Income-related Benefits (Subsidy to Authorities) (Temporary Accommodation) Amendment Order 2010

Lord German Excerpts

Thursday 2nd December 2010 Lords Chamber

I fear that the most likely outcome is not that people can move happily to a place where the rents are lower and not, at least in the southern half of this country, that landlords will reduce rents, but rather that tenants in many areas will try desperately to stay put. That is the best option for them, in so many respects, but they will try to find the balance of the rent for the landlord from the very low incomes that they already have from pensions or other benefit sources—and, indeed, from very low wages because, as the noble Lord, Lord Knight, has said, one in eight people on housing benefit is already in work. This adds up to a series of people on the lowest income facing considerable hardship. I hope that the Minister is able to respond with some information on how those problems can be mitigated, if not fully resolved.

[Lord German]

My Lords, I am relatively new to this House; it has been five months now. I mistakenly thought that when a debate is called on a particular order, we debated that order and that if noble Lords wanted to debate another order, they would put a Motion down about it. I was obviously mistaken as it seems to be the way of this House that if you can find one word in the title of the order, you work on that, so I may regard it as a fairly open season. If somebody can explain that method and the way that this House works, I would be pleased to hear it.

It seems to me that we have an order before us which has nothing to do with most of the statements made by the noble Lord, Lord Knight. I understand both the concerns that he wishes to raise and that he wants to talk about the other orders. I wonder why the Motion is therefore not about another order but, be that as it may, I wish to raise one question and one issue about this order and, since it is open season, I would like to make about three or four remarks about the order to which the noble Lord, Lord Knight, has referred.

The first question is about this order. Quite clearly, the burden of applying a new cap on temporary accommodation owned by registered social landlords is going to mean a new burden for them. Social landlords may or may not have to readjust their own rental levels with the people from whom they are actually renting the accommodation in the first place. Has an impact assessment been done of that and do we know whether much work is to be done in that area? If so, how do the Government propose to recompense registered social landlords for the extra work that they have to do? Just as, in its system, if local government is having to do extra work one would expect the extra burdens upon it to be recompensed with some funding, is there an extra burden on registered social landlords as a result of this order and, if there is, how are the Government going to recompense them?

On the other order—to which the noble Lords, Lord Knight and Lord Best, both addressed their remarks, which was perfectly reasonable—I have a couple of remarks and questions about issues that need to be raised. First, the noble Lord, Lord Knight, referred to the Social Security Advisory Committee report: but was it not the case, as I believe, that that report was written in advance of the orders to which he referred being laid? Can the Minister tell us whether they have taken account of the views of the SSAC in the orders that were laid, in which case there is another debate to be had that might be overtaken by the events to which the noble Lord, Lord Knight, referred?

Secondly, is it not a fact that we refer to movement in the private rented sector as being something which, one almost gets the impression, is unusual? However, do the figures not show that 40 per cent of tenants in the private rented sector move within a year? There are reasons for that happening and there is evidence of it. Do they not also show that 70 per cent—a huge number—of all tenants in the private sector move within three years? Therefore, mobility in the private rented sector is not unusual—it happens—and I do not necessarily believe that we should be worried about it if it already happens and is already a feature of that sector.

My second point of concern is that the housing benefit changes are often seen through the prism of London. People understand that there is a particular problem in London, which I admit there is, but it is often viewed as representing what is happening in the whole country. There are many areas in this country where the cap will not impact in the way that it will in London. We need to be careful that we do not see the nature of all change through the prism of London alone. There are specific circumstances in London that need to be adjusted and taken into account, and undoubtedly that is a debate to be moved forward.

The fundamental question, to which the noble Lord, Lord Best, referred, concerns the partnership between those who pay the rent and those who receive it. The question is how those who receive the rent can be incentivised to reduce the amount they charge. That is fundamental because, although an equation has only two sides to it, this one has a third, which is the housing stock and the number of houses that are available for social housing. However, I think that that, too, is the subject of another debate. In the equation between those who pay the rent and those who receive it, how is it intended that landlords be incentivised to move to the new levels that the Government will be providing? Perhaps in his reply the Minister can outline some of the ways in which that might happen. If it does happen, it might take away some of the evidence from those who say that landlords will not alter and will not move.

[Lord McKenzie of Luton]

My Lords, given the hour and the potentially challenging journeys that some of us will have in getting home tonight, I intend to speak only briefly, especially as I have an invite this evening to Luton’s Best. It is an award ceremony for community excellence, which shows that we were ahead of the game before David Cameron thought of the big society.

Luton has a direct relevance to this debate—particularly to the contribution of the noble Lord, Lord Best—because, taking all these housing benefit changes in aggregate, Luton is being affected at the moment. I am told that there is block-booking of bed and breakfast accommodation in Luton by London boroughs in anticipation of what all these changes will mean, and that has ramifications not only in relation to rent levels locally but in relation to the whole range of services provided by, for example, the local authority. Therefore, I say to the noble Lord, Lord German, that even the cap on its own has a spillover effect on other boroughs. Of course, the cap may be a particular issue for London but the other range of issues—the 30th percentile and the CPI—could also in due course have profound effects right across the country.

I also say to the noble Lord, Lord German, that he was a little harsh on my noble friend Lord Knight, who I thought gave a brilliant speech. He was dealing with the context in which this order has to be applied, and it is affected very profoundly by the new environment in which we find ourselves. This order follows on from one that came into effect in April, introduced by our Government. It related, as we have heard, to changing the basis on which subsidy was paid to local authorities from what was called the threshold and cap system, from which local authorities used to generate good revenues by charging at one level but paying rents at a different level. I have no doubt that those surplus revenues were put to good use, but it is right that that was changed. Moreover, as my noble friend said, the extension of the changed subsidy arrangements to housing association leasing systems is in principle a sensible thing to do.

The Explanatory Note for the order states that,

“some other leased accommodation not currently affected”,

is to be included. I hope that the Minister will be able to say what is encompassed within that. It would also be good to know what the implications of these changes to the subsidy system will mean to the resources of RSLs. I do not think that a detailed impact assessment has been produced, but understanding the impact would be helpful.

We are considering these changes in a substantially changed environment so far as housing benefit is concerned, but I am sure that we will have an opportunity to debate that not only today but on numerous occasions to come. We are dealing with a situation where actual rents are paid by local authorities and are then reimbursed through the subsidy system. I was interested in what the noble Lord, Lord Best, said about the impact of all these housing benefit changes on rent levels. He asked whether they would force rents down in some circumstances or have impacts in other ways. One of the changes to be introduced under the housing benefit changes will be the switch in 2013 to uprate local housing allowances by reference to the consumer prices index rather than, as now, by reference to actual rent movements. That inevitably means that there will be a widening gap between actual rents and local housing allowance levels. If the arrangements proposed in the order are to continue at that time, it means that local authorities may be at risk of having to bear the increased shortfall. The noble Lord, Lord German, asked whether these increased burdens are going to be reimbursed by the Government, which is a highly relevant question. I thought that, so far as local government is concerned, the Government had signed up to fund any increased burdens, so I shall be interested to hear from the Minister on that point.

This is not only a question of the eventual switch to the CPI because the switch to the 30th percentile will lower the housing allowance on which the subsidy is to be paid, even though we are dealing with a situation where it is actual rents that are being disbursed by housing associations or councils. This is yet another example of the Government placing on local authorities the responsibility to deal with what are effectively cuts in the system. In a sense, local authorities are the third party in addition to the two already identified by the noble Lord, Lord Best.

I have one further point. The package of housing benefit cuts and reduced investment in social housing along with cutbacks in support for mortgage interest will inevitably lead to increased homelessness. There is no other conclusion that one could possibly reach. That will lead to greater recourse to temporary and bed and breakfast accommodation, and therefore wider applications of the order before us, along with an increasing share of the costs imposed on local authorities. I want to ask a question on one particular point. One of the recommendations made in the SSAC report was to ensure that definitions of,

“‘intentionally homeless’, and associated guidance, is revised so as to ensure the position of households that fall into arrears because of changes to housing benefit entitlements are not excluded from the scope of the homeless provisions”.

I have not had a chance to peruse this in great depth and thus get behind the recommendation, but if there is a risk of people not being able to continue with their current tenancy because the level of their housing benefit puts it beyond their financial means, one would expect them to fall squarely within the definition of those who are homeless and have to be supported by local authorities.

I shall close with those brief comments, but this is just the start of a long journey of debate we need to have around the whole range of housing benefit regulation changes which I believe are deeply damaging and very misguided.