Housing: Spending Review

Lord Shipley Excerpts

Thursday 4th November 2010 Lords Chamber

[Lord Shipley]

My Lords, I, too, am grateful to the noble Baroness, Lady Hollis, for giving us the opportunity for this debate. It is reasonable that the amount that the taxpayer pays on housing benefit is controlled, given that it has risen by an average of £1 billion a year for the past five years and could carry on growing by a similar amount in the next five years. It is also reasonable to try to reduce the level of rents, which have risen strongly in the private sector, partly as a consequence of the failure of the previous Government to build enough social housing. Furthermore, it is reasonable in principle to impose a cap on the amount that taxpayers, many of whom are low paid, should contribute for a single household receiving housing benefit. This latter principle has broad political support, given the commitment in the Labour Party’s general election manifesto earlier this year.

However, none of this absolves us from the responsibility to examine the proposals for housing benefit changes carefully to establish whether the policies will deliver the outcomes forecast and whether those outcomes are ones that we should support. The private rented sector has been a cornerstone in stopping the use of bed and breakfast, as people have been provided with private rented housing as an alternative to waiting in B&B accommodation. In Newcastle, and here I declare an interest as a member of the city council, we have not used bed and breakfast accommodation since 2006, and I do not wish to return to the days when we did. In the past year, 205 households have been supported by the council to access private rented accommodation who might otherwise have been homeless. That gives a dimension of the scale we are talking about.

My concern is that the local housing allowance changes may restrict access to private rented accommodation and therefore limit the capacity of councils generally to resolve future housing need. It is also likely that the changes will increase the number of people who present themselves to councils as they lose private rented accommodation because of the reduction in the local housing allowance. Councils will still have a duty to accommodate households in priority need, mainly those with children under 18, those aged over 60, those fleeing a disaster such as a fire, the severely ill and the vulnerable. Meeting these duties may result either in an increase in gatekeeping barriers, leaving people in unsatisfactory conditions, or increased costs to councils in the form of subsidised access to the private rented market or through people waiting in bed and breakfast accommodation.

There is therefore uncertainty about the net value of the savings to the public purse by reducing the local housing allowance. Further, there is a real risk of cost shunting from the Department for Work and Pensions to councils, which will have to pick up the cost of assessing more people at risk of homelessness and then housing those accepted as being in need. Has the DWP conducted a cost-benefit analysis of the overall impact of housing allowance changes on the public purse? Has it estimated the gross cost to the public purse based on how many households will become homeless as a result of the changes, and deducted this from any savings made by reducing the local housing allowance? Also, what consideration has been given to the indirect impact of the local allowance changes? I cite, for example, the likely room blocking in supported housing as it becomes more difficult for people to secure independent accommodation in the public and private rented sectors. This may increase the risk of institutionalisation of those who cannot move on and increased rough sleeping for those who cannot access supported housing.

In conclusion, why did the DWP impact assessment not address the central question of how many people need to become homeless, with all the additional costs to the state that homelessness entails, before the projected savings to the DWP are eliminated by rising costs elsewhere in the public sector?