and others, as we explore ways to best support landlords, local authorities and tenants, leading up to the implementation of this measure. That work is ongoing, and we will look at how we can work to ensure that claimants’ options are clearly set out, well in advance of the measure coming into force in April 2013.
It is important that local authorities and other providers of social housing make more effective use of their stock, and this measure, alongside the Localism Bill, will provide not only a greater incentive but a means for achieving that. This measure is about asking people on benefit to make realistic choices about the affordability of their accommodation when it is larger than they need. It is in the interests of social landlords to make the best use of their stock in order to make sure that tenants are able to pay their rent. For this reason most landlords would try to offer alternative housing options whenever they could. The specific duty on social landlords in Amendment 48 is therefore unnecessary and would raise important concerns around control, classification and enforceability. We do not want to impose regulations on to social landlords just for the sake of it.
The Government are providing funding to councils—£13 million over four years until 2015-16—to assist them in supporting underoccupying tenants who wish to move, as well as funding an action team within the Chartered Institute of Housing to work with all social landlords to help them to promote moves. The Government are investing £4.5 billion to help to deliver up to 170,000 new, affordable homes over the next four years.
This amendment would also exempt claimants from the measures where no suitable alternative accommodation is available. However, we expect that many people will decide to remain in their existing property, and make up the shortfall, even if an alternative offer of smaller accommodation is available, so it is likely that such an exemption would be an expensive waste of money in many cases. Of course, without a definition of suitable alternative accommodation, it is not easy to estimate how much this exemption would cost, but let us be clear that it would be extremely complex to deliver, and undoubtedly place a significant dent in the expected savings that would need to be found from elsewhere. I do not think this is a sensible way forward.
I understand that there are concerns about the supply of smaller properties. Claimants affected by this measure will have to decide whether to meet any shortfall themselves—from their earnings for example, or they could take in a lodger, or someone they know, to fill the extra bedrooms. If they do decide that moving to a smaller property is the only option to avoid getting into arrears, the social rented sector should not be seen as the only option. Private renting may be an appropriate alternative for some of those affected.
Changes being taken forward by the Department for Communities and Local Government through the Localism Bill will make it easier for councils and housing associations to move underoccupying tenants. However, this is not just about landlords. Some tenants can, and perhaps should, take more responsibility for arranging a move themselves. The new national homeswap scheme, Home Exchange Direct, will increase opportunities for social tenants looking to move through mutual exchange. Home Exchange Direct brings together the four internet providers of mutual exchange services to offer tenants more choice over where they live. Ultimately, landlords in Northern Ireland, Scotland and Wales will also be able to join the new scheme.
Amendment 34A also probes the availability of suitably sized accommodation. The provisions in subsection (3) will restrict how the other powers relating to the provision of housing costs may be used. Adding a line in subsection (3) to take into account the availability of suitable accommodation will not limit the way in which those other powers can be used. I take it that this amendment is really intended to ensure that claimants are unaffected by the size criteria in circumstances where no suitable alternative accommodation is available, and I have already made my thoughts clear on that. I recognise that, for some households in certain circumstances, moving may not be appropriate or should be delayed. Local housing authorities are best placed to take into account individual households’ circumstances. Where it is appropriate, they may offer help to meet a rent shortfall through the discretionary housing payment scheme.
The question of how people might respond was raised by my noble friend Lord German and the noble Baroness, Lady Hollis, who I congratulate on her speech. She has made a series of excellent speeches. The most up-to-date evidence is the survey by the Housing Futures Network on claimants’ behaviour, which came out recently. It showed a variety of initial reactions. Twenty-five per cent of respondents said that they were quite or very likely to downsize; 50 per cent said that they were unlikely to consider moving; 29 per cent said they would be quite or very likely to move into work or increase their hours; and around 15 per cent said that they were quite or very likely to take in a lodger or offer a spare room to a family member. Therefore, around 65 per cent of the survey’s respondent group are looking to change their behaviour. In the interests of full reporting of that survey, I should add that 35 per cent said that they were quite or very likely to run into arrears. Clearly, over the next couple of years we will look at putting strategies in place to make sure that that does not happen.
The second part of the amendment would provide an exemption from the size criterion measure for those living in significantly adapted accommodation. I appreciate that within this amendment there is acknowledgment of the need to draw a line somewhere and not just exempt all claimants in any form of adapted accommodation. I have noted the different views put forward in this Committee on how we might begin to do that.
The noble Baroness, Lady Lister, raised the question of disabled children. We are looking at ways to limit the impact on disabled children effectively and in an affordable way. I am sure she will understand that I do not want to comment today on the specifics of that, but I can assure her that very active consideration is going on. I should add the reminder that over this SR period we are already spending a lot of money—a total of £190 million, of which £130 million is for discretionary housing payments.
Since the measure was debated in the other House in May—I think the noble Baroness, Lady Hayter, was right about that—we have looked in detail at the possibility of an exemption for a tightly drawn group living in adapted accommodation. The work that we have undertaken to look at this in detail, in conjunction with various stakeholders, has revealed that such an approach is complex and has drawbacks. The issues that have been highlighted are finely balanced, so I should like to take a little more time to deal with them. My department is working closely with officials from the DCLG. We are continuing to talk to stakeholders as we do so. I hope to return to this matter when we debate Clause 68, and certainly by the time we get to Report if that is too tight.
My response to the question of my noble friend Lord German on the evaluation of the reforms is that we intend to undertake independent monitoring and evaluation to assess the impact of this set of measures and the changes in the social rented sector, and we expect the research to be undertaken over a two-year period, 2013-14, with preparatory work starting in 2012-30.
With that in mind and the assurances I have given more generally, I ask the noble Baroness to withdraw her amendment.
Lord Freud
My Lords, this has been a very good debate. I am not saying I have welcomed anything anyone has said, but I am saying the quality of the debate has been very high. I thank noble Lords for the great expertise they have brought to these issues. In response to the request of my noble friend Lord Kirkwood and the noble Lord, Lord McKenzie, I shall try to answer on each of these amendments and justify the idea that we can group them and get the right answers through. I am grateful for the indulgence of Committee members in allowing some big groups to come through, which should help us, but I aim to answer all of these issues.
To go back to the essential core point, housing support is a critical element of universal credit. It will help people pay their housing costs and help prevent homelessness. It will recognise that people need support across a range of different tenure types whether they live in the private rented sector, the social sector or whether they are owner occupiers. However, to repeat the point I made earlier, it also needs to be affordable to the taxpayer. My noble friend Lord German made the point about the increases in pure cash terms—it is up from £11 billion to £22 billion in a decade, which is 40 per cent in real terms—and that rise was going to continue if we did nothing.
The noble Lord, Lord McKenzie, asked why is it this community that is taking the £2 billion saving we are looking at. I remind Committee Members that the way we are designing many of these particular housing reductions is not directed wholly or even mostly at tenants. Clearly, we are looking for landlords to take the strain in the private sector—I am on record as saying that—although we expect other responses in the social area which I have gone through.
Lord McKenzie of Luton
I quoted the figure of £2 billion. I thought that figure was for several years and related to these underoccupancy provisions. Is that right or is it a broader range?
Lord Freud
No, the figure of £2 billion applies to the total saving by the end of the period in 2015 of all the benefit changes, and the particular change here is £0.5 billion per annum on the social sector from 2013-14.
Tackling housing benefit expenditure is vital to our combined efforts to reduce the economic deficit. The measures within Clause 68 will help to deliver significant savings affecting housing benefit claims for those living in both the private and social rented sector. Clause 11 will allow us to carry these measures through into universal credit.
Starting with Amendment 36 from my noble friend Lord Kirkwood and the noble Lord, Lord Kennedy, I confess that it surprises me because it appears to call for a return to something akin to the local reference rent. This was a system that was difficult for claimants to understand, led to delays as individual rent officer determinations were sought, and it was expensive. It needed an army of rent officers to carry out these case-specific determinations. It is not a system that I would willingly go back to. This amendment would also maintain the status quo for housing benefit in the social rented sector, ignoring a property size in relation to the size of the household. As I have set out, we must take control of housing benefit expenditure across both sectors, but this amendment would do neither. In fact, it would increase costs.
I turn to my noble friend’s point on CPI. We will discuss this in more detail in a later group. The CPI uprating will apply across the spending review period, and if it becomes apparent that LHA rates and rents are moving out of step, they can be reconsidered at that point.
Amendments 38 and 79 would exclude anyone from this measure who is disabled and lives in adapted accommodation. Unlike Amendment 48 in the name of the noble Baroness, Lady Hollis, this exemption would apply regardless of the extent of the adaptations that have been made. It would also exempt anyone in accommodation who is “particularly suited” to the needs of that person. These are extremely broad categories. We have already heard in some detail the issues surrounding claimants living in adapted and specially suited accommodation. The terms of the exemption suggested in these amendments are simply too broad brush. However, as I said in relation to Amendment 48, I want to return to this matter once we have considered it further.
Amendments 43 and 83 also touch on similar issues to those discussed in relation to Amendment 48. They would exempt claimants where there is no suitable alternative accommodation, which is classified in the amendment as social rented housing that is also within the claimant’s locality. We cannot contemplate such a wide-ranging exemption. It would be costly to administer and would no doubt apply to those who would, in fact, have paid the shortfall regardless.
On Amendments 39 and 80, we estimate that around 200,000 claimants, where only they or their partner receive disability living allowance, will potentially be affected by the size criteria measure. However, this figure does not include other members of the household such as children and non-dependants. An exemption is simply not affordable and may well include many cases for whom an exemption would not be necessary, while missing out other hard cases. To provide a blanket exemption where claimants and partners receive DLA would lead to a reduction in savings of approximately between £130 million and £140 million in 2013-14, and this amendment goes further even than that.
Amendment 48C and the peculiarly titled Amendment 86ZZZA would exclude all households where there is a disabled child and again reduce the savings significantly and provide too broad an exemption. In response to the point made by my noble friend Lord German about exemptions for people who require an extra room as a result of a medical condition, we are looking at ways to potentially limit the impact of these changes in a way that is effective and affordable. The most appropriate course of action for the tenant and landlord in such cases will vary, depending on the individual circumstances of the claimant and his or her household. They may choose, for example, to apply for a discretionary housing payment.
As for the point raised by the noble Baroness, Lady Campbell, on fluctuating health conditions, local authorities can and do use discretionary housing payments for precisely that purpose. I can inform her that we have worked with the Department of Health on the extra room for a non-resident carer, which will cover that point in the guidance we issue to local authorities.
Amendments 40, 41 and 81 are relevant to foster carers. Within universal credit, our intention is to ignore any fostering income and therefore not to include any foster children within the assessment unit. To do otherwise, by treating the child as a family member and the fostering allowance as income, could result in the family being considerably worse off, and as such act as a deterrent to fostering.
Baroness Hollis of Heigham
My Lords, perhaps I may press the Minister on that key point. He has quoted a figure of £500 million for HB savings. The impact analysis that I think most of us were working off gave a figure of £700 million. If that figure is correct—it may have been overtaken by further refinement from the DWP—it would mean that, for less than half the cost of the savings, he would take some 80 per cent of those worst affected out of the equation. That seems to be very good value.
Lord Freud
My Lords, without us rambling through the papers, I think that the figure is £500 million, of which £300 million is a very substantial proportion.
The Deputy Speaker (Lord Haskel)
My Lords, a Division has been called in the House. The Committee stands adjourned for 10 minutes.
Lord Freud
My Lords, perhaps I may conclude on the point raised by the noble Baroness, Lady Hollis. The confusion is between the £0.5 billion that we start to save annually in 2013-14 and the £770 million figure that she quoted from the impact assessment. It represents two years of savings on a GB basis, which is appropriately discounted and deflated.
Baroness Hollis of Heigham
My Lords, it is nice of the Minister to give us those figures, but is his £300 million the amount set off against the £500 million, or is it set off against the £770 million?
Lord Freud
No, it is £300 million set against £500 million—so 60 per cent.
I have already talked about the behavioural responses. I move to the point raised by the noble Lord, Lord Rix, about the number of bedrooms, the size of the rooms and box rooms. Again, we discussed that issue briefly in the previous set of amendments when the noble Lord, Lord Foulkes, raised the window tax. It is the social landlord’s responsibility to specify the number of bedrooms in a property but, as I said, we are looking at this, including the size of the bedrooms, to explore whether it is an issue.
Amendment 35 of the noble Lord, Lord Rix, relates to support for mortgage interest payments and is connected with Schedule 4, concerning the payment of housing costs for pensioners. I understand only too well why noble Lords are seeking reassurance that assistance with eligible mortgage interest costs will continue to be provided for homeowners, including those with long-term disabilities. In fact, I met only yesterday representatives from Mencap to discuss these matters.
Approximately 430 claimants have purchased their properties through the shared ownership scheme known as HOLD—rather less than the 1,000 figure that has more generally been quoted. The Government want disabled people to continue to access suitably adapted homes, whether through a mortgage or housing benefit. The Homes and Communities Agency continues to support the provision of shared-ownership homes where this is a local priority, including shared-ownership homes under HOLD. The agency is holding ongoing discussions with lenders on the provision of mortgages for HOLD. Support for mortgage interest is intended to provide a reasonable level of help for homeowners but has never been intended to cover all of a person’s housing liabilities. As noble Lords can see from the draft regulations, help will continue for homeowners. So I see no need to set out in the Bill specific reference to mortgage interest payments. We propose to continue using the same standard mortgage interest rate for all claimants. As to Schedule 4, a housing credit element with broadly the same rules as housing benefit will be introduced into pension credit to ensure that low-income pensioners continue to receive help with their rent.
Regarding the point raised by the noble Lord, Lord Best, on providing incentives for pensioners to move, our approach to this issue will, over the long term, help to ensure that people are in suitably sized accommodation before they become pensioners. Our expectation is that the proportion of pensioners needing to downsize will in future be lower than it is now. As several noble Lords mentioned, the Localism Bill includes measures specifically aimed at helping pensioners to downsize and will help to increase mobility in the social rented sector for this group.
Baroness Hollis of Heigham
Could the Minister at some point, not necessarily today but in due course, set out the stats on the number of pensioners underoccupying and what his projection is of the time it will take for numbers to diminish?
Lord Freud
I would be happy to circulate the information to noble Lords.
On the social sector size criteria measure that we are introducing through Clause 68, we will use the time before its introduction in April 2013, as we are already doing, to explore fully the implications for claimants and landlords. We acknowledge that the impact will not be the same across all regions; we will work with stakeholders to look at those variations as we move towards implementation.
Let me repeat: I value these debates and hope that they continue on a constructive level as we move forward.
Baroness Wilkins
Could I just return to the issue of disabled people? I am delighted to hear that he is willing to think again about fostering, but I am very disappointed by his reaction in relation to disabled people and feel that he has failed to recognise their situation. He says that the amendments have been drawn too widely. Could I press him on what he would feel was acceptable?
Lord Freud
My Lords, I hope that I am indicating that we are looking very hard at what proposition we can bring forward later on in this process of considering this Bill to deal with that particular set of problems that noble Lords have raised. So I will have something to say later on in the process.
The Earl of Listowel
I am very grateful to the Minister for reassuring the Committee that he will think carefully about the treatment of foster carers. That is welcome. However, I have a strong concern about a number of issues in this area. I have two questions. I wonder if he could drop me a letter on this, if he cannot reply now. Those registered foster carers who may have one, two or possibly even three rooms vacant, who do not have foster children with them at the moment but are waiting for them, and because of that are not getting an allowance and are on benefit, are hit by that—it is a bad situation for them. So reassurance on their position would be good. I am grateful to him for his response with regard to those parents who have their children removed from them. I think he was saying that for a short period it would be acceptable to give those families where the child has been removed an exemption in certain circumstances. I feel very worried about those families, which are very dysfunctional by definition. To have one’s children taken away is a very serious situation, and to lose a child and then to have an extra room or two rooms and to be further hit—that does worry me. Reassurance on that point, what happens to them, would be welcome.
Lord Freud
I will repeat the two points. The first point is exactly the issue that we want to deal with and the one that the foster community is worried about—the voids area. That is something that we are aiming to address. My response to the second point was, and remains, that this is where we would expect discretionary housing payments to come into play. It is exactly the complex set of judgments that need to be made, and local authorities are best placed to make them.
Baroness Hollins
I apologise for this, but I think that the Minister said that the same mortgage rates would be applicable as for everybody else. From my understanding, in the example that I gave of Theo, the mortgage rates had changed from the previous preferential rates, leading to a gap in the costs of his housing that he cannot meet.
Lord Freud
I think that this is the same case where I spent time with the family, so I am reasonably familiar with it. There was never any preferential treatment within HOLD; it used the standard rates. What has happened is to some extent a bit of a breakdown in the financing market in this area, among other breakdowns, after the worst financial crisis that any of us has ever seen.
So we are looking at a dysfunctional mortgage market with huge deposits required. There was never any special provision here: they were using the standard provision. We pulled it down from a little over 6 per cent to, as the noble Lord correctly said, 3.63 per cent and, if we had used the formula pre-crisis, we would have gone down to a rate of 2.08 per cent, which would have left people in an even worse position. To some extent, by moving the way that we do this, we have been more generous than the previous formula, but we have not changed the goalposts in any way. The issue is whether the market revives naturally—I know that it is shut at the moment—or whether, frankly, we need to think again about what is the appropriate level of support and how it should be delivered.
Baroness Sherlock
May I press the Minister on one more point? I understood that his argument in response to the amendments up to Amendment 83 was that he could not accept such a broad exclusion because it would encompass people who would otherwise have paid the shortfall. That is probably the dead weight argument. I was in the Treasury. Dead weight is much loved as an argument by the Treasury and despised by pretty much everyone outside it. You can see that it makes perfect sense, if you are in the Treasury, to think, “You are already paying this, why on earth would I want to do it?”. If you are on the other end of the telescope, it looks rather different.
Does the Minister accept that the fact that a claimant may stay put and pay the difference does not necessarily mean that they can afford to pay it? That point was made by the noble Lord, Lord Kirkwood, and the noble Earl, Lord Listowel. Someone who can see no alternative suitable accommodation may stay put, pay the difference—or at least accept that they must pay the difference and get into debt, with all the consequences that has for the family. Does the Minister accept that point and, if so, how will he address it?
Lord Freud
My Lords, it was interesting that there was a range of responses to our survey. Different people will do different things depending on the circumstances. That is the point. That is the problem with all the broadly defined exemptions that we have discussed today, which we have explored in great detail in the department: none of them works to define eloquently and adequately the people whom we want to protect. We need other ways to do that. I know that people like to attack the Treasury on every conceivable opportunity—
Baroness Sherlock
The Treasury employed me for many years; I would do no such thing.
Lord Freud
It did not sound like that.
Some people will choose to pay £11 and £12 extra for an extra bedroom perfectly rationally and other people will make other responses; a wide range of response is likely. A lot of people would regard it as a bargain to spend that amount on an extra bedroom. As noble Lords will be aware, spending to get that extra accommodation in the outside world—whether through a mortgage or through renting—would cost a lot more.
Baroness Sherlock
Forgive me, in the interests of levity, I was not being clear enough. The people I am concerned about are not those who could afford it but declined to stay, or those who are staying put and are happy to pay the money. The Minister mentioned statistics earlier about the number of people who would move, downsize or stay put and pay the difference. I am concerned about the rump who remain, which I think is sizeable—perhaps he will remind us of the percentage. I tease him about dead weight only because that argument works only if the Government are willing to accept that the price is borne by those who are not capable of making the difference. I am trying to tease out exactly how big is that price, who is paying it and what price the Minister would regard as acceptable for people who are forced into debt in order to make it work for everyone else.
Lord Freud
My Lords, I said earlier that we are working on the detailed implementation of this. It would be premature to make judgments on that. We need to develop strategies to ensure that those problems do not arise.
Baroness Hollis of Heigham
In that case, can I ask the Minister to amplify his stats for us when he writes to us next? He has talked several times, over the few Committee days we have had, about a £60 million discretionary housing fund, and how it is going up threefold, and so on. I am not keeping a tight list, but I think we have now overspent that by approximately five times. Could he tell us—given that there are some 400 local authorities—even on a per capita basis, how it works out? On average an authority can only help 700 families, out of—for instance, in the Norwich situation—some 20,000-odd families that are in rented accommodation.
I believe that those people affected, who will not readily afford it, are probably more like 7,000 rather than 700. Could the Minister give us the assumptions, or the stats, behind that £60 million figure as to what this would mean in a typical local authority, per 1,000 rented homes, for a period of, say, six months, or what percentage of those families you could typically expect to support? So that, per 1,000, that £60 million would extend to 20 families for six months, or 50 families for six months. Then we can get some idea of how that money connects to all the various issues for which this will, apparently, be the solution.
Lord Freud
Yes. I always prefer to answer rather than write, but I think I will on this occasion go to paper. It may be that the noble Baroness prefers paper.
The Earl of Listowel
My Lords, I was grateful, as I said before, that the Minister is giving this issue of arrears careful consideration. I think it might be helpful to the Committee if he could provide some reassurance that by Report we will have considerably more detail on what the plight will be of those who face arrears under the new arrangement. Can he give any assurance on that point?
Lord Wigley
My Lords, I speak at the request of my noble friend Lord Rix, who has had to leave the Committee, because we have now been going for well over four hours. I think he anticipated that we would have finished before now, and he has had to go to a 7.30 pm engagement outside the House. He has asked me, as I have my name on the amendment that led this bank of amendments, if I could respond briefly.
In doing so, I will touch on three points. In reverse order, taking up the point made by the noble Baroness, Lady Hollis of Heigham, a moment ago, with regard to the cost implication of the discretionary payments that are to be made by local government, has an assurance been given by the devolved Administrations that they have the resources to be able to do this? We are dealing with a non-devolved subject but are looking to devolved authorities, from a devolved budget, to fund the counterbalancing money that is required. If that answer is not available now, perhaps there will be an opportunity at some later stage to deal with that. It is clearly a matter that will be of concern, not only to the devolved Administrations, but to local authorities in Wales and Scotland.
Lord Freud
I can answer the noble Lord pretty rapidly on that. This is not a devolved area, so the discretionary housing payments are not devolved.
Lord Wigley
Of course—that is the whole point. The housing benefit is not a devolved area, but local government money is, unless there is going to be payment made from Westminster sources—Whitehall sources—to the local authorities in Wales. From the indication I get, payments will be made directly to local authorities, or via the Assembly to local authorities. In which case, fair enough, if enough money is going to be there; but if it has to come from their general pools, then that is from a devolved budget and will cause them problems.
Lord Freud
All I can confirm is that, just as anywhere else in the country, in those Administrations, the money will go by formula to those local authorities, in the same way that it currently does.
Lord Wigley
I accept entirely, of course, that housing benefit is run by the local authorities as a non-devolved portfolio, coming under Whitehall. However, the general funds that they have, unless there is additional funding coming from Whitehall to those local authorities and bypassing the Assembly, it would otherwise come out of the Assembly budget. All I was asking was whether that had been agreed with either the Assembly, or in the case of Wales, the Welsh Local Government Association? The Minister might be able to confirm that.
Lord Freud
What I can confirm is that the DHPs go directly to the local authorities, not through the local Assemblies.
Lord Wigley
Therefore, will any additional resources for discretionary payments that will be made, in line with the numerous references to discretionary payments that we have heard over the past few days, go directly and be over and above the payments that will otherwise be made.
Lord Wigley
We can put a marker down on that clear answer, for which I am very grateful.
Secondly, on one of the banks of amendments that dealt with disability and tried to get exclusions for people in certain categories of disability, the Minister, if I recall rightly, said that it would cost far too much, possibly £180 million. If that is the cost of excluding disabled families from the provisions of the Bill, it is, equally, the additional cost being faced by disabled families as a consequence of the Bill. That is an enormous cost. If it is a large sum for the Treasury budget, how much larger a sum must it be for disabled people trying to find it from their own domestic budgets? That is something that I suspect we shall need to come back to for clarification on Report. I hope that will be possible. I do not expect the Minister to respond at this point.
My third point is in regard to Amendment 35 in my name and that of my friend, the noble Lord, Lord Rix, which concerns home ownership among people with long-term disabilities. The Minister mentioned that only 400 people were affected by this. I am sure he is not decrying the importance of the scheme for the 400 people that it has helped; every single one is important in its own right.
Lord Freud
My Lords, may I make that absolutely clear? There are 430 people currently on the HOLD scheme. The bulk of them have an arrangement with a mortgage provider, Kent Reliance, which means that they can continue to pay the required rate of 3.63 per cent. Therefore, only a handful of people on the HOLD scheme are affected by any change.
Lord Wigley
Yes indeed, those 430 may well be safeguarded but there is the question of whether other people, who might in the past have come on to that scheme, will not be able to do so in the future. More importantly, the Minister referred to having had a meeting yesterday with people from Mencap to discuss this. From having a brief word with the noble Lord, Lord Rix, before he left, I understand that the people at Mencap are hoping that the Minister will at some stage, if not today, come back with some provision that will cover the requirements of this important group of people who are being helped by the scheme. I do not know whether they misunderstood that or whether the Minister will look at it again before Report to see what can be done. However, I very much hope that he will take on board the serious points that have been made by the noble Baroness and others, including the noble Lord, Lord Rix, about this important group.
We have gone well beyond our time. I put it to noble Lords that we ought to consider whether this is the most sensible way of undertaking our responsibilities, when the Committee runs for more than four hours without a break, we have disabled colleagues here and there are disabled people who want to follow our proceedings. I beg leave to withdraw the amendment.