Welfare Reform Bill

Lord Whitty Excerpts

Tuesday 13th September 2011 Lords Chamber

[Lord Whitty]

My Lords, on the one hand, the Government must be gratified that they have received almost universal support for the final objective of the Bill: the simplification of the whole welfare system. On the other, they must be quite concerned that it has probably provoked an almost unprecedented amount of lobbying on the actual implications for particular groups of benefit claimants and for the system as a whole. The whole experience in life, for most of us, is that simplification costs money, at least in the short term. Yet the Ministry is attempting to do this at the same time as delivering to the Treasury significant savings in order to offset the deficit. It is conceivable, and desirable, that in the medium to long term this will produce savings because the incentive to go back to work will be greatly increased, and therefore those on benefit at the margin will not be on benefit any longer. However, that will take a long time, and in the present economic and social circumstances, the effects of those changes will take the Minister well beyond the point where the noble Lord, Lord Kirkwood, has just offered him a drink. At least four years needs to be added to 2017 before we will be able to see the long-term benefits. That is the problem that the Government are in.

I want to concentrate on one aspect of the Bill—and maybe draw some conclusions as to how to manage this process—namely housing benefit and related housing matters. I have always taken an interest in housing benefit. The noble Lord, Lord Brooke, referred to his maiden speech. My maiden speech referred to housing benefit and how we needed to reform it. Not a lot has been done and, as the noble Lord rightly said, the cost has significantly risen. There is, however, a difference between housing benefit and many of the other benefits that the Government are attempting to wrap in to the universal credit system. Some of the entitlements are the same, and it has some of the dysfunctions of the other benefits, but the amount spent on housing benefit is based not on the individual circumstances of the claimant, or his or her household, but on the circumstances of the housing market, or the quasi-housing market, in the area in which he or she lives. It is therefore different from the other parts of the benefits that we are folding in and it is a little difficult to propose, as a major feature of the Bill, that housing benefit should be treated the same.

There are other aspects of housing which are dealt with in the Bill. Reference has already been made to the issue of requiring benefits to be paid to the claimant rather than allowing the option of paying them direct to the landlord. I can never understand why Whitehall always thinks that if you leave more of their own money to the poor, they will manage it better. It never happens with the rich. For many poor people, having direct deduction from their benefit into their rent and council tax is the equivalent of our more bourgeois use of direct debits and standing orders. Many of our own abilities to manage our finances would be seriously undermined were we not to have that facility, but many of these people will not have the full range of bank accounts to help them with whatever they might wish to do.

Reference has also been made to council tax benefit being separated from housing benefit. That is complicated for people who have hitherto applied for both on the same basis and could lead to unfairness and to different local authorities operating it in different ways. They are, of course, effectively retaining the same basis of housing benefit for the pension part. Creating a housing credit element of pension credit will actually retain that proposition for those households who are of pensionable age, but of course that could mean differential treatment for the same amount of income for equivalent households in equivalent properties. Combined with other government proposals on altering the eligible rate criteria and effectively introducing a target for social rents in housing associations and council property of 80 per cent of the market rate, this will actually cause extreme difficulty in many areas of housing stress, particularly in central London but also in other cities and in some rural areas as well.

The Explanatory Notes explain that,

“regulations will provide for a claimant’s liability to pay rent to be treated as an amount other than the actual amount of the liability”.

In other words, as the noble Lord said earlier, we are going to pay them less than they are entitled to on some notional formula of a target and then of a cap. Meanwhile, of course, the whole benefit system is changing and the provision of social housing is also being covered in a different part of the legislative jungle, the Localism Bill, which we have been debating in recent days and which abolishes the life tenure for social housing; introduces a new system, in parallel, of affordable rents and requires a local authority to have tenancy strategies; and, indeed, changes the whole basis of social housing finance by abolishing the housing revenue account arrangements. It also does other things such as diluting local authorities’ responsibility for homelessness.

In all these interventions in the housing market there is a completely transformed situation against a background whereby every part of the housing market is seriously dysfunctional. The statistics summarising this were repeated in proceedings on the Localism Bill; namely that the formation of households is running at twice the rate at which new dwellings become available. That affects the whole range of housing tenure. It therefore affects the poorest who are attempting to retain or gain access to all three main areas of housing tenure and raises some very basic questions.

Government intervention in the housing market has shifted over the past 25 years from supporting the supply side, through the supply of council housing and home improvement and regeneration grants, to supporting the demand side by paying individuals. At the end of the 1980s the ratio was 80:20 in favour of supporting the supply side; it is now 80:20 in favour of supporting the demand side. Is that sensible? Should we not rethink the whole of government intervention in this area, certainly over the medium term? I suggest that the Government take the provisions in this Bill on housing benefit, the provisions in the Localism Bill on social housing and related matters, the changes that they are proposing in relation to planning to make housebuilding easier, put them all together and look at them carefully to determine what the totality of our housing strategy should be. If they did that, it might be easier in the long run to incorporate whatever succeeds housing benefit into the universal credit. If, however, they try to deal with one side of the matter without dealing with the other, I am afraid that they will not meet their objectives either of simplification or of saving money. I leave that thought with the Minister. He perhaps ought to set up a commission to look at the matter—I would be willing to serve on it—but we ought to look at the totality of housing. I see that I have overrun my time but I hope that the Minister will take note of what I have said.