Welfare Reform Bill

Lord McKenzie of Luton Excerpts

Wednesday 14th December 2011 Lords Chamber

As Christmas approaches, most of us understand what a home can be and how a spare room is so often part of that. This amendment keeps the status quo and maintains the current definition of underoccupancy, which already expects those in social housing to live more compactly than the rest of us. Let us not go down an uncharted road that is likely to add to the hardships of hundreds of thousands of our poorest citizens. I beg to move.

[Lord McKenzie of Luton]

My Lords, I will speak to Amendments 14ZZA and 49A, which are in this group and are amendments to Amendments 14 and 49. I start with an apology to noble Lords for tabling these amendments somewhat late. We thought, on reflection, that it was appropriate to import into the proposition of the noble Lord, Lord Best, the circumstances in which a local housing authority or registered provider of social housing is able to make a suitable alternative offer to somebody who is underoccupying social housing. I am pleased that the noble Lord felt able to signify his acceptance of that.

The presumption would be that such an offer would be taken up. In these circumstances a tenant could not rely on the spare bedroom to avoid an underoccupation charge—or tax, as it is more appropriately called. In that respect it would be consistent with Amendment 17A, tabled in my name and those of my noble friends Lady Hayter and Lady Hollis. However, the amendments would not disturb the basic proposition in the amendments of the noble Lord, Lord Best, so that where there is no suitable alternative offer the DCLG definition of underoccupation should be used, and the tax would not apply unless there was more than one spare bedroom. We support this.

Our amendment leaves the definition of what constitutes a suitable alternative offer to regulations—the same formulation we have used in Amendment 17A. It raises questions of how and by whom the determination is to be made, but these practical issues should not be insurmountable and may be dealt with in regulation. The definition would carry the implication that suitability should reflect the broad needs of the actual tenant in terms of size, location, extent of adaptation, proximity to transport and relevant support facilities. It should recognise that it would not, in all circumstances, have to be bedroom standard plus one, and would not carry any implications that RSLs or local housing authorities would have to manage their housing stock in any particular manner, although tackling underoccupation should clearly be a key part of the strategy.

No one doubts that underoccupation is a problem. We have a chronic shortage of housing stock and a huge demand for affordable housing. Yet the Government’s policy is the wrong way to go about tackling the problem, as it punishes people for housing choices over which they have little control rather than enabling the best fit between the available properties and the needs of households. We have heard that this measure will encourage tenants to make the same choices about their housing as those in the private sector or those who own their own home. Social tenants are, however, the group least likely to be underoccupying their property using the standard DCLG definition. Eleven per cent of social renters, or 429,000 households, have two or more spare bedrooms above the bedroom standard and approximately half of these are pensioners. In comparison, 47 per cent of owner-occupiers and 16 per cent of private renters have at least two bedrooms over the standard. Social tenants are, therefore, much more likely than other households to be living in a property which is considered to be the right size. It seems that the Government are intent on strengthening this disparity. Under the reinvigorated right-to-buy provisions, there is nothing to stop tenants who underoccupy from buying their property at the full, relevant discount.

These matters depend on whether an additional bedroom is fairly described as spare. This implies that it is surplus to requirements but, as we have heard from the noble Lord, Lord Best, for many it is not. The Housing Futures Network survey shows just some of the uses to which such an additional room might be put. These include a couple sleeping apart for medical purposes, storage of equipment—especially medical equipment—occasional use by overnight carers and many more which the noble Lord, Lord Best, instanced. We know that the vast majority of tenants do not recognise that they are underoccupying their homes at all. This is a reflection of space standards confirmed in the national figures on occupation. The DWP definition is out of kilter with what has become the norm for reasonable occupation in England. There also appears to be a huge administrative advantage in recognising the flexibility of the additional room. Without it, there is the risk of tenants having to constantly report changes of circumstances such as the son or daughter returning from university, somebody returning home because they have been made redundant and are struggling with their rent and the onset of an illness or infection with requires a couple to sleep apart. Are we really going to make these routinely reportable events?

The Government have also suggested that a further aim of the policy is to increase work incentives. Claimants who are underoccupying and who cannot move will be expected to find, on average, £13 a week to meet the shortfall in their rent. The DWP impact assessment suggests that they may do so by moving into employment or increasing their hours—even in the current circumstances, even with the current unemployment figures. Given that the whole aim of universal credit is to make work pay, it seems unclear why this additional work incentive is needed. Even if it does force some people to move into work, they are likely to be outnumbered by those who will move into debt.

In Committee, the Minister cited research by the Housing Futures Network, a coalition of four housing associations, which had interviewed 452 of their residents who would be affected by the underoccupation penalty. The survey found that 29 per cent of these would consider a move into work, but also found that 52 per cent would find it “very difficult” or “fairly difficult” to make up the shortfall in housing benefit. More than a third of those surveyed said that they were “very likely” or “quite likely” to move into arrears. The department’s own assessment notes the possibility of arrears, noting that the cost to social landlords of implementing this policy will include the cost to run schemes to enable affected tenants in the social rented sector to move home within the sector. The assessment also noted that the costs of action taken in relation to tenants failed to make up the shortfall between the rent and their housing benefit entitlement.

The third rationale given for the policy is the need to reduce expenditure on housing benefit. The equality impact assessment states:

“The overall cost of Housing Benefit needs to be controlled, and reduced in order to tackle the budget deficit. This measure is part of the effort to rein in Housing Benefit expenditure”.

However, the impact assessment is also clear that these savings will be made only if the first intention of the policy, to encourage people to occupy more suitably sized housing, actually fails. The impact assessment states:

“Estimates of Housing Benefit savings are based upon the current profile of tenants in the social rented sector, with little tenant mobility assumed. If a significant number of tenants wished to move, this would reduce direct savings and place extra demands on social landlords … If all existing social sector tenants wished to move to accommodation of an appropriate size, there would be a mismatch between available accommodation and the needs of tenants”.

How perverse can a policy be, when structuring it to fail is an excuse for hitting 670,000 poor households? In this situation, where there is simply not enough accommodation available to ensure that everyone has a home of what the DWP considers to be the right size, tenants will be left with no choice but to either take a hit to their incomes or move to the private rented sector, where the state will pick up the bill for the considerably higher rent that tenants are likely to face.

The people facing these choices are not likely to be able easily to absorb a £13-a-week hit on their income. The impact assessment shows that around 20 per cent of such families include a child under 16. The Housing Futures Network research found that more than 70 per cent of the households affected include someone with a disability or major health concern. The research also found that more than 40 per cent struggle to manage financially and more than two-thirds have an income of less than £150 a week, excluding benefits—meaning that they will have to spend around 10 per cent of their income to make up the rent shortfall.

The Minister has suggested that shortfalls might be met by discretionary housing payments, but there has been no indication that local authorities will be given extra resources to meet the cost. The impact assessment finds that the cost merely of administering these payments could reach £500,000. I ask the Minister: is there to be a top-up for this policy—a top-up to the pot that my noble friend Lady Lister in Committee called the “loaves and fishes” approach to funding?

The Government’s approach will therefore fail to deal with the problem of underoccupation while asking some of the poorest and most vulnerable people to pick up the tab for this failure. We would expect a more rational approach to the problem of underoccupation that encourages local authorities to prepare a strategy to address the issues of occupation and enables them to encourage people to move, but only where suitable alternative accommodation is available.

We know that good policy and the right incentives can enable a better fit between people’s housing needs and the available accommodation. Some people do want to downsize. The Housing Futures Network found that 12 per cent of those surveyed said that their current accommodation was slightly too large for them, but that they needed help and support to downsize. Shelter cites the successful example of the Oldham programme that offers financial incentives and support with moving arrangements, which has freed up 130 family-size homes in 16 months. If it were possible to roll out this programme nationwide, Shelter estimates that about 45,000 homes could be freed up. Shelter emphasises that, to achieve that, local political will is needed as well as sufficient local resource.

To summarise, Amendment 14, as amended by our amendment, and our Amendment 17A would imply that people had to take up suitable accommodation when it was offered. Amendment 17A would prevent the underoccupation tax applying at all where there was no such offer, and Amendment 14 would allow the reduction in housing support—the tax—to operate where there was more than one spare bedroom.

The Government's approach aims to tackle underoccupation, but will not do so, and will save money only at the expense of some of the poorest families in the country. Where there is a suitable offer of alternative accommodation, it may be reasonable to ask families to move, but to enable that to happen, we need to ensure that local authorities are working to address underoccupation rather than punishing those families for failure to do so. We support the amendment moved by the noble Lord, Lord Best, and, clearly, our Amendment 17A.

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

My Lords, I need to thank noble Lords to start with for a thoughtful and insightful debate.

The introduction of size criteria into the social rented sector from April 2013 is essential to reduce housing benefit expenditure, which without reform would reach £25 billion in cash terms by 2014-15. With savings from this measure estimated to be around £500 million per annum, it will play a key role in our efforts to control housing benefit expenditure and to tackle the budget deficit. In these difficult economic times, we cannot avoid having to make these choices. I assure noble Lords that these decisions have not been taken lightly.

In case there is any doubt, let me remind noble Lords that the size criteria measure will affect only working-age housing benefit claimants living in the social rented sector who are underoccupying their accommodation. For a family of four, with two adults and a teenage boy and girl, we are proposing that they will be entitled to housing benefit for a three-bedroom property with a living room, kitchen, bathroom and possibly even other rooms, such as an extra bathroom and study. This is the same as we allow for people living in the private rented sector. Those in a property that has more bedrooms than the size criteria allow will receive a percentage reduction in their eligible rent, meaning, on average, a shortfall of around £14 per week.

It is only fair that everyone plays their part, but we will, of course, ensure that we maintain safeguards for those in the most vulnerable circumstances. However, even with the reforms that we have started making to housing benefit, we are still expecting to spend nearly £23 billion on housing benefit this year. By the end of the spending review, we expect to achieve £2 billion in annual savings from the package of housing benefit reform. That is £2 billion off the £25 billion that I referred to. The Government believe that it is right that those living in oversized properties in the social rented sector contribute to those savings. Claimants in this sector make up over two-thirds of all housing benefit claimants, although most of the £2 billion in annual savings will still come from claimants living in private rented accommodation.

In England, approximately 420,000 households in the social rented sector underoccupy their accommodation by two bedrooms or more, while over a quarter of million households are overcrowded. What is more, 1.8 million households are currently on the housing waiting list in England. Over 700,000 of these households belong to reasonable preference groups, which means that they are treated as having a higher priority on the waiting list. This includes the homeless, people living in insanitary or overcrowded housing, and those needing to move because of a medical condition.

This measure is necessary to control spending. It is necessary because spending was allowed to spiral out of control under the previous Government, but we also believe that it will encourage greater mobility among households living in the social rented sector. It will help local authorities and other social housing providers to make the best use of their existing housing stock. It runs alongside and in support of measures introduced as part of the Localism Act, such as increased flexibility for local authorities to manage their housing waiting lists and the development of the national home swap scheme.

We have discussed this measure in detail and I have listened to and thought at length about the important issues that have been raised. We have various amendments to get through, but it might be helpful if I first set out what conclusions the Government have arrived at and what we intend to do. Noble Lords will understand that there is limited scope for manoeuvre within such a tight fiscal context, but I am pleased to announce today an additional £30 million that we will add to the discretionary housing payment budget from 2013-14, in support of the introduction of the size criteria into the social rented sector from April 2013. We believe that the amount made available is reasonable, based on what we know about the numbers likely to be affected by the measure. We think that £30 million could assist around 40,000 cases. It could help even more if local authorities choose to use DHPs to make up some, but not all, of a claimant's shortfall.

My noble friend Lord German asked what that funding is for. It is specifically aimed at two groups. The first group is disabled people who live in significantly adapted accommodation, and the funding is to enable them to remain in their existing homes. I hope that goes some way to satisfying the noble Lord, Lord Wigley, as well on that matter. The second group, which a number of noble Lords mentioned, is that of foster carers. We have carefully assessed the number of foster carers who will need to keep an extra room for when they are in between fostering, and we have an amount for them. I hope that goes some way to satisfying my noble friends Lord German and Lord Kirkwood on that matter, and indeed the right reverend Prelate the Bishop of Ripon and Leeds, who I hope feels that there is some room at the inn for this very vulnerable and important group.

The case for providing some mitigation for these two groups is clear, but we have decided that the way to do it is through the discretionary housing payment route rather than through specific amendments. We need rules in the benefit system that do not increase administrative complexity. We need to be able to make and deliver effective legislation not just within housing benefit but within universal credit. Such exemptions might, for example, include those who would otherwise have met the shortfall themselves, and might miss others who would have had a stronger case for additional support. I am convinced that a more localised, discretionary approach is the best way forward. It means that the limited resources that we have can be efficiently targeted at those who need them most. Of course we would like to do more, but there is simply no more money available.

Discretionary housing payments can be paid only where there is a linked claim to housing or council tax benefit. This is in effect, therefore, ring-fenced funding, although we cannot tell local authorities precisely who they should spend it on or how much they should spend. That is for local authorities to decide. However, we provide further guidance for local authorities through the DHP good practice guide. We have an illustrative draft of that, which I can share with noble Lords this evening, and we look forward to refining that with the input both of noble Lords and key stakeholders.

[Lord McKenzie of Luton]

Would the Minister clarify whether that £30 million is a one-off figure or an annual figure, and from when does it commence?

[Lord Freud]

I am pleased to clarify that that is an annual figure that starts in the year 2013-14, when the actual provision comes in.

Next, I would like to clarify the rates of reduction to be applied under this measure. In setting the percentage reduction rates, we have considered the sorts of rent differentials seen in the social rented sector alongside the question of affordability for the taxpayer. We intend to set the percentage reduction rates at 14 per cent for underoccupiers with one additional bedroom, and 25 per cent for underoccupiers with two or more additional bedrooms.

We think that the average cost to affected claimants, in terms of reduced housing benefit entitlement, will be around £14 a week in 2013-14. The majority of claimants affected—just over three-quarters of the total—are underoccupying their accommodation by just one bedroom. For this group, the average reduction will be around £12 a week. For those underoccupying by two or more bedrooms, the average reduction will be around £22 a week.

I would like to assure noble Lords that discussions within the coalition Government in designing this measure were thorough and productive, and these will continue through implementation. My officials are working closely with the Department for Communities and Local Government, the Department for Education, and the devolved Administrations.

It is worth picking up the issue, which my noble friends Lord German and Lord Stoneham raised, of whether we can make the transition easier. It is technically possible to stagger implementation arrangements, based on the anniversary of the claimant’s tenancy, but this move is not cost-neutral, and the planned savings will be reduced, albeit modestly.

I must be clear that, principally, I am more concerned about the ability to deliver the proposal because it might be very difficult to police and monitor. I am concerned that some landlords will offer new tenancy agreements to existing tenants, so that implementation of this change is delayed, and then the costs would spiral very substantially.

We are, however, determined to make maximum use of the time available between now and the measure coming into force to help prepare local authorities and social landlords for the changes, which in turn will benefit those who are affected. I am sorry if I rather loosely used the term “two years”, on which my noble friend picked me up.

Amendments 14 and 49, from the noble Lord, Lord Best, would exempt claimants from the measure where they underoccupy by just one bedroom. Amendment 12 would appear to tie Amendment 14 in with the housing costs calculation for universal credit.

There is a tension here between the bedroom standard, which is a widely used standard which views underoccupation as having two or more extra bedrooms, and the local housing allowance size criteria, which we propose to use for housing benefit purposes and which we already use for the private rented sector.

Our size criteria take a more generous view on the age at which someone is entitled to their own bedroom. Since the deregulation of rents in 1989, we have been using 16 as the adult threshold in size criteria for housing benefit purposes. The bedroom standard, on the other hand, sets the threshold at 21. Against these stricter criteria, however, the English Housing Survey and other similar surveys then consider the household to be underoccupying their accommodation only if they have more than one additional bedroom above the bedroom standard, a point the noble Lord, Lord Best, made. The size criteria that we propose to introduce into the social sector consider any number of spare bedrooms to be underoccupation. Neither approach is right or wrong. In some cases, the bedroom standard plus one will be more generous than the local housing allowance size criteria, in some they will work out the same and in a few cases the LHA size criteria would actually prove to be more generous.

On the point made by the noble Baroness, Lady Hollis, about the person who needs an overnight carer, I need to make it clear to the House that where someone needs an overnight carer we allow an additional bedroom for that non-resident carer, and we have done so from June this year.

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[Lord Lester of Herne Hill]

My Lords, as a member of the Joint Committee on Human Rights, I simply say how glad I am that the noble Baroness, Lady Wilkins, has drawn attention to that part of our report. I agree with her speech.

[Lord McKenzie of Luton]

My Lords, we have Amendment 14ZA in this group, which concerns foster carers seeking exemption from the underoccupancy penalties. We know—indeed, we heard a short while ago—that the Government are sympathetic. When we discussed this in Committee, the Minister told us that it was not possible both to disregard foster allowances as income and to include foster children in the assessment of housing need. However, the National Housing Federation has suggested that discussions between fostering organisations and DWP officials have not shed any light on why the trade-off would be inevitable and has suggested that it could be sorted out by legislation.

As we heard earlier, the Minister’s solution to supporting foster carers was the use of discretionary housing payments and the additional funds that have been made available, and it would be churlish not to welcome that. However, it is hard to see how this can adequately address the problem, given the many other calls on these payments that are likely to be made. Of course, these payments are discretionary, so there would be no certainty for those looking to foster a child that their housing benefit would be covered. It is suggested that the Minister cannot possibly see the inclusion of foster carers within the underoccupancy penalties as a cost-saving measure. As the LGA has put it, if these penalties apply, foster carers could be forced to give up this role at a time when there is a national shortage of 10,000 foster families across the UK. I urge the Minister to give due consideration to this matter, but in doing so I welcome the announcement that he made earlier.

My noble friend Lady Turner introduced amendments that covered three issues. The first was about adaptations to properties, which has been fully covered. My noble friend Lady Wilkins made the important point that this is not just about the physical adaptations to properties but about the support that people need in their community.

My noble friend also referred to someone in the work-related activity group being exempt unless there was suitable employment within easy access of alternative accommodation. We need to know that someone in the WRAG would not necessarily need to be in employment but to be working closer to the labour market. Nevertheless, my noble friend makes a valid point.

My noble friend’s third point was about claimants agreeing to any proposed relocation to alternative accommodation. In the debate on the last group of amendments, we debated a little the issue of suitable alternative accommodation for people, what “suitable” might mean and the complexity that might come with that. To the extent that it features in these arrangements, the opportunity for the claimant to be able to agree to what is reasonable is a fairly fundamental point as well, so I support my noble friend’s contention.

[Lord Freud]

My Lords, Amendment 13—and Amendment 48, which is a repeat of Amendment 13 but relates to Clause 68—tabled by the noble Baroness, Lady Turner, seeks to make a number of changes. I spoke earlier about how I propose to address the noble Baroness’s valid concerns about those living in adapted accommodation, and I hope that that has satisfied that particular position. On the related point raised by my noble friend Lady Thomas, the disabled facilities grants are quite separate from this; they are administered by local authorities to meet those costs. It is a separate pot, if you like, run by local authorities and not by the DWP.

Amendment 13 would create a new Section (3A). Proposed new paragraph (b) deals with the availability of work in an area and seeks to exempt claimants from the underoccupation measure by their not being relocated to an area where there is no suitable employment, or from a reduction if there is no suitable employment near their current home. We are not in the business of dictating to people where they can or cannot live and we have no intention of doing so. We expect that most people will choose to stay where they are and meet the shortfall. This was supported in the research from the housing futures network, which we have already discussed.

Let me put into perspective the numbers of people who are looking to increase their hours of work. We are talking about between two and four hours per week at the national minimum wage to meet these shortfalls. The amendment links an exemption to the availability of suitable employment, which would be hugely complicated to administer. We would need to define suitable employment and easy access, and in our view those are decisions for the tenants themselves to make, just as those people who live in the private rented sector or who are buying their own properties make such decisions. The labour market is constantly evolving. From a practical point of view, the exemption would be unworkable.

Proposed new paragraph (b), which would be inserted by Amendment 13, would appear to ensure that claimants are not forced to downsize against their will. The amendment would achieve that, but in practice it would go even further. It would enable claimants to block relocations by their landlord regardless of the circumstances. It is unusual for a social landlord to relocate a tenant without their consent, but they can do so in some circumstances, such as where they plan to redevelop the area. We do not intend to interfere in the relationship between landlord and tenant, and nothing in our legislation would force a tenant to move against their will.

On the size criteria measure, we are not seeking to force people to move, but we are asking people to consider the affordability of their accommodation where it is larger than they require, and I beg the noble Baroness, Lady Turner, to withdraw her amendment.

On Amendment 14ZA, which was tabled by the noble Lord, Lord McKenzie, I have set out our intention to increase the DHP budget with the specific aim of helping foster carers as well as disabled people in adapted accommodation. We very much value the work done by foster carers who care for and welcome children into their homes. That is why the benefit system already treats them more favourably by not taking those children, and, as a result, any fostering allowances, into account in their assessment. However, we recognise that there might be circumstances in which a reduction in the housing element of their benefit might act as a disincentive to fostering, and in such circumstances a local authority will have additional funds to award a DHP.

I should make the point here that local authorities will have a direct interest in applying those discretionary funds because they will make a saving by keeping the fostering market open. This is not one of the areas where one worries about discretionary funds being used in other ways; this is an incentive for the local authority. Just to reinforce that natural incentive, we are going to make sure that children’s services within local authorities will be made aware of the availability of DHPs and will input locally on their priorities. I know there are many concerns in this area, but I really think that we have closed the circle.

This amendment seems to go further and would not allow any deduction to the housing element, thereby prohibiting deductions for other income or non-dependant deductions. It also does not cover foster carers who are between placements and who therefore have no income from fostering allowances. The flexibility of DHPs will allow for such circumstances, if it is felt necessary.

The noble Baroness, Lady Wilkins, raised a point on the JCHR. We have just received that report and will be considering it very closely.

I consider that we are meeting the needs of this group through the increase to DHPs, and I therefore beg the noble Lord, Lord McKenzie, not to move his amendment.

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Moved by

[Lord McKenzie of Luton]

14ZZA: Clause 11, line 3, after “provider of social housing” insert “, and no suitable alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available”

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Moved by

[Lord McKenzie of Luton]

14A: Clause 11, page 5, line 23, at end insert “including mortgage interest”

[Lord McKenzie of Luton]

My Lords, the amendment deals with mortgage interest relief. When we raised this issue in Committee, the Minister told us that it was actively under review. We have now had a chance to see the results of that review with the publication this month of a call for evidence on support with mortgage interest and we have some concerns about what it contains.

The main proposals outlined include placing a charge on the property of any long-term claimant of mortgage interest support, which, with an additional sum for interest and an administration fee, would be recouped on the sale of that property; paying the support directly to the claimant rather than to the lender as at present; introducing a zero-earnings rule for eligibility for mortgage interest support to prevent in-work claimants on universal credit from qualifying; and extending the current two-year restriction for JSA claimants on claiming support for mortgage interest to those previously entitled to some transitional protection.

The Government’s stated rationale for the changes is, once again, to encourage claimants into work. The document states:

“A core aim of Universal Credit is that working age claimants have strong incentives to take up work in order to maintain their choice of housing tenure”.

However, the proposals to place a charge on the property of MIS recipients at present apply only to those who are not expected to move back into work—those who, in the words of the call for evidence,

“need long-term help with their mortgages because they are disabled or have retired with outstanding mortgage liabilities”,

and whom, the document states, it is not fair for the taxpayer to support indefinitely. Perhaps the Minister in his response could outline the key rationale for these changes. Are they intended to ensure that anyone who wants to remain in their home must move into work? Or are they intended primarily as a cost-saving measure? What are the expected savings from the scheme to put a charge on the property, and how do these compare to the potential added expenditure on housing benefit if people decide that they would rather not pay this charge and move into the private rented sector?

On direct payments to lenders, we have had significant representations from landlords who are worried about the impact of direct payments to tenants of housing benefit—we discussed this in Committee on a number of occasions and will discuss it again shortly. The Council of Mortgage lenders seems similarly concerned about these proposals, with its director, Paul Smee, stating that,

“the principle of paying the benefit to claimants rather than lenders is dangerous in terms of potentially reducing its effectiveness in meeting its intended purpose”.

Could the Minister let us know what discussions he has so far had with lenders about these proposals?

The Minister will doubtless say that the proposals in this document are out for consultation—that is, they are just that: proposals—and that he will consider views on them. Perhaps he could therefore let us know the expected timetable for any changes to support with mortgage interest payments. It would be particularly useful to know when he intends to make decisions about eligibility for this support under universal credit, as the level of support provided will make a significant difference to whether work pays for home owners.

We look forward to further detail on these measures, but it would be extremely helpful if the Minister could take a moment to outline the principles behind them and the expected timescale for their introduction. I beg to move.

[Lord Freud]

My Lords, I thank the noble Lord for this opportunity to debate the way in which we will provide help with mortgage costs alongside, or as part of, universal credit. As I have said previously, housing support is critical to the success of universal credit. It will recognise that people need support across a range of different tenure types whether they live in the private rented sector or the social sector, or whether they are owner-occupiers.

Noble Lords will have seen the illustrative regulations on the universal credit housing element which set out our broad approach to support for housing costs. The regulations will indeed make provision for help towards mortgage interest payments.

I also mentioned in Committee that we would be consulting on possible future reforms of the support for mortgage interest rules. As the noble Lord pointed out, we published not a consultation but a call for evidence on 6 December which contained a number of ideas on simplifying the help provided towards mortgage interest payments for working age and pensioner home owners. One of the reasons that it is a call for evidence and not a consultation is that there are much less backing data in terms of impact assessments around a call for evidence than a consultation. Therefore the noble Lord will forgive me if I do not supply the answers to some of the questions he asked me. That is the difference in the process.

We intend to provide support for owner-occupiers, as the call for evidence makes clear, whether this sits inside or outside of universal credit and pension credit. The call for evidence seeks views to help inform the appropriate way forward in determining how financial support towards mortgage interest costs should be changed in both the shorter term and longer term. We are looking at a different model to deal with the longer-term costs of supporting home owners. Essentially, we are looking for a way in which we can keep people in their homes when it is long term, but not at an exorbitant, open-ended cost to the taxpayer. That is the point of exploring these issues: we want to make sure that it delivers fairness to taxpayers.

For support for mortgage interest, we intend to have a rule that provides that help with mortgage costs will stop once a claimant starts work, as is broadly the case now. We believe that the position of claimants with mortgages is different from that of tenants. Owner-occupier claimants have been in work—clearly lenders would not advance money for house purchase unless the borrower could service that debt through income from work. If owner-occupiers are to be able to service their mortgage debt in the future, then they need to return to full-time work and our proposals, or our evidence call, reflect this reality.

The call for evidence runs for 12 weeks until 27 February 2012 and we will of course consider carefully the responses, whether from the CML or anyone else—noble Lords are welcome to add their views, at which I shall look with great interest—and, based on those responses, we will then develop our detailed policy proposals. I can assure the House that we are continuing to provide help with mortgage interest costs. With that assurance, I hope the noble Lord will withdraw the amendment.

[Lord McKenzie of Luton]

I am grateful to the Minister for that reply. I certainly do not intend to press the amendment. As he explained, this is very much work in progress. Can he say a little more about the reactions to date—particularly from the Council of Mortgage Lenders—in respect of the direct payment issue.

[Lord Freud]

To be absolutely honest, I have talked to the CML about this matter but I have not had a direct conversation with it since we issued the call for evidence. One of the reasons we had that as one of the questions is specifically to get a considered view from it as to how that might work.

There are a number of issues. At the moment, we pay a fixed rate for everyone based on the average mortgage. The Council of Mortgage Lenders has said in the past that it prefers the actual amounts. So there are a lot of issues. It is administratively complex. I know I am telling the noble Lord things he already knows because he was in situ while some of this was being developed. There is a nest of complicated issues. We are trying to flesh this out in the next few months.

[Lord McKenzie of Luton]

I am grateful for that further clarification and beg leave to withdraw the amendment.

Amendment 14A withdrawn.

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[Lord McKenzie of Luton]

My Lords, I shall be brief, because it is very rarely possible to add to something that my noble friend has said in moving an amendment. However, I will try in two respects.

Amendment 15 deals with a relevant change in circumstances. How would that feed through into changes of circumstances that may impact on transitional relief for universal credit? Would a change in rent level support be a change of circumstance that would have to be taken into account?

As for non-dependant deductions, under existing arrangements there are a range of circumstances whereby people who might be treated as non-dependants are not and where some non-dependants do not generate a deduction under the provisions. For example, in respect of the latter, no deduction is made in respect of any non-dependant who is staying with someone but whose normal home is elsewhere, who is receiving a training allowance in connection with youth training under specific provisions or is a full-time student during his or her period of study or is in hospital for more than 52 weeks. There are those sorts of exemptions. Is it planned that those will be carried forward into the new world of universal credit?

[Lord Freud]

My Lords, local housing allowance rates are set each year at the anniversary date of the claim. In many cases, they coincide with claimants’ annual rent increases, but as the noble Baroness, Lady Hollis, will recall, during the LHA pathfinder some landlords increased rents mid-year to take advantage of increasing LHA rates. That is why we will operate a common uprating date of 1 April.

I would like to consider this matter further. I do not believe that it is appropriate to provide regulations in the Bill, and we will have an opportunity to debate the regulations in this area. However, I can assure the noble Baroness that we will consider the implications of a common uprating date for this group of claimants as part of the continuing work on the treatment of change of circumstances in universal credit. I am not able to get to a conclusion on what we define as a change of circumstances. Again, it is an interconnected group of things. On the basis that I am working on it, I hope that the noble Baroness will agree to withdraw the amendment.

The next area is on non-dependants. We debated a similar amendment in Committee, and I remember blushing with pride when the noble Baroness said that I made an intelligent response. It is a rare accolade that I get from some members of the opposite Benches, but not all.

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Moved by

[Lord McKenzie of Luton]

17A: Clause 11, page 5, line 23, at end insert—
“(4A) Regulations shall not permit any reduction of housing benefit or amounts included for accommodation in an award of universal credit in respect of under occupation, deemed or actual where—
(a) the landlord is local authority or registered provider of social housing, and(b) any such landlord is not able to offer suitable alternative accommodation which would not cause a person to under occupy.(4B) Regulations may make provision for determining when accommodation is suitable for the purposes of these provisions.”

[Baroness Anelay of St Johns]

My Lords, first, may I ask a question of the Opposition at this point? There has been no claim that this amendment is consequential, and it clearly is not consequential. I say so in a spirit of wishing to elucidate information and explanation from the Opposition, and it is not necessarily overtly hostile, because the Opposition are looking rather puzzled. The Opposition have not at any time said that this is consequential. It is the view of the Government, on advice, that something that refers to regulations is so clearly not consequential upon the earlier loss.

I wonder if the noble Lord could say, for the benefit of the House and before the Minister is able to take a decision, why he considers it to be consequential.

[Lord McKenzie of Luton]

My Lords, I do not believe I considered it to be consequential, but I believe that we debated it as part of that first group. We had a wide group, of which this was part. I was not anxious to revisit that debate. If the noble Baroness insists that we do, perhaps we could set aside another couple of hours to do that.

[Baroness Anelay of St Johns]

My Lords, I shall respond in the same helpful measure. I am grateful to the noble Lord. The Chair put this as moved formally; that was the improper thing. I hasten to add that I know that the Chair was not trying to be improper.

Of course, I have to put on record that this is a separate matter. If the Opposition wish to press this to a Division, that is their absolute right, and I recognise that. However, the Government cannot accept Amendment 17A because it is not consequential, and the Minister clearly has not accepted it. I hope that that is an explanation which is a little clearer than mud.

[Baroness Anelay of St Johns]

May I very rudely interrupt the noble Baroness, Lady Hollis? I am reminded, of course, by those who know the rules well, that if we are to debate this amendment—which we are, albeit very briefly—it is right that the noble Lord, Lord McKenzie, should move it. I will, of course, be able in procedural terms to reply to the noble Baroness, Lady Hollis, and explain the position. However, perhaps the noble Lord, Lord McKenzie, for the sake of the formalities, might quickly like to move the amendment, and then we can deal with the process.

[Lord McKenzie of Luton]

If it has not been moved already, then I beg to move.

[Baroness Hollis of Heigham]

My Lords, my case then stands, in other words. I had understood that when the noble Lord, Lord McKenzie, spoke immediately after the noble Lord, Lord Best, he moved the additional amendments, which the noble Lord, Lord Best, had previously indicated he would accept as part of the position.

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[Baroness Anelay of St Johns]

My Lords, for the avoidance of doubt, as I say, the Government do not accept the amendment. I will certainly ask my colleagues behind me—including the Minister, who must be wondering what on earth this is all about—that when the Question is put, no person on the coalition Benches calls against it.

[Lord McKenzie of Luton]

In which case, I think that all I need to do is to say, I beg to move.

Amendment 17A agreed.