Welfare Reform and Work Bill (Tenth sitting)

Shailesh Vara Excerpts

Thursday 15th October 2015 Public Bill Committees

[The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)]

I beg to move amendment 172, in clause 19, page 18, line 25, leave out subsections (4) to (6).

This amendment and amendments NC19 and NS1 alter the provision for determining the amount of rent payable in respect of the first relevant year (or a later relevant year) in cases not covered by clause 19(1).

[The Chair]

With this it will be convenient to discuss the following:

Government amendments 174, 175, 178 and 179.

Government new clause 19—Further provision about social housing rents.

Government new clause 20—Provision about excepted cases.

Government new clause 21—Rent standards.

Government new clause 22—Interpretation.

Government new schedule 1—Further provision about social housing rents.

Government amendments 180 to 183.

[Mr Vara]

It is good see you this afternoon, Mr Owen, as it was this morning.

We recognise that tenancies will start at different points in the four years of rent reductions and that providers will want to know what rent is set on re-lets for new social housing and for conversions to affordable rent. First, I turn to the more substantial amendments in the group, which make more detailed provision for this situation than clause 19 as introduced. They enable a provider to determine the amount of rent that is initially payable when a tenancy begins after 8 July 2015. The cases are not covered by clause 19(1), which applies to the generality of tenants who were tenants of their social housing on 8 July. Clause 19(1) also governs the future rent reductions for all tenants whose tenancies began after 8 July 2015, once they have been tenants for a full relevant year.

New schedule 1 sets out the details of how rent should be set for different types of new tenancies starting after 8 July 2015. It also provides for exceptions, exemptions and enforcement of the schedule. Part 1 provisions are intended to clarify how the rent reduction requirements should be applied in relation to new tenancies after 8 July, whether that is a re-let of existing housing, new social housing or letting at affordable rent. In the first of those instances, re-lets that exist in social housing will be able to be let at the greater of a social rent or an assumed rent rate.

The social rent rate, which is prescribed in sub-paragraph (4) of new schedule 1, is set in relation to a formula that will be set out in regulations. Sub-paragraphs (7) and (8) provide that the Secretary of State may define “formula rate” in the regulations. Our intention is that the regulations will mirror the formula set out in the rent standard guidance and the Government’s guidance on rent. For supported housing, we will continue to allow rents to be set at up to 10% above formula. I appreciate that these are important issues for social housing providers, so I draw Members’ attention to this change.

The assumed rent rate, which is prescribed in sub-paragraph (5), is based on the rent that was payable under a tenancy in place on 8 July, but the calculation reflects the rent reduction requirement. This is important for providers whose rents have historically been set higher than the formula rent at 8 July 2015. In those circumstances, we do not want providers losing more than 1% year-on-year in rent reductions, which would have been the case if rents for all new tenancies were set with reference to the social rent rate.

Sub-paragraph (6) clarifies that, if the tenant is in that social housing for a part of the year only, or if the requirement ceases to apply because of an exception or exemption, the reduction in rent applies on a pro rata basis. In instances of new social housing, the rent will be set with reference to the social rent rate as described above. Paragraph 3 sets out the case for a person becoming a tenant of affordable rent housing after 8 July 2015.

Sub-paragraphs (2) to (4) provide that the rent payable by that tenant should be set at no more than 80% of what would be the market rent for that social housing and that, in the following years, a reduction of 1% per annum applies. Again, such rents will be on a pro rata basis if appropriate. What constitutes affordable rent housing will be set out in regulations made under paragraph 4. The intention is to mirror the existing policy that homes should be let at affordable rent levels only in certain circumstances, including where there are agreements or arrangements with the Homes and Communities Agency, the Greater London Authority and the Secretary of State, to control housing benefit costs.

Part 2 of the new schedule sets out exceptions to, exemptions from, and the enforcement of, the requirements in part 1. Paragraph 5 makes provision for exceptions that mirror those set out in clause 20, namely low-cost home ownership and shared home ownership accommodation, and various exceptions applicable to mortgagees and other lenders when those persons take steps to enforce a security. Paragraph 5(4) gives the Secretary of State a power to make regulations to disapply the requirements of part 1 in other cases, set out in sub-paragraph (5). In particular, the regulations may include provisions on tenants, tenancies, accommodation and events. They may also include provisions on high-income social tenants and on periods when a tenant’s rent is temporarily reduced or waived.

Paragraph 6 of the new schedule relates to the granting of exemptions by the regulator or the Secretary of State and makes equivalent provision to that in clause 22. Paragraph 7 gives the Secretary of State a power to make provision about the enforcement of the schedule, including provisions to apply part 2 of the Housing and Regeneration Act 2008 with modifications.

Part 3 of the new schedule sets out the conditions relating to regulations made under the schedule. Paragraph 9(2) provides that providers must have regard to guidance when determining assumed rent in cases of properties that were not tenanted on 8 July 2015.

Amendment 172 removes the provision made for other cases in the Bill as introduced. Amendment 174 is a drafting amendment linked to new clause 20 on excepted cases under the new schedule and new clause 19, and is necessary to introduce the new schedule. Amendments 175, 178 and 179 are minor technical amendments consequential on new clause 22 and, in the case of amendment 175, on new clause 21.

New clause 21 expands the provision in clause 19(9) of the Bill as introduced. Sections 194(2A) and 198(3) of the 2008 Act give the regulator of social housing the powers to set and revise standards relating to levels of rent. The new clause ensures that the regulator may not issue standards inconsistent with the provisions on social housing rent in the Bill.

New clause 22 simply gives the meaning of various terms set out in the provisions on social housing rent in the Bill. In particular, subsections (3) and (4) clarify when a tenancy begins, when a tenancy is to be treated as continuing although a new tenancy has been granted, and when a tenancy that has been assigned should be treated as coming to an end. The new clause clarifies the position in respect of new grants of tenancies to the same tenant, including at least one of the tenants who formerly held a joint tenancy, as well as certain changes of tenancy under schedule 1 of the Rent Act 1977 and assignments by way of exchange.

I turn briefly now to new clause 20, which provides the Secretary of State with a power to make regulations regarding the maximum amount of rent payable by a tenant in a category excepted by regulations under clause 20 or the new schedule. It also enables the Secretary of State to make provision regarding the maximum amount of rent payable by a tenant who ceases to be excepted from the rent reduction provisions. Those powers are important as they enable the Secretary of State to make regulations to establish the appropriate rent regime for such excepted cases. In so doing, they give flexibility to make provision for special cases—for example, supported accommodation and tenants whose rent has been temporarily reduced. Providers, at present, have discretion to charge high-income social tenants a higher rent, and it is the Government’s intention to except such tenants from the rent reduction provisions. It is important to ensure, however, that if a tenant’s income drops below the high-income threshold, they will no longer be required to pay a higher rent, and the Secretary of State will be able to require that under the regulations.

We also recognise that providers’ individual circumstances will differ significantly, and the new clause will give the Secretary of State power to provide in regulations for an exemption regime if a provider needs it. The new clause will also enable regulations to provide for enforcement of the regulations by the regulator. Amendment 180 is consequential on the addition of the new clauses and the new schedule to the Bill.

Amendments 181 to 183 are technical and relate to the date upon which the various provisions come into force. Amendment 181 will ensure that the provisions exempting a registered provider from the rent-reduction measures can come into force from the date of Royal Assent. Although we do not expect registered providers to plan on the basis that an exemption will be granted, it is nevertheless important that a provision is put in place quickly where it is needed. Amendment 182 is consequential on amendment 181. Amendment 183 is consequential on the addition of the new clauses and the new schedule and will enable the Secretary of State to introduce regulations quickly following Royal Assent. The Bill provides that such regulations will come into force on other appointed days for other purposes. The intention is to bring the Bill’s provisions into force on 1 April 2016.

I wish to make a clarification. Earlier, I said that paragraph 6 relates to the granting of exemptions by the regulator or the Secretary of State. I said that it makes equivalent provision to that in clause 22. I should have said clause 21.

I thank you, Mr Owen, and colleagues for forbearing in listening to these detailed, technical and necessary comments. I am sure everyone will appreciate that it is necessary to provide such detail on the changes.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

As I said this morning, I accept that these are technical amendments. We will scrutinise them in detail, but I will make more general remarks in relation to my own amendments.

Amendment 172 agreed to.

Amendments made: 147, in clause 19, page 19, line 9, after “a” insert “private”.

This amendment and amendment 148 secure that only private registered providers may have relevant years starting on a date other than 1 April.

Amendment 173, in clause 19, page 19, line 10, leave out “tenants” and insert “tenancies”.

This amendment secures that a private registered provider’s usual practice is determined by reference to numbers of tenancies.

Amendment 148, in clause 19, page 19, line 19, after “A” insert “private”.

Amendment 174, in clause 19, page 19, line 22, at end insert—

“( ) This section is subject to—

(a) section (Provision for excepted cases) (provision for excepted cases);

(b) Schedule (Further provision about social housing rents) (further provision about social housing rents).”

This amendment is a drafting change linked to amendment NC20 (a new clause about excepted cases) and amendment NS1 (a new Schedule making provision about initial levels of rent for tenancies beginning after the beginning of 8 July 2015).

Amendment 175, in clause 19, page 19, line 23, leave out subsections (9) and (10).—(Guy Opperman.)

This amendment and amendments NC21 and NC22 secure that the provision in subsections (9) to (10) is also applied to the provision about levels of rent that appears in the new clause and new Schedule added by amendments NC20 and NS1.

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[Debbie Abrahams]

Thank you, Mr Owen, for that clarification. My hon. Friend makes a relevant point, and perhaps he will ask the Minister directly.

Amendment 85 would require the Secretary of State to produce a report on the availability of accessible and supported housing. Finally, amendment 184 would introduce a sunset clause so that there would be no further reductions in rent after 2020. These things have a way of continuing, so we want to ensure that it is clear that the Government intend there to be no further rent reductions after 2020.

[Mr Vara]

I am grateful to the hon. Lady for the measured way she has approached the debate and presented the case for her amendments. I am grateful to her for moving amendments 21 and 85, because they give me the opportunity to set out clearly why we have put these measures in the Bill.

The housing benefit bill for England in the social sector now stands at £13 billion, having risen by nearly a fifth over the past ten years. Rising rents in the social housing sector are fuelling that increase, with average rent increases in the social sector more than double those in the private sector over the past five years. The Government are determined to put welfare spending on a sustainable footing and reduce the deficit while protecting the most vulnerable. We made commitments to deliver £12 billion of welfare savings, and the scale of the housing benefit bill means that we must address it, including through social rents, if we are to reduce the deficit.

[Neil Coyle]

The Minister’s concern for the rising rents in housing associations might be more welcome if it were married with concern for the rise in the private rented sector. Why is the Minister reluctant to address the concern of 70,000 private renters in Southwark and the steep rent rises they face?

[Mr Vara]

Let us talk about the private rented sector. In the years 2004 to 2014, the rent increase in the private rented sector was 23%, according to the Office for National Statistics. In the same period, the social housing rent increased by 63%. If that does not show that there is a difference, I do not know what does.

[Emily Thornberry]

I would be happy to take the Minister around Islington, where, I can assure him, the social rent levels are very much lower than private rent levels and the private rents are going up enormously. In my borough, we have great problems finding accommodation for people in the private rented sector if we cannot provide sufficient housing for them in the social rented sector, which we cannot. Our concern is that everything that the Government are currently doing is undermining the social rented sector and will, in the end, lead to a bigger benefit bill.

[Mr Vara]

I am grateful to the hon. Lady for her contribution, but I suggest she takes up the issue with the Office for National Statistics, rather than with me, as it is a highly regarded independent body. I am minded to say that the vast majority of the public will agree with the ONS, rather than with her.

[Peter Dowd]

May I ask for clarity? The whole point about the public sector is that it reinvests the money into new houses, new stock, decent homes and so on. The corporate group of the public sector tends to do that—it is part of its raison d’être—but the private sector is not doing it. Will the Minister give his view on that?

[Mr Vara]

I thank the hon. Gentleman for that contribution. I am mindful of the fact that he was a council leader before entering Parliament, and he brings added value to the Committee, and indeed the House, as a result. I will address the issue he has referred to and the argument that there will be a reduction in housing, so if he will please bear with me for a while longer, I will tell him why I believe that these measures will not have the impact that Opposition Members seem to think they will.

The Government have taken the decision to reduce rent increases within the social sector, which is good news for tenants. Just as I did on Tuesday, I pay tribute to the right hon. Member for East Ham (Stephen Timms), who acknowledged on Second Reading that the 1% reduction was a good thing and that he supported it. He is a distinguished Member of Parliament, and I am sorry that the Opposition Front Bench team has been deprived of the benefits he brought to it. He is a former Chief Secretary to the Treasury and a former Department for Work and Pensions Minister, and commands respect on both sides of the House. Given his ministerial experience, he knows the real position, and he said that he felt the 1% reduction was necessary. To be fair to him, he said he had concerns about the housing stock; I will address those concerns shortly, as I said to the hon. Member for Bootle. However, he recognised that the 1% reduction is necessary.

Rents paid by social housing tenants in England will reduce by 1% a year for four years from 2016. That means that by 2020 they will be paying roughly £12 per week less than they would have had to pay under the current policy of increases at a rate of the consumer prices index plus 1%. The policy will also help taxpayers, who are subsidising rents through the rising housing benefit bill. It is interesting that we have heard a lot of comments regarding housing associations, but no one seems to be acknowledging the financial benefit of £12 a week to the people living in those houses.

[Jess Phillips (Birmingham, Yardley) (Lab)]

To return to the Minister’s point about the benefit to the taxpayer, people living in lots of different types of supported accommodation, in social housing or in housing association housing are also in work and are taxpayers. I wonder how many times we will have to repeat that point to the Minister. They are not two distinct groups. Everybody pays tax, so will he please stop making out that one group of people is paying for another?

[Mr Vara]

The hon. Lady speaks of one group. The only conversations we hear are about the people she refers to; she does not talk about the people who are paying through their taxes for social housing but do not live in it. She speaks of a distinction she would rather I did not make—she would rather that we all spoke of just one group. She needs to recognise that there is another group. Perhaps she might reflect on those people occasionally.

[Jess Phillips]

Is the Minister telling me that the taxes of people who do not live in social housing are put in one pot and the taxes of people who do are put into another, and that those pots pay for different things? Am I confused, or is that money mixed?

[The Chair]

Order. This is a debate, and I am sure that the Minister will deal with the questions that have been raised.

[Mr Vara]

We need to treat this debate as one taking place in Parliament, not in a sixth-form debating society.

[The Chair]

Order. I am conducting a Bill Committee at parliamentary level, and I am sure that the Minister will respond at that level.

[Mr Vara]

Absolutely, Mr Owen. I refer to all taxpayers, whether or not they are in social housing. All are equal in the contribution they make, but we must recognise that the taxpayer is paying a huge amount into the social housing budget at the moment. We have decided that a 1% reduction is fair. An argument has been put forward about there being inadequate housing; I will come to that shortly.

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[Naz Shah]

rose—

[Mr Vara]

A lot of questions were asked, and I would like to have the opportunity to address the issue of additional funds. I will give way to the hon. Lady in due course.

We need to recognise the £2.4 billion in surplus funds that housing associations have and the £2.2 billion that the 165 local authorities have in their housing revenue accounts. We should also remember the Government’s £10 billion debt guarantee scheme to support the delivery of new rental homes, and we are encouraging the supply of new homes with a £1 billion build to rent fund.

[Naz Shah]

Will the Minister give way?

[Mr Vara]

I will not for the moment.

The Government remain committed to the delivery of 275,000 homes over the course of this Parliament. I remind Opposition Members that we have a track record of delivery—in the past five years we delivered more affordable homes than the Labour party did in 13 years of Government.

[Emily Thornberry]

Will the Minister give way?

[Mr Vara]

I will not give way to the hon. Lady.

We also need to remember that when the Labour party was in power, house building fell to its lowest level since the 1920s. In England—

[Several hon. Members rose—]

[The Chair]

Order. The Minister is not giving way, and I would appreciate being able to listen to him without the conversations on both sides of the Committee Room.

[Mr Vara]

In England, only 75,000 homes were started between June 2008 and June 2009, the lowest level of building since the 1920s. So Government Members will take no lectures from Opposition Members when it comes to house building. They need to reflect on a whole host of other things—

[Naz Shah]

Will the Minister give way?

[Mr Vara]

I will give way to the hon. Lady.

[Naz Shah]

Will the Minister qualify his 2014 figure of £2.4 billion? Was that before the bedroom tax hit, when the housing associations lost that money, or afterwards?

[Mr Vara]

I thought I had made it clear that the £2.4 billion was in the 2014 financial year. The £2.2 billion for local authorities was in the last financial year.

[Neil Coyle]

The Minister used careful language—“most” and “many”—when talking about the financial robustness of housing associations. What distinction is made for those housing associations that are not in as strong a financial position? How will they be supported through a change that could see them lose significant sums?

[Mr Vara]

I appreciate that the hon. Gentleman is still reading the Bill, but when he gets further on he will find a subsequent clause that deals with exemptions, including local authorities or housing associations that might be in financial difficulty, and there are measures to deal with them.

To help further, the regulator will be on hand to assist housing associations in considering how they can deliver more efficiency and better value for money. My colleagues at the Department for Communities and Local Government continue to engage with all those concerned as they develop plans to meet the reductions. We acknowledge, however, that there might be some circumstances in which the reduction policy should not apply. Clause 20 therefore provides some statutory exceptions and for further provision to be set out in regulation. In clause 21 we have also allowed for circumstances in which the financial viability of a private registered provider might be jeopardised. In such circumstances a provider may apply to be exempt from the rent reductions; similar provision is made for local authorities.

As for the number of new homes being built, the Government remain absolutely committed to ensuring housing for those who cannot access the market, and we support the ongoing role that the housing association sector has to play in the supply of affordable housing, as well as driving more home ownership. There continues to be a role for housing associations in delivering the mix of housing supply that the country needs, as we have already seen with the delivery of 260,000 new affordable homes over the past five years. We are committed to delivering 275,000 homes by 2020.

We do not believe that there is a need for a plan or a report, as suggested in the amendments. Our approach is measured and will be good for tenants and taxpayers while building in safeguards for supported accommodation and the financial viability of private registered providers. On amendment 184, the Government have made a commitment to reduce rents for a period of four years from April 2016, which is made clear in clause 19 and the new schedule. I hope amendment 21 will be withdrawn.

[Debbie Abrahams]

The amendments have been drafted in consultation with a number of agencies, housing associations, the National Housing Federation and the Local Government Association. Moody’s has also criticised the Government’s measures. The Minister said that my right hon. Friend the Member for East Ham supports this measure, but he supports and has put his name to amendments 21 and 85.

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[Mr Vara]

To clarify, I was simply saying that, on Second Reading, the right hon. Member for East Ham did not disagree with the 1% reduction. He agreed with it, but with caveats.

[Debbie Abrahams]

Amendment 21 reflects the concern about the affordable homes building programme, which is why we have asked for a plan. We are not convinced that the Government will follow through, which is why I have moved the amendment.

On the other, more general points, I gently refer the Minister to the Government’s own data on house building performance, which were published this summer. Unfortunately, since 2010 the Government have presided over the lowest level of house building in peacetime since the ’20s—those are the Government’s own figures. I will not press the amendment but, again, I refer the Minister to the figures on affordable homes. We are really concerned about what is happening. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Exceptions

[Mr Vara]

I beg to move amendment 176, in clause 20, page 19, line 42, leave out paragraph (c) and insert—

‘(1A) Section 19 does not apply in relation to social housing that consists of or is included in a property if, where the property is subject to a mortgage or other arrangement under which it is security for the payment of a sum or sums—

(a) the mortgagee, or a person entitled under the arrangement to be in possession of the property, is in possession of the property,

(b) a receiver has been appointed by the mortgagee, by a person entitled under the arrangement to do so or by the court to receive the rents and profits of that property and that appointment is in force, or

(c) a person has been appointed under or because of the mortgage or the arrangement to administer or sell or otherwise dispose of the property and that appointment is in force.’

This amendment expands the exception from the rent reduction requirements in clause 19 so that it includes, as well as cases of a mortgagee in possession or a receiver appointed under a mortgage, cases where steps are taken under a different form of security to realise the security. See also amendment 177.

[The Chair]

With this it will be convenient to discuss Government amendments 177 and 149.

[Mr Vara]

The amendments relate to clause 20, which provides for an exception from the rent reduction requirements when a mortgagee takes possession of a property, or when a receiver is appointed by the mortgagee or the court, or where a property is sold by a mortgagee in possession or the receiver. This exception is intended to protect the value of stock held by all private registered provider landlords, to ensure that they can continue to use their assets as security for borrowing in the same way that applies in similar circumstances under the existing rent policy.

Our intention is that the rent reduction measures should be aligned as far as possible with existing policy on social housing, currently set out in the regulator of social housing’s rent standard guidance and the Government’s guidance for local authorities. Amendment 176 expands the exception from the rent reduction requirements in clause 19 so that it also includes cases where steps are taken to realise security under a different form of security, and where any person is appointed under a mortgage or different form of security arrangement to administer or sell the property.

Amendment 177 provides that the exception applicable to a sale by a mortgagee in possession or a receiver is not limited to the first person or body becoming successor in title of the registered provider on the sale or transfer of the property by a mortgagee or receiver, but extends to all subsequent purchasers or owners. It also expands the exception to cases in which the property is sold under a different form of security arrangement.

Amendment 149 clarifies that events for which the regulations may provide may include periods when the rent payable by a social tenant is temporarily reduced or waived. Such provision could be used to clarify how the rent reduction should apply when a registered provider has temporarily reduced or waived a tenant’s rent—for example, because they are making repairs to the property.

The details will be set out in the regulations. Without these amendments, there would be an impact on the private registered provider sector, potentially reducing the value of all social housing assets currently being used for security for borrowing, which would lead to a need for more security, and preventing them from borrowing more to build the homes that we need.

[Debbie Abrahams]

I should like to make a reference to my amendment, if I may.

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[Neil Coyle]

In rising to speak to the amendment, I just want to say that I welcome the Minister’s commitment this morning to write to me so I can find out a bit more information. He suggested that I was trying to make a name for myself—I believe that was the term he used. I certainly do not intend to upset him in any way, not least because I understand he has a black belt in martial arts.

[Mr Vara]

Let me assure the hon. Gentleman that I have been here for 10 years and what he says will in no way upset me. He will very soon become a seasoned politician with a thick skin.

[Neil Coyle]

The commitment to providing information was linked to the amendment because we were talking about housing associations, representations and the discussions that the Department is having. It would be useful if the Minister, when answering in writing, could provide information on the number of housing associations that have been met; the numbers that indicated that they support the policy, especially those providing specified and supported accommodation; those that specifically outlined the risk to their business case of the policy going ahead; and any representations to the Department from organisations suggesting that they would be unable to provide specified accommodation. I would be grateful to receive that information. I do not expect an answer today.

We heard about specified accommodation in great detail from my hon. Friend the Member for Oldham East and Saddleworth, and from all the organisations that made representations—I am particularly grateful to Homeless Link, St Mungo’s Broadway, Shelter and Crisis. The amendment is designed to cover shared houses, hostels, refuges and self-contained accommodation owned by registered providers, and instances where housing-related support, including financial management, is provided.

St Mungo’s Broadway operates in my constituency. Of its residents—the people that it provides support to—52% have previously been rough sleepers, 72% have mental health needs, 44% have significant physical health problems and more than one in five have experienced violence or abuse from a family member or partner. That is the client group, to use the Department’s language, that we are talking about. The total number of units provided at the moment is around 105,000. My hon. Friend the Member for Bootle mentioned Riverside, which estimates that it provides about 4,600 units of that kind of accommodation. We are not talking about a huge number, but the measure would make the provision of the services and housing more difficult for those organisations.

The Homes and Communities Agency was mentioned earlier. It has estimated that investment in supported housing results in a net cost-benefit to the public purse of £640 million per year. Does the Minister have any information about how that cost-benefit analysis has been undertaken or about the risk to that cost-benefit if housing is put at risk? The cost to local authorities of rough sleeping is roughly £8,600 per person. That does not include any cost to the Department of Health, the Ministry of Justice or the Home Office—it is just the cost to local authorities. Getting this wrong and putting accommodation for vulnerable people at risk could have knock-on costs for all taxpayers.

The Department for Work and Pensions and the Department for Communities and Local Government have commissioned a review into supported accommodation to establish a better evidence base for future funding decisions. Would the Minister give an indication of where that review is at and why the Government are not prepared to wait for the outcome of that review before pressing on with the policy?

Riverside estimates that the cumulative cost of the policy to it would be about £100 million. It has said that

“a year on year reduction in rental income would make this element”—

the specified accommodation—

“of our business loss making”.

It would either have to subsidise from elsewhere or stop providing that accommodation.

St Mungo’s Broadway has said that

“the requirement to reduce rents in social housing in England by one per cent per year for four years will result in the loss of supported housing schemes for homeless and vulnerable people.”

It is saying categorically that it will be unable to provide some of the accommodation that it currently provides, and that there is a knock-on cost that the Government have not taken into account. As my hon. Friend the Member for Oldham East and Saddleworth has mentioned, St Mungo’s Broadway has said that it will lose £1.25 million by the end of this Parliament as a result of the annual rent reduction. The four housing associations that I have spoken to, which provide some of their accommodation in Bermondsey and Old Southwark, have said that collectively, the cost to them of the proposed policy would be more than £180 million during the lifetime of this Parliament alone.

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The status of “specified accommodation” came into law in 2014 through the Housing Benefit and Universal Credit (Supported Accommodation) (Amendment) Regulations 2014—I do not think we need the statutory instrument number. Specified accommodation serves a different purpose from general needs accommodation; it is defined as housing where “care, support or supervision” is provided. People who live in specified accommodation have support needs that generally mean that they would find it difficult to sustain accommodation in which support was not provided. Those support needs might be related to homelessness, mental health issues, offending, domestic violence, substance abuse or any combination of those. The rationale for treating supporting housing separately from other social housing has been recognised in the Government’s decision to keep housing costs for specified accommodation out of universal credit and benefit cap calculations. There is a practical precedent, and it would be wrong to undo the steps that the Government have already taken to protect vulnerable people from those policies, which is why the amendment is much needed.

[Mr Vara]

May I initially address the hon. Gentleman’s points, although I will of course write to him? As a caveat, I must say that we have lots of meetings with lots of organisations, and many have asked whether we could look at something differently. Policy is not reached purely on the basis of asking, “Do you agree with this, or don’t you?”. Instead, we make it clear that we propose to do something and that we have a Government mandate to do so, and we ask how we can do that so that we best accommodate others’ views. Matters are not clearcut, but I will certainly write to the hon. Gentleman.

The hon. Gentleman referred to the evidence review that the Government have commissioned on the specified accommodation and supported housing sectors to understand better the scale, shape and cost of the sector in England, Scotland and Wales. We hope that the findings will be available sometime next year.

I welcome the contributions to the debate, all of which have been heartfelt. I commend the hon. Member for Oldham East and Saddleworth for the measured way in which she put forward her arguments, and I have taken her points on board. I am very grateful that the amendment was selected, because it gives me the opportunity to set out what is in the Bill, and to explain why we cannot support the amendment. However, I hope that the hon. Lady will take comfort from my remarks.

We recognise that the rent reduction measures introduce a significant change to existing rent policy. We have listened to comments and concerns about the housing of vulnerable groups, and I can offer the hon. Lady a number of assurances that mean that her amendment is unnecessary. First, in the light of this new policy, we will look to align as far as possible exceptions under the new policy with those that apply under the existing rent policy for social housing. That means that we intend to except from the rent reduction requirement the types of housing that are excepted from the rent standard. Those include specialised supported accommodation, which provides support for the most vulnerable people and which is developed in partnership with councils or the health service. Also excepted will be residential care homes and nursing homes. Clause 20(2) gives the Secretary of State for Communities and Local Government a power to set further exceptions should they be needed, to except that accommodation from rent reductions.

Clause 20(3) further clarifies the cases and circumstances that regulations may provide for, which include groups of tenants and types of accommodation.

[Peter Dowd]

I acknowledge what the Minister is saying, but I would ask him to cast the net more widely. For example, does he recognise that, under section 117 of the Mental Health Act 1983, if accommodation cannot be continued, provision becomes much more expensive because of a statutory requirement, notwithstanding the forthcoming amendments? That provision would be much more expensive if organisations could no longer provide it. The Government are taking money from Peter to pay Paul, but Paul is much more expensive.

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[Mr Vara]

I take on board what the hon. Gentleman says, some of which I will address later when I talk about other forms of help, assistance and funding.

We have tabled amendments that provide the Secretary of State with powers to allow, by regulation, rent setting for new tenancies in supported housing at up to 10% above the formula. That is similar to the existing rent policy and standard practice. We believe that should help providers of supported accommodation for vulnerable people to continue to provide that important housing. We also acknowledge that there might be some circumstances in which the financial viability of a private registered provider or a local authority could be jeopardised—something the hon. Member for Bermondsey and Old Southwark mentioned. In those cases, the providers could apply to be exempt from rent reductions.

[Neil Coyle]

It sounds like some of what the Minister is saying is likely to be welcome. Let me reiterate that the borough of Southwark is the biggest landlord in London. In bringing forward other exemptions, would the Minister be willing to meet my local authority to ensure that the most appropriate accommodation is exempted to best effect?

[Mr Vara]

I would of course be happy to meet the hon. Gentleman and anyone he wishes to bring to the meeting. What I would say is that we have been mindful of the fact that we cannot judge the situation as it is now. Where local authorities or housing associations find themselves in financial difficulty and their viability may be an issue, there are processes in place to ensure that the regulator works with them to make sure that things can be worked out. If it is felt necessary, then with the consent of the Secretary of State there can be alterations through a rent reduction, and organisations can make their case. However, we hope to set out in regulations the criteria that would be applied.

We intend to work with organisations—housing associations and local authorities—because we want to make this work. The change is not simply being imposed; we are consulting widely. The hon. Member for Oldham East and Saddleworth was right to say that there have been a number of amendments, and I repeat that that is a direct consequence of lots of organisations coming to us and saying, “Well, how about this?” We have taken what I think is a commendable decision, in that we have genuinely listened and tried to clarify what we thought we were aiming for. It was not clear enough for the people concerned, so we sought to clarify it.

It is important to get the balance right between reducing the burden on taxpayers and supporting the provision of housing for vulnerable people, as well as the balance between supporting the provision of that housing and treating fairly those older or disabled tenants who pay their own rent and who should benefit from the rent reductions, but will not do so if there is a blanket exemption.

When it comes to dealing with vulnerable older and disabled people, it is important to look at the wider context. As a Government, we are determined to protect the most vulnerable in society and help them to live independent lives, and assistance goes beyond what we are discussing today. Funding for supported housing is included in the wider settlement to councils. The Government continue to support local areas to meet their local needs by maximising funding flexibility. For example, in 2015-16, we are investing £5.3 billion in the better care fund to deliver faster and deeper integration of health and social care. This will enable councils to invest in early action to help people to live in their own homes for longer and help to prevent crisis, as well as supporting councils to work together more effectively, deliver better outcomes for less money and drive integration across all services.

The Government are also investing in specialised housing for older and disabled people through the £315 million care and support specialised housing fund. Phase 1 is expected to deliver over 4,000 homes by 2018; phase 2 was announced in February and will set aside up to £155 million in capital funding for the development of specialist housing to meet the needs of older people and adults with disabilities or known mental health issues.

[Neil Coyle]

My understanding is that the better care fund is entirely restricted to new projects, so it cannot help towards councils’ existing accommodation costs. Given that we know the waiting lists that councils across the country have, I am not convinced that the better care fund is the solution to the specific problem before us. At the same time, the Government are ending the independent living fund, leaving councils potentially significant new costs for providing residential care accommodation for disabled people who had previously been able to be supported in their own homes.

[Mr Vara]

I repeat that we should not look at this solely in the context of what we are discussing today; there is a wider picture here, and I have given details of the other moneys available alongside the 1% reduction we are discussing.

I repeat that the Government are committed to ensuring that the most vulnerable people are protected. Statutory homelessness is lower now than in 26 of the past 30 years, at less than half the peak it reached in 2004. This Government have increased spending further to prevent homelessness, making over £500 million available to help the most vulnerable in society. That has resulted in local authorities preventing 935,000 households from becoming homeless since 2010.

[Neil Coyle]

There is a brilliant charity in Bermondsey called UK Homes 4 Heroes, which supports former members of the armed forces. We have seen a dramatic rise in the number of former members of our armed forces sleeping rough in London. How will this specific policy help councils and others to better support those coming out of the armed forces, to prevent them from ending up sleeping rough, given what the Minister has just said?

[Mr Vara]

That issue commands huge respect across Government and on both sides of the political argument. There is discussion and debate across Government to make sure that brave men and women who are prepared to put their lives on the line for our safety and security get the best possible treatment. There are clearly still issues that need to be resolved. It is an ongoing debate. I am very aware of the situation to which the hon. Gentleman refers; there are RAF bases in my constituency, and I am only too aware of how we need to look after those people a lot better. We have made progress in the past five years, but we need to do more and should remain vigilant.

I believe that there are sufficient safeguards in place to ensure the continued financial viability of housing providers while balancing the need to support tenants who should benefit from a reduction in their rent. I urge the Opposition to withdraw the amendment.

[Debbie Abrahams]

I am grateful to the Minister for that positive response and look forward to the regulations he mentioned setting out the criteria on requests for exemptions that providers of supported housing may put to the regulator. I believe that the Minister recognises the dire situation those providers are in. I also thank my hon. Friend the Member for Bermondsey and Old Southwark, who provided us with the wider context about, for example, how the end of the independent living fund will affect local authorities’ provision for supported accommodation; that is very relevant.

I differ from the Minister in my interpretation of the homelessness situation at the moment. We can trade off figures, which I do not think is helpful. We need to move beyond that. I have the Government figures here, and in the past five years, for example, there has been an 840% increase in the number of families with children who have been declared homeless and are living in bed-and-breakfast accommodation. The situation is certainly not rosy. We have anecdotal evidence of that ourselves. However, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

This amendment provides for directions that exempt a private registered provider from the rent reduction requirements in clause 19 but limit what increase in rent the provider may impose.

[Mr Vara]

I beg to move amendment 154, in clause 21, page 21, line 5, at end insert “, and

(b) the social housing in relation to which it is to have effect.”

This amendment enables a direction to affect only some social housing of a private registered provider.

[The Chair]

With this it will be convenient to discuss Government amendments 155, 156, 161 and 162.

[Mr Vara]

We have recently been talking about exceptions and exemptions and it might be helpful if I clarify the position. We will set out the criteria for exceptions in the regulations. When we talk about exemptions, the financial viability conditions are in the Bill. We can also set out other conditions for an exemption in the regulations. I hope that that is helpful in drawing a distinction.

The amendments seek to introduce flexibility into the exemption process in relation to clause 19. Amendments 154 and 161 allow a direction to be made in relation to only some of the social housing that a private registered provider or a local authority have, ensuring that exemption can be targeted. Amendment 155 enables the regulator of social housing, the Homes and Communities Agency, to publish guidance on steps that a private registered provider should take before seeking an exemption. Amendments 156 and 162 give the Secretary of State power to prescribe conditions other than serious financial difficulties in which an exemption may be granted to a local authority.

Amendment 154, 155 and 161 recognise that exemption is a tool of last resort and, if needed, should be used in as targeted a way as possible. Amendments 156 and 162 provide for greater flexibility in the exemption regime.

[Debbie Abrahams]

I am grateful to the Minister for his clarification. We are talking about the financial viability of supported housing providers and, more broadly, housing associations. The Government are considering the problems that they face, so has there been any assessment of the housing providers whose viability could be threatened as a result of the measures? Will one be undertaken? I am grateful for the detail on the amendment, but it seems that implementation is already anticipated. Should there not be a step before that?

[Mr Vara]

We are not anticipating difficulty. We are trying to recognise what might happen in future, so we are making it absolutely clear that, although we propose a 1% reduction, where financial viability is threatened, there are measures in place to deal with it.

We must recognise that the regulator is there to help, assist and advise. Its job is to assist, but as a default mechanism we have those provisions. However, as far as I am aware, we do not anticipate anyone having difficulty. I reiterate that we are confident that housing associations and local authorities are robust organisations that can deal with the 1% reduction. It must be considered in the wider context. Individuals and other organisations throughout the country are having to put up with difficulties. We are asking for a 1% reduction. I repeat the comments made by David Orr, chief executive of the National Housing Federation. I will not repeat the whole quote, as I gave it earlier, but simply two lines. He said that

“in truth, there is no sector anywhere that is not still capable of making further efficiency savings. That is as true in our sector as it is anywhere else.––[Official Report, Welfare Reform and Work Public Bill Committee, 15 September 2015; c. 91, Q144.]

Amendment 154 agreed to.

Amendments made: 155, in clause 21, page 21, line 11, at end insert—

“( ) The regulator may publish a document about the measures that the regulator considers could be taken by a private registered provider to comply with section 19 and to avoid jeopardising its financial viability.”

This amendment enables the Regulator of Social Housing to publish documents relating to the condition in clause 21(4).

Amendment 156, in clause 21, page 21, line 13, after “(9)” insert “or (9A)”.

This amendment and amendment 162 provide that the Secretary of State may issue a direction if an alternative condition is met, that is, a condition that the circumstances of the local authority must satisfy requirements prescribed in regulations by the Secretary of State.

Amendment 157, in clause 21, page 21, line 18, after “for” insert ““at least”.

This amendment and amendment 158 permit a local authority to which a direction in the terms of clause 21(7)(b) is issued to make a reduction in rent, instead of keeping the rent the same.

Amendment 158, in clause 21, page 21, line 19, for “the same as” substitute “no more than”.

Amendment 159, in clause 21, page 21, line 21, after “required” insert “at least”.

This amendment permits a local authority to which a direction in the terms of clause 21(7)(c) is issued to make a greater reduction in rent than the reduction specified in the direction.

Amendment 160, in clause 21, page 21, line 22, at end insert—

“(d) a direction that section19 is to have effect in relation to a local authority specified in the direction as if section19(1) required the authority to secure that the amount of rent payable by tenants of their social housing increased by no more than the percentage specified in the direction.”

This amendment provides for directions that exempt a local authority from the rent reduction requirements in clause 19 but limit what increase in rent the authority may impose.

Amendment 161, in clause 21, page 21, line 24, at end insert—

“, and

(b) the social housing in relation to which it is to have effect.”

This amendment enables a direction to affect only some social housing of a local authority.

Amendment 162, in clause 21, page 21, line 27, at end insert—

“(9A) The condition in this subsection is that the circumstances of the local authority satisfy requirements prescribed in regulations made by the Secretary of State.”

Amendment 179, in clause 21, page 21, line 31, leave out subsection (11).—(Guy Opperman.)

This amendment is consequential on amendment NC22.

Question put, That the clause, as amended, stand part of the Bill.