Benefit Cap (Housing Benefit) Regulations 2012
Lord Best Excerpts(14 years ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Lister of Burtersett
My Lords, I think that I and the noble Lord, Lord Kirkwood, were the only Members of this House to oppose the benefit cap on principle and I remain opposed to it on principle, but I will not go through all those arguments again, although the Minister put the principled arguments for the cap, except to say that we have rather different views about fairness. I refer to that in relation to what is not yet a proposal but a suggestion mooted by the Secretary of State that a further benefit cap should be imposed on families with three or more children—exactly the same group who stand to lose most from this benefit cap—before this cap has even been applied. What possible basis is there for floating yet further caps until we know the effects of this one? I should be grateful if the Minister could say something about the interaction between the caps and what work has been done in the department on the likely impact on child poverty.
Like my noble friend Lord McKenzie, I read the Guardian and saw yesterday’s report. I followed it up by contacting the Child Poverty Action Group— I declare an interest as its honorary president. It has just, with the London Advice Services’ Alliance, published a study of London local authorities and how they are dealing with the various cuts in housing benefit.
It is clear that one of the common solutions, as evidenced in that Guardian piece, is to move families from inner to outer boroughs, or well beyond. Like the localisation of council tax benefit, it seems that the Government are taking a Pontius Pilate position here—washing their hands of all responsibility and then saying, “It is the local authorities that are responsible”. A Government spokesperson was quoted in the Guardian yesterday as saying:
“It is neither acceptable, fair nor necessary for local authorities to place families far away from their area”.
I agree, but to the extent that it becomes necessary, the blame lies with central government.
The National Audit Office spelled out, in its report last week, the pressure that the combined cuts in housing benefit would put on the supply of affordable local housing in some areas. The National Audit Office also drew attention to one of the findings of the interim report from the evaluation being carried out for the departments:
“Claimants’ reluctance to consider moving to other areas appears to reflect a considerable attachment to their local area as a place to live”.
The evaluation report refers to the importance of proximity to family, friends and schools.
I have heard Ministers—I do not think that this includes the Minister here today—say that people have no right to be able to live in nice areas that other people cannot afford to live in, as if we are talking about posh areas here and it is all about the niceness of the area. Actually, quite a few pieces of research around poverty and place show the importance of local roots and the networks that people have, and the Government seem completely impervious to this. I find it very strange because it seems to me to fly in the face of the whole philosophy of the big society, which is about the support that people give to each other. Yet this and other policies—I will probably say more about this this evening—wilfully destroy, or are happy to countenance the destruction of, these social support networks. One of my hobby-horses is that this is something that we must look at in all the evaluation that is being done. Like my noble friend I welcome the fact that there will be a review of the impact of the cap, but nothing is said in the Explanatory Memorandum about the impact on social networks.
The Minister talked about incentivising work. We have heard this on a number of occasions. I shall quote the Secretary of State, who said, in the House of Commons in an Oral Answer in September:
“When we recently started dipping into the issue and surveying those who were likely to be affected, it was interesting to find out that, already, well in advance of what is going to happen, about a third of people have admitted that they are out looking for work as a result of the oncoming benefit cap”.—[Official Report, Commons, 10/9/12; col. 15.]
I am interested; I keep hearing this. I am sorry to add to the questions the Minister is being asked, but what is this survey? Is this the telephone calls that he mentioned? Does the department ring up and they say, “Oh, yes, I am looking for work because you are about to cap me”, or what?
I have heard a number of social policy academics say that, if it is in terms of people going into work, this is the normal turnover one would expect. How do we know it is because of the forthcoming cap? Even to the extent that it is having this effect, the CPAG/Lasa study confirmed that several local authorities are working actively with residents to help them move into work or increase their hours in order to avoid a cap, and this is obviously very welcome. It stated:
“However, few see this as an approach able to solve the problems of more than a small proportion of families hit by the cap. One authority estimates that there are at least 500 families who would not be able to be supported into employment due to disability, caring or parental issues”.
Many emphasise the high cost of childcare as a barrier.
My noble friend Lord McKenzie and the noble Lord, Lord German, have mentioned carers and the fact that 5,200 of those expected to be hit by the cap are in receipt of carer’s allowance—that is about one in 10 of everyone affected in 2013-14. The mean reduction will be £105 a week, the median £77 a week. That is a lot of money for people to lose.
The Minister talked about the long-term positive behavioural effect. He might recall that in Committee on the Welfare Reform Bill my noble friend Lady Sherlock and I asked the noble Lord—this is a variation on the question asked by my noble friend—what are the positive behavioural effects that the Government are seeking from carers? Presumably they are not to stop caring. I asked the noble Lord and I am glad to say that he confirmed that that was the case. What other behavioural effects are being sought of carers? I am as baffled as I was then.
I turn to the question again raised by my noble friend on supported housing. I am grateful to Crisis for its briefing on this. It estimates that 10% of those affected could be single adults and it is likely that some of them will be living in supported accommodation. Supported accommodation ranges from hostels for homeless people to domestic violence refuges; it is exempt from normal housing benefit rules so it is not subject to LHA restrictions; the rents charged by different accommodation projects vary, depending on a number of factors but particularly the level and range of support provided. Therefore, a hostel that houses, for example, long-term rough sleepers with severe mental health problems will have higher running costs. A small number of people who live in such high-cost accommodation and who receive other benefits will be affected by the cap. They are not in a position to move elsewhere and they pay a lower rent. We are talking possibly about higher-rate ESA or incapacity benefit as was, and they are likely to be some distance away from moving into work so would not be able to avoid being hit by the cap.
I do not believe that it is right, nor do I believe it is the intention of the policy that the cap should impact on people who are extremely vulnerable or who are at a crisis point in their lives and cannot live independently. Supported accommodation providers rely on housing benefit as a source of funding and they would struggle to provide the vital services that they offer if their residents’ housing benefit were to be cut. Although Ministers have stated publicly that there will be no more exemptions to the cap, I understand that there are discussions going on as to how residents in supported accommodation will be treated. Ideally, I would like to see people who live in supported accommodation exempt from the cap but, failing that, I would be very grateful if the Minister could explain to your Lordships how it is intended to protect supported housing residents from the impact of the cap.
Crisis is also concerned that in the worst instances, households that are not able to find alternative accommodation could be left facing homelessness. That is a point made by my noble friend. I would like to read from the CPAG/ Lasa report, which states:
“Applying the benefit cap to families in temporary accommodation effectively means that families who are accepted as homeless, could be made homeless once more due to their inability to pay the costs of temporary accommodation”.
The situation was recognised by the noble Lord, Lord Freud, during the passage of the Welfare Reform Bill. I quote the noble Lord:
“We need to get a solution to this so that we do not have a ludicrous go-round of people moving into expensive temporary accommodation which they can no longer pay for because of the cap. We are absolutely aware of this and have measures in train to get a solution in the round to that issue”.—[Official Report, 23/1/12; col. 893.]
The report continues:
“At present, however, local authorities see themselves pushed into precisely this ‘ludicrous go-round’, with little option for escape”.
Could the Minister please comment on that and explain what measures exactly are in train to solve what he himself described as a ludicrous situation?
Lord Best
My Lords, I thank the Minister again for that period of grace. I had an amendment seeking a 26-week period of grace and this is the first time that I have ever had a Minister exceed my expectations. I knew I should have gone for 52 weeks but I thank him for confirming that that is safely in place.
Although I agree with a great deal of what has already been said, I particularly wanted to pick out the problem faced by those going into temporary accommodation. There are 51,600 households currently in these properties leased from private landlords. The housing association and sometimes the local authority itself stand in the middle. The private landlord charges a rent and on top of the rent that the landlord charges, the housing association, in taking on this commitment, has to agree to return the place to the landlord in pristine condition at the end of the period so there is a need for reinstatement costs. Management costs are also involved in this, so it is unsurprising that rents for these temporary accommodation leases are higher than other rents. In the areas where the other rents are already very high, these are going to be very high rents. However, the £500 per family cap kicks in regardless of the fact that rents in particular places will be very high.
Housing Benefit (Amendment) Regulations 2012
Lord Best Excerpts(14 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Lister of Burtersett
My Lords, we have heard some powerful speeches in support of the amendment. I take us back to the debate in Grand Committee on 15 October and what the Minister had to say:
“A lot of people will decide that they will have enough money or that they will be able to take in a lodger or take extra work. Those are the kind of decisions that we expect to happen in the marketplace”.—[Official Report, 15/10/12; col. GC 485.]
How many of us think of our homes as the marketplace or the decisions that we make around our homes as market decisions? We are not just talking about bricks and mortar; we are talking about the homes that people live in and the local roots that nourish them. The Minister made it sound so simple, saying that people will decide whether they have “enough money”; we are talking by definition about people on a low income, as my noble friend Lord McKenzie said. Or, the Minister says, they can “take in a lodger”; my noble friend has explained why that is not always appropriate. Or, the Minister says, they can find “extra work”; that is not so easy, either to get a job or increase one’s hours.
According to the National Audit Office report, one-third of households surveyed by Housing Future expect to fall into arrears as a result of this policy. According to Citizens Advice, other debts are likely to increase because, initially at least, people will try to prioritise their rent. Yet the Minister made no mention of debt or arrears as a likely solution, if that is a solution, even though debt is identified by the Government as a primary cause of poverty. One thing that we discussed in Grand Committee was the disproportionate impact of this policy on disabled people. There is evidence about the particular effects on disabled people of debt, and how debt can itself create mental health problems.
I come back to a point that I made earlier, and I have made before. I know that I probably sound like a broken record, but I refer to the impact on social networks when people move as a result of this policy—to people’s lives and to their being able to find work. Often lone mothers can use those networks for childcare, and so forth. The Minister mentioned the evaluation that will take place, which I welcome. In our last gasp, when we were discussing the then Welfare Reform Bill and this provision, the Minister committed that the monitoring would include the impact on social networks. In every subsequent reference that I have seen to that monitoring, I have not seen a mention of that, so I would be very grateful if the Minister could recommit this evening that that monitoring will include the impact on social networks.
On discretionary housing payments, I will not labour the loaves and fishes point any further, but I would instead like to quote from the National Audit Office report that came out last week, which says:
“It is not clear how the current level of funding for Discretionary Housing Payments has been determined or whether it is likely to be sufficient for local authorities in tackling the impacts of reforms. The £390 million of funding over the Spending Review period represents around six per cent of the total £6.4 billion savings expected from Housing Benefit reforms during this period. This works out at around £200 per household affected … There is also no established process for reviewing the level of funding for Discretionary Housing Payments over time. For example there is no mechanism to assess whether the overall funding amount should change to reflect higher claimant numbers. Uncertainty about the basis for future funding in part reflects the fact that the Department is still reviewing how to provide support for housing as a result of broader welfare reforms … Monitoring of how payments are made by local authorities would improve the Department’s understanding of local need. At the moment monitoring is limited”.
I would be grateful if the Minister could tell your Lordships’ House what the department’s response is to those observations from the National Audit Office.
Letters have already been going out to people who are likely to be affected by this policy, and it is striking fear into their hearts. It is a mean-minded policy that shows scant concern for the lives of those affected—and, as the right reverend Prelate put it, shows no concern for the dignity of those affected. Human dignity is at the heart of human rights.
Lord Best
My Lords, the noble Lord, Lord McKenzie, attributes the phrase “bedroom tax” to me, so I take responsibility for this—because it is a tax. It is not about trying to ensure that people are allocated to the property that best suits their needs; it is about raising money and reducing the deficit. We all understand about deficit reduction. Where we differ on this is whether people on the lowest incomes should be contributing to that deficit reduction with what is in effect a tax. It is a payment, which the tenant makes out of their benefits—out of the other benefits they receive, such as disability living allowance, income support or child benefits. It goes to government; that is where the payment ends up, and it reduces the deficit. That is a perfectly valid objective, but I and others maintain that it should not be at the expense of people who are living on the very lowest incomes at present.
The noble Baroness, Lady Turner, attributed the underlying problem to the shortage of accommodation, which then means that rents are much higher than one would hope and expect that they should be. It is not the fault of the occupier that they pay a large rent. We say that it is a disgrace that people are paying these enormous rents, but it is not that people wish to pay large sums in rent; that is what the market has determined. It is very different in London, as the noble Baroness pointed out, as it is in so many other places.
I am collecting examples of people who have written to me with their own cases. One after another, they are cases in which any reasonable person would say, “In that particular case, it seems very unfair for people to have to pay a new tax that they didn’t pay before—in that case, I agree that there should not be this tax to be paid”. One such case I can cite comes from the diocese of the right reverend Prelate the Bishop of Norwich. I agreed very much with his words. I apologise to the Minister for repeating the content of an e-mail that I mentioned in Grand Committee, but it is such a typical case. The lady has lived 23 years in her council house and now it contains herself and her husband. It has three bedrooms. They have actually done quite a bit of work to the House; the garden is immaculate—this is their home. But it is a tax, and they will face a bedroom tax of £25 a week unless they can move out. They have been told that there is a place in another Norfolk town. It is 16 miles from where they live, but there will be a place there in due course. It is not available at the moment, but in due course they will be able to get a one-bedroom flat. The absolute last thing that they want to do is to leave the family home where they have been for 23 years, where their children still come back at Christmas and on other occasions, and where she has a base to look after her mother in the village. It will cost the social services an arm and a leg to have to send in carers to look after mum. At the moment she goes in three times a day: once in the morning, briefly at lunchtime, and once in the evening. She will not be there to do that once she has moved away to the town. This is all ridiculous, and anyone would say, “Look, in that case don’t charge them the tax. Leave them where they are”. Anybody can see that that is the sensible thing to do. However, it will be extremely difficult to make those special cases, and to find the resource that will bridge the gap in their rent in those cases.
Housing Benefit (Amendment) Regulations 2012
Lord Best Excerpts(14 years ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Turner of Camden
My Lords, I support my noble friend’s analysis of these regulations. As the Minister said, we have already debated this issue in detail when we discussed the Welfare Reform Bill and many of us voiced our objections at that time. Nevertheless, I still oppose what is proposed in the regulations because it seems to me that, when they are implemented, very vulnerable people may be placed at an enormous disadvantage.
There are particular problems in certain areas. I am particularly concerned about the area of London in which I live. At one time there was a fair amount of reasonably priced property available in that area. However, that is no longer the case. As soon as a large house becomes available, developers move in and turn it into flats. Houses that once housed two or three families are now filled with masses of people living in the same block. It is all enormously charged for. A number of people are making an enormous amount of money. I am told that a small two-bedroom flat in the area in which I now live would cost £500 a week. When you remember that the median rate for employment in London is £26,000 a year, how do people on those rates afford that kind of rent?
I know that the regulations will not take account of the local rents only. On the other hand, the fact that these kinds of development are going on in large parts of London and people are making quite a lot of money out of them means that the amount of housing available at reasonable rents has decreased because the developers move in and make a lot of money. As a result, there is a shortage of the kind of housing that would normally be available for people on much lower incomes.
The problem is that people now in receipt of benefit may find that they are underoccupying—that they do not need two bedrooms and so on—and they may have to move. If people have to move, that is a great disadvantage for them. In particular, it is a disadvantage for disabled people, who usually have some support mechanisms in the area in which they live—they may belong to groups that look after their needs and so on. To have to move is a great disadvantage to them. It is a great disadvantage to them if they want to work, and some of them do want to work. The Government are already closing the Remploy factories in which some of them could work. If they have to move, there is nowhere for them to obtain suitable employment. That is a great disadvantage.
For all these reasons, I believe that the regulations before us this afternoon are to the disadvantage of numbers of people whom we ought to protect. My noble friend has already indicated that in some detail and I do not want to repeat it, but I emphasise that I am not at all happy about these regulations. I am not the only one—so are many people and so are the organisations particularly concerned with disabled people, which have already made representations to us on these grounds.
Lord Best
My Lords, the Minister is well aware of my disquiet, and I am unlikely to be satisfied in relation, in particular, to underoccupancy—the bedroom tax. I know that he has made some important efforts and I think that he is going to be able to be reassuring on one or two points that noble Lords have raised. I am sure that we will hear that full-time students will not have to lose their bedroom and regain it by a convoluted process while they are away at university. Also, I think that we now have a date when it will be the case that taking in a lodger will not mean that benefit will be cut by the amount received in rent, which will be helpful to some people. These measures are not going to change the world, but they are good things to do and I am grateful to the Minister for putting them in place. There may be more.
I want to talk about discretionary housing payments, which are the way out when you can see that a situation is quite untenable and any reasonable person would say, “Of course, in that particular case, this whole business is a complete nonsense and we must allow those people to stay where they are”. I am now getting the kind of letters that hundreds of MPs are going to get when this really big change gradually dawns on the world outside. I shall read to the Committee from a letter and will give the kind of reply that I would like to be able to give and explain the difficulties I have in giving it.
There is a woman in a relatively rural area of Norfolk who lives with her husband. They are not of pension age. He is a bit disabled. She looks after him, and she also looks after her elderly mother in the village. She sees her mother in the morning, at lunchtime and in the evening. She does a great job with her 81 year-old mother. She is in a three-bedroom council house. They have been there for 23 years and have brought up their children, who have gone. She uses two bedrooms because she and her husband do not sleep in the same bedroom. She will be paying another £25 a week because she is deemed to have two empty bedrooms.
The council has said that it has some one-bedroom flats in the nearest town, which is 16 miles away, that it may be able to move her into, but not now because the one-bedroom flats in the town are rather precious. Later, it might be able to move her in, but in the mean time, she will have to stay where she is. She says, “I can’t afford the extra £25 a week bedroom tax. What am I to do?”. In my letter back to her, I should like to say that there are things called discretionary housing payments. I am hinting at it but what hope can one give to people in such circumstances? It would clearly be completely foolish to move her out, although she cannot afford to stay; she cannot afford the extra £25 a week. However, moving her 16 miles away would mean that her mother had to be looked after by social services at considerable cost and her husband will not be properly housed—it is a nonsense. I should like to be able to say that the local authority should have the opportunity, where anyone can see that it would be sensible, to fill that gap and pay the bedroom tax, enabling her to stay where she is.
We know about discretionary housing payments that take care of some of the local housing allowance and the private rented sector. We know about the sums that relate to the total benefit that people can get from the universal credit—the £500 limit. We know about these other aspects of using discretionary housing payments. However, I cannot find anywhere any money for discretionary housing payments to pay the bedroom tax, except in respect of two special categories. These are thoroughly commendable, although I was startled to hear that the money was taken from the rest of the bedroom tax payers.
There are two kinds of special case. One covers adapted properties that have been physically changed for the people who live there. It would be a nonsense to move them out because there is a spare bedroom. It would cost everyone an arm and a leg. The other exception is a case where there are foster children. They do not count as part of the family but, obviously, they must have a bedroom. There is £30 million a year, which will continue indefinitely, for those two exceptions. That is great but they are very restricted categories. My middle-aged couple in Norfolk would not fall into either group.
I am afraid that noble Lords and, in particular, Members of the other place will all get such e-mails and letters, so they should be prepared. I had another letter from someone with two daughters, one aged 11 and one aged 13. One daughter is severely disabled. She needs a very large bed and, therefore, her own bedroom. However, the two girls are expected to share because they are aged under 15 and are therefore underoccupying by having two bedrooms. That will cost the family £14 a week from their disability allowance. They do not have £14 a week; they have great difficulty in getting by on what they do have. Everyone says that they must stay where they are. This is where a discretionary housing payment could come in. However, as I read the numbers I can see nothing. What does the Member of Parliament say in replying to his constituent?
I hope that the Minister has up his sleeve the opportunity to put in place more discretionary housing payments to get us through what I suspect will be rather a large number of cases in which anyone would agree that it would be best to let people stay put. I do not think it requires more legislation. We will not get the results of the very important, thoroughgoing research—I have congratulated the Minister on it—until some way down the line. Then we will see how things are working out. If it is not already the case, I advise the Minister to talk to his Treasury colleagues and provide a bit more discretion for local authorities to pick up cases that otherwise will just be hopeless. I have no idea how we and the people concerned will be able to cope.
Baroness Hollis of Heigham
My Lords, I declare an interest as chair of Broadland Housing Association, which spans Norfolk as a major traditional housing association. I also congratulate the Minister. We appreciate the reviews that he is seeing through and respect his respect for the evidence. It is welcome to be working with a Minister who is evidence-based. We appreciate that and it should be recorded.
Despite what the Minister said, these regulations are not about overcrowding. The people who are overcrowded and the people who are underoccupying are two different populations and in two different sets of places—they do not match. If the Minister were really serious about the issue of overcrowding, he would actually be looking, as some of us have tried to do, at the underoccupation among pensioners who, of course, are the biggest source of underoccupation. Although I am not suggesting that we should do that, if the Minister were serious about this, he would not confine his efforts to families, many of whom have children.
Secondly, the regulations are not about treating social housing in the same way as private rented housing. This is the second line that the Minister has offered us. What we have learnt over the last six months is that, far from the local housing allowance pressing down private sector rents, which was the mythology offered to us throughout the past year, the reverse is happening. Private rents have soared because, as my noble friend said, no new housing is being built. Private renting is not becoming a transitional tenure but a longer-term tenure. Demand is going up as a result, as are rents, as will the housing benefit bill. So, far from this exercise pressing down housing benefit, I am confident that we will see housing benefit in the private sector rise, because there are not three housing markets in this country, there is one. As new building has stopped in the owner-occupation sector and the social rented sector, the pressure on the private rented sector will increase, rents will go up and, as a result, the housing benefit bill will rise.
So neither of these two things are at issue. This is not about matching underoccupation and overcrowding— it does not fit. The Minister knows the statistics— they do not fit. It is not about following the example of the private rented sector, where rents are soaring and HB bills are likely to go up.
Like others, I do not want to repeat the arguments aired at great length in Committee. I have not been persuaded by anything since that the Minister was correct in his analysis. As a chair of a housing association whose tenants will lose the best part of £1 million in forfeited benefit, I have some questions for the Minister. What advice will he give me, given that his colleagues in DCLG have ensured that, instead of having £42,000 on average for a grant for a new house, it is now down to £16,000? As we cannot build without a grant of a minimum of £26,000, we cannot build. For the first time in 40 years my housing association is not building any new property. Given that, we have no possibility at all of “balancing our stock” to build the new single-bedroom properties that are pivotal to this scheme. As a result, our tenants know that they are faced with only our existing stock and occasional re-lets.
Occasional re-lets, when they come up, if they are attractive and in the right places, are for the most part pursued by pensioners. However, in future, pensioners who would like to leave a three-bedroom house and move into a one-bedroom flat or bungalow, will not be able to access any re-lets in our villages. This is because people currently in two-bedroom properties who are in the client group affected by the benefit cuts will now have to move to any available one-bedroom property against their will. I have yet to discover how that in any way adds to the sum of human happiness.
Many of our tenants have functional illiteracy and may therefore be re-classed as vulnerable, with the result that we will enjoy their housing benefit direct. However others, such as couples with children, will find it hard to manage; they will have debts, the banks will lean on them, and although I am trying to get them into credit unions, that may not be possible as they do not operate throughout Norfolk. They may well run into arrears. What would he have us do? If we let the arrears run, that will affect the estate, other people will stop paying their rent, we will go into the red, our books will not balance and we will go into special measures. The alternative is to evict, but the local authority will hope that we do not, because those families will go into bed and breakfast accommodation. This may be 10 miles away, the children will have to leave their schools, the younger ones may be bed-wetting, they will all be crammed into one room, and the cost to the public purse will actually increase because the cost of a bed and breakfast will be something like £300 per week, as opposed to the rent for their current accommodation at about £70 or £80 per week. So we have made that family deeply unhappy, broken up the pattern of managing their lives and very fragile incomes, and put them into accommodation at greater cost to the public. However, as they are a family they are entitled to be rehoused, so the local authority will ask us whether we can help. We will reply that the only property we have available is the same three-bedroom accommodation from which they were evicted because they could not afford to pay for it.
Welfare Reform Bill
Lord Best Excerpts(14 years, 8 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
“(3A) The Secretary of State shall commission an independent review (“the review”) of the impact of the provisions of sections 11 and 68 of this Act.
(3B) The review shall assess the impact of those provisions on—
(a) families; (b) the incidence of poverty;(c) the incidence of homelessness;(d) levels of underoccupancy;(e) local authority resources;(f) rent arrears; and(g) any other consequences of sections 11 and 68 of this Act which the Secretary of State or the reviewer consider should be covered by the review.(3C) The review will commence six months after sections 11 and 68 of this Act come into force (or, if the provisions of sections 11 and 68 comes into force on different dates, six months after the latter of those provisions comes into force).
(3D) The review will conclude with the making of a report within six months of the review commencing; and shall be repeated one year after it commenced.
(3E) Reports made under subsection (3D) shall be laid before both Houses of Parliament.”
Lord Best
My Lords, in response to the Minister’s defence of the inclusion in the Bill of this underoccupation penalty, perhaps I could briefly spell out the position that we have reached this evening.
Before Christmas, this House asked the other place to reconsider the idea of requiring several hundred thousand tenants in council housing or housing association homes to move out or pay a fine if they were deemed to have a spare room. The amendment that we sent to the other place would have meant that although the requirement to move out or pay up would still stand for all these households, it would not take effect unless a suitable smaller home to which they could go was available. This would have removed the injustice of penalising people through a reduction in their housing benefit, which they would have to make up from the rest of their extremely low income, when they had no option but to stay put. The fine, or bedroom tax, of an average of £14 per week would have to come out of the tenant’s other income—for example, from a single person’s income from jobseeker’s allowance of just £68 per week—even where they had no chance of escaping this significant reduction in their living standards. Of course, rent arrears will follow, which means evictions and more cost. Long-standing residents in council housing, not least in rural areas, would have to move away over considerable distances to avoid the financial penalties of staying in their own homes.
Despite support from your Lordships on all sides, in the other place this amendment was rejected on financial grounds since the measure was expected to cut the deficit by some £470 million per annum. I put forward a modified amendment, which your Lordships again accepted. Under it, the delay in imposing the penalty charge until an alternative smaller home could be offered would not apply to all the households hit by the underoccupation rule, but only to the most vulnerable, such as disabled people, war widows, those caring for severely disabled people or children under one year-old and others not required or expected to seek work.
On the issue of caring for a disabled relative, perhaps I could elaborate a little on the Minister’s comment that a spare room would be allowed for a carer looking after an older relative. This will apply only to a non-family member who is a carer and lives there all the time, exercising their caring duties. However, that spare room is often for the daughter who comes on a temporary basis when her mother comes out of hospital or to look after another member of the family. Having that bit of space can save the National Health Service money as well. Strong speeches were made in favour of the amendment in the other place, including from the Conservative Benches. For example, the particularly acute position in Northern Ireland was highlighted. There was recognition that disabled children often need their own bedroom, as do adults when one of a couple is disabled, and older people for whom an extra room for a family carer who just visits from time to time can be so important. These arguments have fallen on stony ground and the Bill is now back with us.
So that there are no threads still to be untangled, perhaps I could pick up on a couple more of the points that the Minister made in defence of this measure. He very fairly made the point that an additional £30 million in discretionary housing payments has been found to give the extra benefit back where there are foster children in the home—that is very welcome—or where the property has been adapted and it would be foolish to move people out to somewhere smaller and have to adapt that property, possibly with the adaptations to the previous property going to waste. However, the £30 million that has been found to increase discretionary housing payments in those cases has come from increasing the fine for everyone of £13 per week—the original average figure that we heard in Committee—by an extra £1 per week for everyone who is not exempt. Although the £14 that we now face means that the extra funding will help as many as 40,000 households—I am pleased that it will—the remaining 670,000 households will all pay another £1 a week, which is where that funding has come from.
I turn to the amendment that has now come back to this House. I must say that I was tempted to bring forward an amendment that would lessen the cost to the Government since it is clearly the level of expenditure that has inhibited the Government from going anywhere near my amendments so far. However, frankly, to modify the earlier amendments by taking out yet another group of those trapped by the penalty would become invidious as we try to choose between different categories of highly vulnerable people, and select some but not others for the already limited protection that the earlier amendments would have afforded.
Instead—and I apologise to those who hoped that this House could save the day but will now be deeply disappointed—the amendment that I have brought before your Lordships takes a different tack. It would rely on high-quality research to show the consequences of this measure. The amendment places an obligation on the Government to review the impact of the underoccupation penalty on the families concerned and on levels of poverty and homelessness; to calculate the cost to local authorities and housing associations; to look at whether levels of underoccupancy actually fall; and to consider other foreseeable and unforeseeable consequences. The exercise would begin six months after implementation of the provisions in the Bill. It would be completed within a year and repeated a year after that. My hope is that the Government would prove willing to make some in-flight corrections and to take mitigating action if the evidence shows clearly that the consequences of this measure are dire.
In response to a Motion that I moved on the regulations that introduced earlier housing benefit cuts, the Minister put in hand a thoroughgoing research project on the impact of those changes. I have been delighted by the extent and quality of this research project and I remain very grateful to the Minister for that initiative. I know that he fully understands the value of high-quality research and hope that he feels able to go forward with this amendment. After the long journey we have all taken in pursuit of this matter, that would at least mean that a modest outcome would result from all our deliberations.
Lord Best
I am extremely grateful to all noble Lords who have spoken from all sides of the House, including the Bishops’ Benches. I thank the noble Baroness, Lady Lister, who made the point that breaking up social networks by requiring people to move or face a penalty that they find very difficult is disruptive. Once it is known that a Member of your Lordships’ House is involved in these things, we of course get targeted. One of the most moving e-mails that I received was from a woman who, with her husband, has two rooms and will, I am afraid to say, face a charge of £25 per week. Her husband is partially disabled and they live on a very meagre income. Her mother is a neighbour, living not very far away, and this lady provides a full caring service for her. She has looked into the possibility of moving elsewhere and she can move some miles away. However, she is not going to be able to get back to see her mother twice or three times a day. She cannot afford that £25 a week and is going to have to do something. These are the kinds of social network issues that are raised by this measure.
I am very grateful to the noble Lord, Lord German, who spelt out the need for milestones when one brings in new legislation of this kind. To the categories that we ought to look at, he added the disruption of education. Moving children to a different area and taking them out of school can set them back, and that can have life consequences.
I am grateful to the right reverend Prelate the Bishop of Ripon and Leeds, who has talked on children’s issues eloquently throughout the Bill. From the intelligence on the ground, he is worried that the level of homelessness will increase, and that is certainly an issue that research would look at carefully.
The noble Lord, Lord Kirkwood, who has throughout on this and other aspects of the Bill been absolutely tireless, makes the point that rents may not go down, as the Government hope. I hope that the Minister does not get the blame when the housing benefit bill does not fall. For example, I received some new figures just this week which show how the number of claimants of housing benefit has gone up recently because of the effects on the economy, with more unemployment and more people having to claim housing benefit. That is not the Minister’s fault and I hope that the Treasury does not hold it against him. The housing benefit bill is very hard to curb. The noble Lord, Lord Kirkwood, draws attention to these knock-on effects of everything that one does and calls for a much wider review, which sounds entirely sensible.
The noble Lord, Lord Boswell, to whom I am grateful, stressed the importance of housing more generally and the value of an independent evaluation of the kind that is proposed in this amendment.
The noble Baroness, Lady Sherlock, raised a point to which the Minister responded. I believe that he is genuinely interested in the outcome of an independent review, upon which good policy can be based.
The noble Baroness, Lady Grey-Thompson, highlighted—quite rightly, as it probably has not had quite enough attention in this debate tonight—the fact that very many disabled people are in the accommodation that we are talking about, with fixed incomes and no opportunity to go out to work. They will be particularly badly hit and we must look carefully at that.
The noble Lord, Lord McKenzie, having followed this every inch of the way and to whom I am extremely grateful for his support, made the point that the long list of potential escape routes, such as taking in a lodger or using up one’s savings, are not really viable alternatives to having to move or pay out. He concluded that this was going to place unacceptable burdens on the most vulnerable.
I am extremely grateful to the Minister for accepting the necessity for an evaluation and for committing himself to bringing forward full-scale proposals when the regulations come to us. The noble Lord, Lord Kirkwood, made the point that when regulations come before us, we have another chance to look at these matters; we even have a chance to vote on them, and we are able to hold the Minister to account on this. I think we will be pleased with what is brought forward, not least because he also committed himself to full consultation on this research project with the stakeholders concerned; to consulting, discussing and working with the stakeholders, including myself, the subsequent action—the strategy and the guidance—that follows from this.
Therefore, I must be satisfied with the Minister’s response. He will, he said, be keeping under review the very key ingredient: the level of discretionary housing payments with which local authorities are provided to top up and help people who are in difficult circumstances. I do not think local authorities are going to be very keen to bail out the Government on this one and make up the deficit themselves, but if the Treasury finds, as a result of the research that we do, that there are sufficient hard-luck stories where one cannot really resist having to pay out more housing benefit, the discretionary housing benefit will be one lifeline which could be substantially influenced by research, when it comes along.
At the end of what seems to have been a very long innings on all of this, I thank the Minister for his response and for the courtesy and good humour with which he has approached all aspects of this Bill; I am grateful to him in all those respects. I beg leave to withdraw the amendment.
Welfare Reform Bill
Lord Best Excerpts(14 years, 8 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
“(3A) In relation to a dwelling of which the landlord is a local housing authority or a registered provider of social housing, and no suitable alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available, regulations under this section shall not permit the housing cost element of the universal credit to be less than the actual amount of the liability in a case where a household has no more than one spare bedroom, and—
(a) the claimant is subject to no work related requirements in accordance with the provisions of section 19;
(b) the claimant, or a child or a young person for whom either or both the claimants is responsible, is in receipt of disability living allowance, or personal independence payment, or attendance allowance or an increase of disablement pension where constant attendance is required; or
(c) the claimant is a war widow or widower; or
(d) the claimant routinely provides foster care placements.
(3B) In subsection (3A), “claimant” means a single claimant or joint claimant.””
“( ) In relation to a dwelling of which the landlord is a local housing authority or a registered provider of social housing, and no suitable alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available, regulations under this section shall not permit the AMHB to be less than the actual amount of the liability in a case where a household has no more than one spare bedroom, and—
(a) the claimant is subject to no work-related requirements in accordance with the provisions of section 11D of the Welfare Reform Act 2007;
(b) the claimant, their partner or a child or a young person for whom the claimant (or their partner) is responsible, is in receipt of disability living allowance, or personal independence payment, or attendance allowance or an increase of disablement pension where constant attendance is required;
(c) the claimant is a war widow or widower; or
(d) the claimant or their partner routinely provides foster care placements.”
Lord Best
My Lords, this combined amendment seeks to achieve a compromise on the so-called bedroom tax, the underoccupation penalty that reduces the housing benefit entitlement—later the universal credit entitlement—for those of working age in a council or housing association property.
Perhaps I might recap on the position we have reached on this measure. I have argued since Committee that the Government should stay with the current definition of underoccupancy from the Department for Communities and Local Government, which allows a household one spare room, which may actually be a room that is occupied all the time; for example, where children are not sharing because one has a disability or because a teenager wants a separate bedroom to do her homework and so on.
Requiring people settled in their council or housing association homes to move or pay a fine of what will now be £728 per annum on average seems very harsh. The housing benefit of these tenants will be cut by this amount so they will have to find the bedroom tax out of other benefit income. For an unemployed separated father who has a spare room so his children can stay, this represents a cut of nearly 20 per cent in his income from jobseeker’s allowance. Even though £14 a week may not seem a huge sum to most of us in this House, it means a very significant reduction in living standards for all households affected.
Your Lordships will recall that the earlier amendment on this theme was carried in this House with significant support from all parts of the House. It did not go so far as to allow families one spare room, but it changed the position so that the penalty would only become payable if the tenant refused an offer of a smaller, suitable flat. This amendment would still require all 670,000 households—rising to 740,000 households as the pension age rises—to move if they were to avoid paying the tax, but no one would have to pay until they had been offered and had turned down an alternative tenancy. This took away the surely inequitable requirement to pay the penalty for staying put even where there was nowhere else to go.
As your Lordships know, the majority of council homes built from 1920 onwards have three bedrooms. Requiring a move to a two- or one-bedroom flat can mean waiting for vacancies for some time; for example, in rural areas there are places where all the council houses have three bedrooms so if the tenants are to downsize they must leave the village, perhaps after living there all their lives. Some urban councils purposely avoid putting families into tower blocks, so singles and childless couples have been allocated larger flats there. To suddenly impose the underoccupation penalty on all these households before they have any chance to move elsewhere seems most unjust, and your Lordships voted for the amendment that would provide some relief for this problem.
It is important to note that the earlier amendment did not abolish the bedroom tax, and the penalty would still kick in for those who felt that they could not accept the alternative flat offered to them. Their reasons for refusing to downsize might be very compelling, but regardless of those reasons, the amendment—the compromise from the position of permitting a spare room—meant they would still have to pay if they did not accept the offer of the smaller accommodation.
This Lords amendment was rejected in the other place, though with a relatively small majority of 42, and with support from the amendment from all parties, including 12 Liberal Democrats and two Conservatives. This gives me some hope that if an amendment that cost half as much were to be presented to the other place, it might indeed gain acceptance there.
I am therefore bringing forward an even more modest amendment, in the hope of salvaging something here. The new amendment confines the postponement of the imposition of the bedroom tax to certain categories only, rather than to all tenants. I deeply regret abandoning hundreds of thousands of households who, even if this amendment is approved, will still be caught by the penalty charge on the 1 April next year. Even if they are willing to move, they will be trapped where they are because there are no smaller flats available. However, needs must, and the new amendment reduces the cost in the early years from perhaps a maximum of £300 million by around half, a far cry from the billions referred to in earlier debate. In due course, the Government will collect the great majority of the tax if, as gradually some people are offered a smaller home and do not take up the offer, they are then required to pay up. The cost implications are not, I suggest, too frightening.
Therefore, for the categories spelt out in this new amendment, no fine, penalty, tax, or housing benefit cut would apply unless and until they turned down an alternative offer of something smaller that is defined in regulations as “suitable”. The categories given relief in the amendment are: first, claimants who are not required to work for reasons already set out in the Bill in Clause 19, including those with,
“regular and substantial caring responsibilities for a severely disabled person”,
or for,
“a child under the age of 1”.
These are households for whom pressures to take a job—which, as the Minister has explained, is a key policy driver for the Government—are not relevant. For these people, the penalty simply represents a substantial loss of income with no escape. If the household felt that they could not accept an offer of an alternative flat, they would still have to pay, but only after that offer had been made.
Secondly, the amendment covers claimants who have already been exempted from the household benefits cap, mostly because they are disabled, but also including war widows. These are people who the Government recognise as having extra costs. My amendment simply replicates the categories which the Government have acknowledged should not be penalised by the benefits cap. Many of the 70 charities that are urging parliamentarians to accept an amendment on this issue represent people with disabilities, who are particularly badly affected by having to share bedrooms. Again, I fear that these would not be exempt from paying the tax unless they moved out, but the tax would not be payable until they turned down another home, deemed to be suitable, but smaller.
Each household would still have a very tough decision to take. For one it would be, “Could we move and put our disabled child with his special bed into the same room as his sibling, or should we take the cut in our living standards and stay in this house with a separate bedroom?”; or, for an older couple, where one is under pension age—under 61 years and 5 months next April—the choice could be, “Should we move from our two-bedroom flat to a one-bedroom flat, even though we often sleep apart when my husband is ill, and we frequently use the other room when my daughter comes to give me a hand for a few days?”; or, “Must we move, because £14 per week off my husband’s state pension would be just too much?”. I fear that these difficult choices would still have to be faced even if the amendment is carried, since the amendment only postpones the moment of truth until an offer of a suitable alternative flat is made. Thirdly, this concession would apply where the household regularly takes in foster children. Barnardo’s and other children’s charities are keen to see the nonsense of taxing foster parents removed.
What are the arguments against my case for a now extremely modest element of relief from the proposed underoccupation penalty? It cannot be said that granting this relief takes away the pressure on scroungers—people able to work but not working—since the revised amendment does not cover anyone required by the benefits system to seek work. Can it be argued that the Government have already announced a sufficient safety net to cover the most extreme cases? They have made available £30 million against the expected savings of £470 million, which the bedroom tax would yield, for discretionary housing payments which local authorities can use to cover the tax for deserving cases. The Government have mentioned two groups in particular to be helped by local authorities; namely, those living in homes that have been specially adapted and for whom downsizing would require the smaller home also to be adapted, no doubt at considerable cost, and households with foster children where the underoccupying rule is particularly inappropriate.
The funds for this discretionary power to bail out some hostels is confined to these special cases. If something was left over, it would leave local authorities with an invidious task; that is, how to assess the relative hardship of the bedroom tax in each of the other 670,000 cases where the discretionary housing payments are available to help only one in 16 of those affected.
Nevertheless, I confess to having been thankful for this small mercy—until I learnt that the £30 million for these discretionary housing payments is to be paid for not by the Treasury accepting any reduction in the gains achieved through the bedroom tax but by increasing the tax for the other tenants by another £50 per annum from the previous £13 per week to the new £14 per week.
What about the argument that those on very low incomes could find the money to pay the penalty charge from their savings? I fear that it is more likely that such households will be struggling with debts, perhaps depending on payday loans and even resorting to the loan sharks, rather than sitting on a pile of savings. While older tenants may have put aside a bit, few will be able to cope when faced with a new tax of £728 every year on top of the rises in their heating bills and other costs.
One other remedy suggested by the Minister is for these households to take in lodgers. That is certainly to be strongly encouraged, although the current disregard as to the amount that tenants are allowed to keep without losing benefit has not proved a sufficient incentive to date. Obviously, however, taking in lodgers is not appropriate for most of those in the priority categories of the very vulnerable and disabled people now covered by this new amendment. By all means promote lodgers’ schemes among those not helped by this amendment but it seems unrealistic to expect this idea to be of much help for those singled out in my new amendment.
I hope that since the earlier, more expensive amendment gained such a high level of support from all parts of this House, this lesser version will be acceptable. As noble Lords know, there is backing for any such measure. It comes not just from the many charities concerned with children and disabled people but from the social landlords—the councils and the housing associations. These social landlords have expressed grave concerns, not only on behalf of their tenants but because of the administrative and financial problems that the Government’s proposals will create for them.
The landlords will be asked to be the tax collectors of the £14 per week from each liable tenant to make up the weekly deficit on the rent that the penalty will create. They know that they will have a huge job identifying who may be eligible. I am grateful for the reassurance from the Minister that there will not be an army of snoopers to check on whether a young person has left home or is away for just a few weeks. But landlords will have the problems of collecting the £14 per week or £25 per week if there are two rooms. That will not be covered by housing benefit any more.
Even if the housing benefit is paid directly to the landlord because the tenant is classified as vulnerable or has run up arrears, the extra sum—the penalty charge—will still have to be collected directly from the tenant. This will not be easy. A gradual accumulation of rent arrears seems inevitable, meaning in turn evictions in due course and less money for renovations, new homes or regeneration. The gain to the Treasury is likely to mean losses for housing, as well as the misery of loss of income for those unfortunate tenants who have to pay up.
This will be a particularly painful levy on communities in the north-east and the north-west where 45 per cent of the relevant tenants will be hit, and in Northern Ireland, where rather higher standards have justifiably applied, 68 per cent of these tenants will be affected. In this House we are not troubled by postbags full of protests from aggrieved constituents, as I strongly suspect will be the case in the other place, but I know that many of your Lordships feel strongly that we have a role in restraining government where measures seem excessive or unfair. Even though this amended, amended amendment is now providing much less relief than I feel the situation requires, it nevertheless draws a line by mitigating at least some of the hardship for at least some of those on the lowest incomes, and now exclusively for those who are not in a position to go out to work because they act as carers or are disabled themselves, I hope very much that noble Lords’ support for these households will be sustained.
I pay tribute to the Minister who has worked extremely hard and effectively on this important legislation. I congratulate him on the changes he has achieved, but I know that he feels the hot breath of the Treasury on his collar. I therefore ask him to feel emboldened by the strength of feeling in your Lordships’ House to accept this very modest new amendment. I beg to move.
Baroness Hollis of Heigham
My Lords, universal credit is about using benefits to encourage behavioural change, and above all to encourage people to seek work by reducing its risk and increasing its reward. Like most people in this Chamber, I am deeply supportive of that, as the Minister knows. The House is extremely grateful to the Minister for the care and attentiveness with which he has introduced the changes made by universal credit through the stages of this Bill.
However, this amendment in the name of the noble Lord, Lord Best, has nothing to do with universal credit, nothing to do with behavioural change and nothing to do with urging people into work. It is simply a means of making savings that will come from cuts which will fall on some of the poorest. The Minister has already said, by referring to Moody’s, that we cannot afford to lose those savings, yet none of them falls on me although they could do so. I would be happy to indicate to the Minister, if he so wishes, where they might. In my view, this is about political and moral choices. Do I pay or should a disabled child suffer?
I want to make three brief points. First, I believe that at the core of the policy on underoccupation is a fundamental dishonesty. I do not accuse the Minister of this, but the position is a dishonest one. That is because it states that people of working age must downsize if they have one spare bedroom but, as the Government acknowledge in their own impact analysis, those smaller flats and houses to which people should move do not exist. The Government acknowledge that 85 per cent of people will therefore have to stay put. If they do not, and instead move into the more expensive private-rented sector, the savings will not be made. Let us think about this. The Government are publicly requiring people to downsize and then, knowing that the stock is not there, they hope and expect that people will ignore what the Government are telling them to do—otherwise they will not make the savings. The Government are calling for one outcome but want people to do the exact opposite. We are asking the House not to collude in that false choice.
Secondly, the Government’s position, as has been well outlined by the noble Lord, Lord Best, is deeply unfair to particular groups of people. I shall take just one: the couple with disability who need a bedroom each on occasion. He may have early prostate cancer and be going to the loo half a dozen times a night; she may have a respiratory problem and cough heavily through much of the night. On most nights, they need a separate bedroom otherwise one is being required to go without sleep or the other to sofa-surf in her own home night after night—a 60 year-old woman is being asked to sleep on a sofa night after night because of the change.
The same problems apply to disabled children being expected to share bedrooms with their siblings. If those disabled children need regular night-time care, their siblings are going to go to school without enough sleep, tired and upset, and almost certainly underperforming. Do we really believe that such families should carry the cuts on behalf of us all? I think not.
The third and last point is the consequences for housing associations such as my own—I declare an interest as chair of Broadland Housing Association, half of whose housing is in rural Norfolk. I cannot currently rehouse pensioners in rural Norfolk who want to downsize because I do not have the stock in the villages in which they want to live, yet it is among pensioners that underoccupation is most common. In future, the disabled family which does not want to move will be required to move, while to the pensioner who wants to move we will have to say, “You’ll have to stay put”. Can your Lordships think of a more foolish as well as—in many ways—more selfish policy, whereby people who do not want to move are made to move, and those who do want to move cannot, even though the costs of the one and the other would balance out? That cannot be right.
What will we do? As the noble Lord, Lord Best, said, families who cannot move, including those with a disabled child, will have to take a hit on their housing benefit through no fault of their own because they cannot move, and they will within weeks fall into arrears. What do we then do in a housing association? Either I evict a family with a disabled child into temporary accommodation or bed and breakfast—how I can do this to them?—or they stay put and arrears mount. I have already trebled the amount in my accounts for increased arrears. As the noble Lord rightly said, the money is not available to pay the debt charges of new building, which alone will solve the problems of getting our stock right in the longer term.
The Minister says that such people may make a contribution out of their benefit, by which he means, frankly, that they must either eat less or heat less. A disabled child and their family are being asked to eat less or heat less in order to bridge the gap between their housing benefit and the home in which they live.
I return to my opening point: we do not have to do this. It is about our political and moral choices. Families with a disabled child will lose £14 a week, while most of us enjoy a tax-free winter fuel allowance or find for the second year running that our council tax has been frozen. Not a penny of these cuts is falling on me or, I suspect, on very many of your Lordships, yet we are asking disabled families and families with disabled children to carry those cuts for us. I hope that your Lordships will put themselves on the side of the very modest amendment moved by the noble Lord, Lord Best, put themselves on the side of disabled children, disabled people, war widows, foster carers and kinship carers, and support the noble Lord’s amendment.
Lord Freud
My Lords, we have to look at these things in the round, as we did with the Bill. The reality is that we had a range and we set the provision at an affordable level within that range. Noble Lords may argue that saving money is a cynical thing to do but, as I say, we had a range and we set the provision within the range. We have found the money to ameliorate the measure through the discretionary housing payments process.
My noble friend Lord Newton made an important point about changing circumstances. We have rules within housing benefit to protect people when their circumstances change. Among those changes are going into hospital, being on remand and the death of a member of a household which would result in a reduction in housing benefit. Those same rules will apply in the social rented sector and provide protection for such claimants. For example, housing benefit currently provides 12 months’ protection from rent restrictions where there is bereavement, so there are ways of dealing with such circumstances.
The noble Baroness, Lady Hollis, referred to couples who have health problems. I re-emphasise the point that they would not be pensioners by definition as they are excluded from this measure, so we are talking about couples of working age. Clearly, if there is real difficulty in that regard and separate bedrooms are required, where discretionary housing payments would be considered, and where the couple required an overnight carer, whether non-resident or otherwise, the size criteria would be increased to provide additional room. However, we should consider what happens to people who are renting in the private sector. These situations are already faced by more than 1 million people—I think it is 1.3 million people—renting in the private housing sector.
This is part of a package of reforms to keep the housing benefit bill under control. I have never tried to disguise that in any way. This is a way of trying to control the housing benefit bill that is moving up towards £26 billion, if we do not take the £2 billion of savings across the piece as we are planning to do. That is the saving that we are trying to make within the social rented sector as opposed to the private sector. We are trying to sort out our budget deficit, and we need to make sure that we spread that load right across society in as fair a way as we possibly can.
We realise, obviously, that we need to support tenants, their advisers and housing providers in preparing properly for what is a very substantial change happening in April 2013. Work is well under way to support social housing providers, local authorities and other government departments. An important point raised by my noble friend Lord Kirkwood is the impression that it is all happening on one day. It might be happening on one day, but in practice there is a year before it culminates in which we are aiming to get a very smooth implementation process. We are working closely with the stock team, which is part of the Chartered Institute of Housing, funded by the GLC. We are putting a tool-kit out for local authorities, which involves working on who will be affected; advice on data sharing; allocations policy; tackling worklessness; taking in lodgers; letting spare rooms; reducing arrears; national home-swap schemes; affordable rents; and alternative housing options. We are working on all those areas.
A behavioural response is required right across the piece on something like this. We are looking to help claimants. Those who can must look for a job. Those who are in work can increase earnings by getting more hours. We have discussed taking in a lodger, moving to a smaller property or moving into the private rented sector. Landlords need to have responses. They need to give permission to accept lodgers, identify those affected, communicate changes, train staff, review their allocation policies, look at where the discretionary housing payments need to be made, and so on. There is a range of things on a substantial scale that need to happen, just as the Government have to do a huge amount of work to ensure that they do happen.
We are not expecting the 670,000 people who are affected to move. As I have tried to describe, there are a number of ways in which claimants can make up any shortfall and stay where they are. So I ask the noble Lord to withdraw his amendment.
Lord Best
My Lords, I am extremely grateful to people from all parts of the House who have joined in this debate. My thanks go to the noble Baroness, Lady Hollis, who has been tireless in supporting this amendment and so many others during the course of this Bill; to the noble Lord, Lord Newton, who has been a hero in bringing common sense and good judgment to this Bill at all kinds of stages; to the right reverend Prelate the Bishop of Ripon and Leeds for his support; and to the noble Lord, Lord German, who raised a number of important points. Perhaps I could respond to his point that 1 million bedrooms—I am not sure whether he actually quoted this number—are underoccupied in the social housing sector, and that it would be good if we could get those used. In this country there are, I think, 6.8 million empty bedrooms in houses where there is already one spare room. We have lots and lots of spare rooms, but they are in the owner-occupied sector, and nobody is suggesting that we levy a bedroom tax on the occupiers in the owner-occupied sector—quite rightly; I absolutely would oppose that. However, on council estates now, people who have exercised the right to buy and are homeowners are living next door to tenants in identical circumstances. One of them will be penalised and one of them will not.
I am also grateful to the noble Lord, Lord McKenzie of Luton, for his contribution and indeed to the noble Lord, Lord Wigley. I single out the noble Lord, Lord McKenzie of Luton, because he has brought the expertise of a previous Minister on this key issue to all of our debates and has been more than helpful to me in my formulation of the amendments that we have before us today.
I was greatly encouraged when the Minister said that the cost of this has come down from the earlier amendment, which found favour with your Lordships and did not do so badly in the other place. The cost has come down from some £300 million to about £100 million. I think the Minister said up to £100 million. This, I agree, is serious money, but it is set against the savings in housing benefit that the Minister mentioned again that he is seeking to achieve of over £2 billion. The £100 million is for particularly vulnerable and low-income households. I was not convinced by the argument from our earlier debates in Committee for the increase in the amount that will be charged each week. It will rise from £13 per week to £14 per week, which happens to be the amount required to find a further £30 million of discretionary housing payments. That, I fear, has meant that we are robbing Peter to pay Paul. We are charging another 50 quid to everybody else to pay for the ways in which we can exempt certain people, people in houses that have been expensively adapted, and indeed those who regularly have foster children in the home. That is excellent, but it is being paid for by pushing up the total bedroom tax for everybody else to £728 a year. That is three-and-a-half times the winter fuel payment, for example. That is a serious amount for people on the lowest incomes to find.
I do understand the pressures on the Minister to help the Government achieve deficit reduction, but I see it as incumbent on us in this House to take a stand, even a modest one, to draw a line where deficit reduction is at the expense of many thousands of the very poorest households. We have to say: so far, and no further. Applying the bedroom tax to these vulnerable groups, set out in this amendment, where there is no opportunity for those on very low incomes to avoid the tax, is going too far. I wish to test the opinion of the House.
Welfare Reform Bill
Lord Best Excerpts(14 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
“( ) After subsection (7) insert—
“(7A) In relation to a dwelling of which the landlord is a local housing authority or a registered provider of social housing, and no alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available, regulations under this section shall not permit the AMHB to be less than the actual amount of the liability in a case where a household has no more than one spare bedroom.””
Lord Best
My Lords, Amendment 8 gives effect to an amendment which was in my name on Report and to an amendment to my amendment in the name of the noble Lord, Lord McKenzie of Luton, at that stage. These amendments, which addressed the cuts to housing benefit and universal credit for those deemed to have a spare room, were declared to be consequential amendments to two earlier amendments approved by your Lordships on 14 December and now incorporated in Clause 11.
However, the consequential amendments were not moved formally. They should have been. I fear that the complexities of consequential amendments and of amendments to amendments meant that this amendment is now required. With apologies, I beg to move the amendment formally.
Lord Freud
My Lords, I accept that Amendment 8 from the noble Lord, Lord Best, is a duplicate of previous Amendments 49 and 49A, which related to Clause 68 and should have been formally moved during Report stage. We find the veil and draw it as to why they were not. The Government acknowledge that it was the view of the House, following the vote on the amendments in the name of the noble Lord, Lord Best, on 14 December, to have those amendments made. Essentially Amendment 8, which is a duplicate of Amendments 49 and 49A, would mean that a reduction is not possible where the tenant has no more than one spare bedroom unless suitable alternative accommodation, which is to be defined in regulations, provided by a local housing authority or registered provider of social housing is available. I am clear that to complete that picture Amendments 49 and 49A should also have been made.
The Government regret that the House reached such a conclusion on the social sector size criteria. While I do not intend to oppose these amendments now, I should make it clear to this House that this is not an indication that the Government agree with the overall principle of the amendment proposed by the noble Lord, Lord Best. It is now for another place to consider this when the Bill returns there.
Welfare Reform Bill
Lord Best Excerpts(14 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
“( ) Regulations under this section shall provide that the benefit cap shall not be applied for the first 26 weeks from the date on which the claimant’s total entitlement to welfare benefits exceeds the relevant amount.”
Lord Best
I shall speak to Amendments 60 and 61, which would constrain two of the more extreme aspects of the benefit cap proposed by the Bill. Your Lordships will not be surprised to hear me say that I note that most of those pushed over the cap are in that position because of their housing costs. They are paying high rents in London or the south of England. Why the Government's effort to change people's behaviour and psychology is concentrated almost exclusively on this part of the UK remains a mystery.
Let me take the amendments in turn. First, Amendment 60 would provide a period of grace of 26 weeks for those suddenly affected by the total benefit cap. The noble Lord, Lord German, said in Committee:
“People need the breathing space to be able to find a new job and get themselves back into work. The rationale behind this Bill is making work pay ... giving people time to find another job … should be a first and not a last resort.—[Official Report, 21/11/11; GC 344.]
Such a breathing space is currently the pattern before housing benefit/local housing allowance is curtailed in other circumstances. If, by contrast, the new £500 cap kicks in instantly, the household will run into serious financial problems as soon as any savings they have are exhausted. Rather than having savings, many families may have loans and debts. Because of the new cap, many families in privately rented accommodation—or even some housing association accommodation—across the south of England who encounter unemployment or family breakdown that means loss of a breadwinner will run into difficulty immediately. They will find the safety net of benefits—the social security they have been paying for in national insurance contributions—is no longer there to see them through the transition. Without a period of grace, the cap will mean that the rent can no longer be paid and they are likely to face the prospect of having to leave their current home precipitously.
If people become homeless in this way, the savings the Treasury seeks will swiftly be absorbed by the extra costs for local authorities in finding them somewhere else, which, as we discussed earlier, will not be easy. If they are moved away to a low-cost area, say from Brighton to Bradford, job opportunities are likely to be few and far between. Long-term unemployment becomes much more likely than if they had had the chance to get a job in the locality they know. The move will disrupt children’s education, cut helpful links with grandparents, and all the other disadvantages we have heard of in earlier debates. The harm done can continue for another generation, all because of impatience in imposing the new cap too rapidly. Finding a new home, even in a cheaper area, will not be easy and it takes time to secure a rented property even if the council is trying to help. Surely the best approach is for the DWP to hold back on imposing the new cap long enough to enable the family that has run into difficulties to get back on their feet, rather than forcing them into a crisis with the double trauma of losing their job and losing their home in rapid succession.
I heard the Secretary of State say this morning—we hear it first on the “Today” programme—that hard-working families trying to get a new job would not be penalised. The Minister has dropped many hints that something will be done. I am hopeful, therefore, that the Minister will be able to accept Amendment 60. Colleagues from different parts of your Lordships’ House have told me that in today’s job market 26 weeks is not a long enough period of grace. They have urged me to press for 52 weeks before the total benefit cap takes effect. I have, however, stuck with 26 weeks in the hope that it will give the Minister less trouble. But, a shorter stay of execution would not seem either humane or sensible.
Amendment 61 also seeks to take the edge off one of the most extreme aspects of the total benefit cap. This amendment would exclude from the cap families placed by their local authority in temporary accommodation—normally a private rented flat when the council has struck a deal with the landlord. Rents for temporary accommodation, even though many local authorities send the homeless family some distance to the cheapest neighbourhoods they can find, are high and the housing benefit has to encompass an extra charge to cover the administration of the arrangements. A total bill for a family of three children could be £440 a week in London, even though a central London borough has despatched the family to the lowest-priced accommodation it can locate. If £440 goes on rent, a total benefit cap of £500 obviously leaves practically nothing for all the family’s other costs, as the noble Lord, Lord Greaves, noted earlier. There is no prospect of them surviving on the remaining income within the cap, but the family concerned cannot do anything to rectify the situation. They have not chosen the accommodation but have been sent there by the council because nowhere else can be found for them. Yet, if they stay there, and pay the rent, they face destitution. We could bring back the bed-and-breakfast hotels that are becoming extinct, not least because they are so much more expensive than keeping people in rented homes, or we could revert to building hostels for these households, separating women and children from the men in the true “Cathy Come Home” style once again, but I know the Government are not thinking in such draconian terms, and anyway the problem would hit us long before we could recreate such hostels.
Lord Freud
My Lords, one can very easily see circumstances in which a local authority considers that to be a very sensible use of the discretionary housing payments. That is one reason why we have ramped up that amount. I am not saying that it will be every time, but that might be a solution. We are looking to redesign the process of finding temporary accommodation, which is the immediate problem that local authorities are faced with, so that we do not get caught in some Catch-22, which would obviously not be smart at all. That is where we are with that; we are very conscious of those issues and very comfortable that we have the legislative powers to develop effective solutions.
I pick up the important point from my noble friend Lady Thomas on the DLA and how the cap interacts with it. The DLA is there for those in receipt of DLA. That is how we have worded the illustrative regulations. A person whose DLA award is pending and who is serving what is now, and will remain, a three-month qualifying period, would not be covered by the exemption. That is the point in the question raised by my noble friend. It shows why this issue and other similar issues need to be dealt with in secondary legislation, so that we do not have the inflexibility that we would have if it was in primary legislation.
We are conscious of the concerns around the introduction of the cap. I can assure noble Lords that we are listening. We have said all along that we will introduce measures to ease the transition for families and provide assistance in hard cases. We are still considering our plans, and it is essential that we get them right. The clause has been drafted so that we have all the powers that we need to ensure through regulations that we provide the appropriate protections. I hope that that gives the noble Lord, Lord Best, a measure of reassurance.
Before I ask the noble Lord to withdraw the amendment, I would like to make it clear that the Government do not consider Amendments 60A and 61 to be directly consequential on Amendment 60. Further Divisions would be required should noble Lords wish to push those other two amendments in the group to a vote. I apologise for spelling that out, but we had a small frisson the other week. I ask the noble Lord to withdraw the amendment.
Lord Best
My Lords, I am sure talk of further Divisions will be unnecessary at this late hour. I am very grateful to many noble Lords, including the noble Baroness, Lady Drake, for supporting my amendment on the 26-week period of grace. She made the point that we cannot possibly require behavioural change from people who are already desperately seeking work, which is what we want them to do. I was also grateful for the support of the noble Lord, Lord Stoneham of Droxford, in backing this amendment. People with no history of benefit dependency should surely be given a period of grace to find work.
The noble Lord, Lord McKenzie of Luton, made the point that perhaps 52 weeks would be better than 26 as a period to allow people to get back into work, especially given the statistics we heard—that 50 per cent of people who go on to jobseeker’s allowance find a job within six months, but if we want to get 90 per cent back into work it may take a year in the current job market.
This remains a very important ingredient in the use of the cap. The Minister has promised that finding a solution is a priority and that a period of grace to ease the transition is one way of handling this, but there may be an even cleverer way. The Minister says that the issue still needs to be looked at very carefully but is confident that a way will be found. I must take this on trust, but with the expectation that there will indeed be measures that handle this transition and satisfy the House when the regulations, although those cannot be amended, are brought before us.
I am also grateful for noble Lords’ support on the amendment to make sure that temporary accommodation does not become a Catch-22 situation whereby homeless people are sent somewhere by the council, only to find when they get there that they are not able to pay the rent because the benefit cap has kicked in. That would be a calamity for them. I was grateful to the noble Baroness, Lady Hollis of Heigham, for weighing in on that one and to the noble Lord, Lord McKenzie, for asking for further clarification.
The Minister explained that we need to find a way, and he is confident we shall find one, of handling this exemption or exclusion, or in some way treating temporary accommodation differently and in a satisfactory way. I trust him to be as good as his word and I have pleasure in withdrawing these amendments.
Welfare Reform Bill
Lord Best Excerpts(14 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord McKenzie of Luton
My Lords, it seems that we are all, Lib Dems, Conservatives and ourselves, in favour of a benefit cap. Perhaps at some stage in the future, some analyst or academic might look back on these times and determine the origin of these policies, what analysis underpinned them and whether assuaging the court of public opinion played any role. It seems from what the Minister said a while ago that it played quite a considerable role.
But we are where we are. My party supports a benefit cap, but one based on fairness. A particular concern for us, as currently proposed, is its potential to drive increased homelessness, which is a major consequence of the cap—homelessness for vulnerable individuals, homelessness for families and homelessness for children. The way in which the cap is to be applied, albeit calculated by reference to a range of benefits, means that it is an effective second cap on housing support. It is a second cap on top of the range of reductions in housing support already introduced through the move to the 30th percentile of local market rents, uprating by CPI, a cap on rent levels and room sizes, and increases in scope of the shared room rate.
Not only will the overall cap dramatically increase the prospects of people becoming homeless but, in some cases, the Government will miss their target, and local authorities will bear the cost of the benefit cap, not the tenant. It will fall on council tax payers. If a family is already in accommodation provided for them under homelessness duties, no shortfall between housing benefit or housing allowance and actual rent will be payable by the tenant. Increasing the shortfall by the cap does not change this. There may be the opportunity to discharge the duty into cheaper accommodation, but this is increasingly unlikely to be available, certainly without significant migration to elsewhere in the UK, with all that that entails.
As Shelter points out, the reach of the household benefit cap goes way beyond the extreme cases generally associated with London, and it will be difficult for many households to afford to rent both in the private sector and at 80 per cent of market rents in the social sector across much of the south-east. It affects not only households with large families. Families in the private rented sector with just two children will be subject to the cap in all of central London. The DWP estimates that 50,000 households will be affected by this measure—I think that the estimate has been uprated to 75,000 households as a result of today’s news—and lose £83 a week on average, with 90,000 adults and 220,000 children affected by the measures. Fifteen per cent of those households will lose more than £150 a week. The Children’s Society has suggested that more than 82,000 children could lose their homes as a result of the cap. As the Children’s Commissioner pointed out in a recent report, the DWP’s own equality impact assessment sees homelessness, diversion of living costs benefits to housing costs and migration within the UK as primary effects of the cap. In a chillingly bland comment, the DWP states in the original impact assessment:
“The cap is likely to affect where different family types will be able to live”.
Housing benefit may no longer cover housing costs and some households may go into rent arrears. This will require expense and effort on the part of the landlords and the courts to evict and seek to recoup rent arrears. The impact assessment continues:
“Some households are likely to present as homeless, and may as a result need to move into more expensive temporary accommodation, at a cost to the local authority”.
It is an awful admission that by deliberate act of policy people are to be made homeless, are to run up rent arrears and are to be evicted; an admission also that reduced costs for the DWP will add cost to local authorities. Can the Minister say whether these increased burdens will be met by central government?
The Children’s Commissioner’s report concluded that the impact of the cap will be increased child poverty with associated poor health, educational and other outcomes. The report identified that in order to stay in their homes, parents who cannot or do not find work will have to divert large amounts of their living costs, the non-housing element of universal credit plus child benefit, to make up the shortfall. This will have obvious consequences for children’s well-being. For those who cannot bridge the loss of housing benefit, the loss of the family home will be severe. Local authorities may well have an obligation to rehouse but this may be in temporary accommodation and may require a move to cheaper areas, if they exist. As 70 per cent of those affected by the cap already live in social housing—that percentage may have been updated by today’s impact assessment—cheaper housing may not exist. Evicting families from such accommodation only to rehouse them in more expensive private sector or temporary accommodation would only add cost for local authorities.
The impact of such moves on families is traumatic, especially for children. We know that children from homeless and transient families are more likely to go missing from education. Uprooting families from support networks, friends and communities can have a severe impact on the emotional and physical well-being of parents and children, and for vulnerable people especially so.
There are a number of ways in which these dire consequences might be addressed and subsequent amendments cover a series of possible ameliorations. This amendment supports the amendment separately tabled by the noble Lord, Lord Best, concerning those owed a duty to be provided with interim or temporary accommodation as part of the homeless safety net. The amendment refers only to English legislation and I was advised today that it should also be extended to Scotland. We might bear that in mind for later stages. As the noble Lord explained in Committee, temporary accommodation tends to be more expensive than mainstream housing and local authorities will struggle to obtain suitable accommodation for homeless families. Our amendment goes further and seeks exemption from the cap for those accepted as homeless and in priority need and those threatened because of the cap with becoming homeless. This raises points of detail that would have to be settled in regulations.
If the cap was introduced, households for which a homeless duty has been assumed and which are in temporary accommodation face a shortfall in rent as well as council tax. Local authorities must either cover the shortfall from the general fund or secure alternative temporary accommodation elsewhere within the monetary limits. However, it takes a long time to procure temporary accommodation and some local authorities will be in longish contracts with owners. They will need a long transition and so it may not be possible. Any family in private accommodation entered into prior to the introduction of the household benefit cap that falls into arrears and is in priority need and threatened with homelessness will be able to apply as homeless to the local authority which can then discharge its duty into alternative private accommodation affordable for the family. In many areas there are already insufficient private rented homes that are affordable to people on the local housing allowance. But this does not relieve the local authority of its duty.
Any family with a secure assured tenancy and facing a shortfall—whether it is a council or housing association property—would in theory be able to ask the local authority to secure them affordable accommodation if they are threatened with homelessness due to arrears. However, as all local authorities have their own allocations procedure this would inevitably mean tenants in secure social housing exchanging these tenancies for assured shorthold private tenancies in cheaper parts of the country, again if they can be obtained. If not, the local authority will have to fund the shortfall.
What would be the effect of our amendment? It would relieve the pressure on local authorities currently housing homeless families which would face the cost of the shortfall in rent if there was no suitable cheaper alternative. It would avoid costs being transferred to the general fund, potentially costing some hard-pressed councils millions of pounds. It would stop some individuals and families being uprooted from their communities. This protection would apply not only to households with children but to vulnerable individuals; for example, those with mental health conditions, disabled people and people fleeing from domestic violence. It would not stop increased homelessness and migration within the UK driven by cuts already announced to housing benefits but it could help to stop it getting much worse. It would not facilitate people remaining in lavish up-market properties, so beloved of the press. The pre-cap housing support would be determined on the basis of the changes already being introduced.
The Minister will doubtless put another of his costings on this amendment. When he does, perhaps he will make sure that he includes the actual costs to local authorities in meeting rent shortfalls; the implications for a range of services in supporting the migration across the country which will flow from the cap; and, of course, the costs to landlords and the courts in pursuing evictions. Most of all, will he factor in the human misery that the cap will generate?
There are a range of other amendments suggesting carve outs for the cap, transitional measures and refining the basis of calculation which can sit perfectly well alongside this amendment. If for no other reason, this amendment can provide for those who seek, and have the leverage to encourage, concessions from the Government, but its primary purpose is to prevent the slide into further poverty and disadvantage that homelessness can bring and the multiple disadvantages that spring from poor housing to blight lives, particularly those of the young. I beg to move.
Lord Best
My Lords, I support the amendment. As we have heard, it would mean that families facing immediate homelessness because of the imposition of the benefit cap would be saved.
A major problem with the cap is that, as well as taking no account of the number of children in a family—a point which a later amendment in the name of the right reverend Prelate the Bishop of Ripon and Leeds and others will seek to address—it takes no account of the level of rent: that is, it takes no account of how much of the benefits within a £500 cap must go to the landlord not the tenant. The £500 cap looks relatively high in areas where housing costs are low. In Committee, I quoted £85 per week rent for a council house in the north-east or south Wales, leaving a headroom of £415 per week for benefits to cover all other expenditure. Indeed, the average cost of housing—the £500 is all about comparisons with average earnings—is some £87.50 per week. However, the same cap applies in all areas, including London and the south-east of England, where housing costs are much higher. I am not talking about the extreme cases of refugee families with 10 children living in Hampstead. A rent for a not very salubrious private sector flat in the east end of London can be £350 a week. A £500 cap will plunge a family with three children living there into poverty, with only, in this example, £150 per week left for food, clothing, ever rising fuel bills and the rest, instead of more than £300 as at present. It is not their fault that rents are so high in much of southern England, but clearly the family will have to move out if the application of the cap is not moderated as by this amendment.
However, it is very uncertain where those made homeless can be moved to. The logistics for local authorities of moving large numbers of families to cheaper areas will be extremely complex and expensive. Finding new homes for them, even in a much lower cost area, will not be easy. Most private landlords prefer not to take on tenants on housing benefit and local housing allowance, particularly those not known in the locality, not least because benefit is now seldom paid direct to the landlord. No one wants to send families to so-called benefit ghettos with the lowest quality housing which is bound to undermine the hopes, aspirations and life chances of those sent there. It should be remembered that the new benefits cap is in addition to the caps on rents in high-priced areas which have already been introduced and are now beginning to bite, as existing tenancies come to an end. Regrettably, we are just beginning to see a return to the use of expensive but seedy bed-and-breakfast hotels as the numbers of homeless families rise. The new cap will considerably compound the problem.
This morning on the radio I heard the Secretary of State, Iain Duncan Smith, suggesting that the definition of homelessness was that children would have to share a bedroom. That is a confusion with an earlier amendment which found favour with your Lordships concerning the underoccupation penalty—the so-called bedroom tax—which was not about homelessness at all. Families are deemed to be homeless if the local authority deems that unintentionally they have no place to go. That can happen if they can no longer pay the rent where they are because their benefits are cut drastically. The council is then required to step in to find them somewhere to live. Amendment 58D would avoid that miserable and expensive outcome for thousands of families and tens of thousands of children who will otherwise have to leave their current homes. Two later amendments in my name address two of the most extreme aspects of the imposition of the new cap. At this point, I am pleased to support Amendment 58D.
Welfare Reform Bill
Lord Best Excerpts(14 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Best
My Lords, I am speaking to Amendments 12, 14 and 49. I know that amendments to my amendments have been put down and I will say a few words about them. I understand—I hope this is the correct procedure—that my Amendment 14, as amended, is consequential on Amendment 12. It is Amendment 12 that I shall concentrate on now.
These amendments cover the new underoccupation penalty for council and housing association tenants, the so-called bedroom tax for those on housing benefit. I am very grateful to the noble Baroness, Lady Hollis of Heigham, for her support, and to the noble Lord, Lord Kirkwood of Kirkhope, and the right reverend Prelate the Bishop of Ripon and Leeds, for theirs. Since the noble Lord, Lord Newton of Braintree, asked for his name to be added to the list, although of course only four are allowed, I know the amendment has support across all of your Lordships’ Benches. The amendment also comes with the backing of an impressive list of concerned charities and voluntary bodies led by the National Housing Federation and Shelter, to which I am very grateful for their hard work.
The amendment seeks to prevent a change to the definition of underoccupation currently used by the Department for Communities and Local Government. The Bill paves the way for a much tougher test than at present, with a hefty underoccupation penalty—a cut to the housing benefit—for those whose accommodation fails the new test. Currently, as the Housing Minister Grant Shapps made clear in October, a household in council housing or a housing association home is deemed to be underoccupying only if it has two or more bedrooms above the basic bedroom standard. One spare room is permitted. Under the Department for Work and Pensions’ proposed new definition, one so-called spare room would not be allowed.
Under the fierce new test, a family would be counted as underoccupying if, for example, two teenage girls were not sharing the same room, or if an older couple, one of whom is below pension age, have a two-bedroom flat. All those deemed to be underoccupying will have to move and downsize to somewhere smaller. If they do not, even if there is simply nowhere smaller for them to move to, then they must pay the new penalty. Six hundred and seventy thousand households receiving housing benefit will be caught in this trap, rising to some 740,000 in the years ahead. If they do not move out, they will be charged an average of £13 per week, which will have to come out of their low earnings or their other benefits, which are meant to cover food, fuel, clothing, and specifically not housing. These are by definition very poor households, and the new tax will represent a significant reduction in their living standards.
This may sound a heartless measure, but the Government’s objectives are not dishonourable. The intentions are to reduce the high cost of housing benefit in respect of tenants who stay put, or to free up bedrooms for larger households where existing tenants are persuaded by the new penalty to downsize. I fear that neither of these perfectly understandable objectives will be achieved by this measure.
First, it seems improbable that this will raise tens of millions of pounds. Those deemed to be underoccupying who seek smaller homes as a consequence may well have to move into the private sector, where rents, and therefore housing benefit, will be much higher, costing the DWP an extra £50, £60 or more a week. Secondly, the savings for the DWP will often translate directly into costs imposed on councils and housing associations. These bodies will have to assume the role of tax collectors, extracting the average £13 per week penalty from each tenant who does not move, which will prove to be an administrative and financial nightmare. To see who should be sharing a room, a landlord will need to keep track of the age and gender of each child. They will need to measure the bedrooms to see whether they can fit in two beds. They will need to find out whether family members are living at home or have actually moved out. It will require an army of snoopers to see who must be deemed to have a spare room.
If tenants will not pay or cannot pay, the saving to the DWP simply becomes a cost to the council or the housing association in arrears and bad debts. Less money for social landlords means fewer improvements, fewer regeneration schemes, and fewer much-needed new homes. Since the underoccupancy issue is a much more significant one in the north, affecting 46 per cent of working-age tenants in the north-east, and 43 per cent in the north-west, this tax takes money out of local economies in places that most need it. In Bradford, for example, one of the big housing associations has calculated that if it cannot collect all the payments, and has to take the hit in lost rent, it will cost £2.7 million per annum, which it can ill afford. That excludes the heavy cost of evictions—pointless evictions, since so often there will be nowhere cheaper for the household to move to—wherever the landlord cannot keep tolerating rising arrears.
Lord Best
My Lords, I am deeply grateful to Members from all parts of the House for their support. I am grateful to the noble Lord, Lord McKenzie, for the refinement to my amendment, which I fully accept. I hope noble Lords who have spoken will allow me not to summarise the excellent points that they have made and go straight to a few words about the Minister’s very helpful remarks. I congratulate him on bringing an extra £30 million this evening to alleviate the problems created by this legislation. Perhaps I could just pick up on two key points that he made.
The first is the suggestion that the proposed new definition of underoccupancy would bring social housing into line with the private rented sector. Tenants in the private rented sector are unaffected by this measure. They operate within a quite different framework, whereby the maximum of the local housing allowance is calculated for them based on this tight definition of underoccupancy but with the opportunity for the tenant to use the cash—the benefit—for something smaller, perhaps in a better area, or larger, perhaps in a less popular neighbourhood. In any case, those in the much more expensive private rented sector are predominantly younger, single and childless households, more than half of which stay for less than two years, and a third for less than one year. Unlike those in social housing, they seldom comprise a family needing a long-term home in which to bring up their children.
Secondly, the concession that the Minister has brought to us this evening would allow discretionary housing payments to be made to people whose properties have been specially adapted for a disabled member of that household. The discretionary housing payments would also be available where a foster child is coming into the property. These are excellent exclusions, or opportunities, at any rate, for a discretionary payment to kick in. One could list a whole lot more. Indeed, as one gradually looks at this, one begins to do just that. Why not include people with other disabilities—perhaps a family where, as the noble Baroness, Lady Hollis, suggested, a carer comes to stay periodically to provide respite for a parent? Perhaps an exception could be made where an elderly person has a spouse aged only 60. As things stand, they would both have to move or pay up.
The Minister says that everyone must pay their part and, on average, £14 per week is the part that many households will have to pay as the penalty charge. Even if it is £12, or £22 at the other end, I suggest that these are serious sums of money for many people in very low-income households, if they stay put. The option of moving does not exist for a lot of them.
I think this is the moment at which I would like to test the opinion of the House.
“(3A) In relation to a dwelling of which the landlord is a local housing authority or a registered provider of social housing, regulations under this section shall not permit the housing cost element of the universal credit to be less than the actual amount of the liability in a case where a household has no more than one spare bedroom.”
Baroness Hollis of Heigham
My Lords, I will be very brief. The amendment indicates our very real concerns about the effect of all these cuts to housing benefit. We fear that if there is any reverse in our decision today on underoccupancy, housing associations will face mounting arrears, and spend more time and employ more staff chasing deficits in rent. As a result, there will be even less chance for those housing associations to build the new housing stock we badly need. I know the Minister thinks my fears are exaggerated. I hope he is right. The House has alleviated most of my concerns, but we cannot properly calculate the behavioural effect of all these changes on tenants. The Minister is evidence based—something we all welcome and respect—and he wants UC to work, as we do. I therefore hope that by the time the Bill has gone through its full passage in both Houses he will, if it is appropriate, find the resources to ensure that we have the research to undertake an independent review of its effects on tenants in social housing. Frankly, if we do not have that protection, I fear the worst. I beg to move.
Lord Best
I support the amendment. We already have up and running, thanks to the good work of the Minister, a really first-class piece of research looking at the impact of the housing benefit changes on families, poverty and a whole range of issues. I strongly congratulate him on taking that suggestion seriously and bringing forward a significant piece of research. It engaged a consortium of the top people at Oxford University, Sheffield Hallam University, Ipsos MORI polling and the IFS. I wondered whether that team might have its work somewhat extended to embrace the research suggested by the noble Baroness. It would not involve quite as much work because it would examine the 150,000 or so households that will now be affected by the underoccupancy arrangements. There is much important research to take place.
Lord Freud
My Lords, I acknowledge and commend the contributions of the noble Baroness and the noble Lord to the debate on policy. Both of them, particularly the noble Lord, Lord Best, played an important role setting up the independent research that the department has already commissioned around the local housing allowance. More recently, as noble Lords are aware, we have announced research looking at direct payments in the social rented sector. However, I must complain bitterly at the improvement to the negotiating position of the consortium that the noble Lord mentioned. When we carry out research, we always have open competition and no one is favoured. We choose the best researchers.
I place real value on independent research. We need robust evaluation on the impact of welfare reform on housing provision. I know that we are taking some steps in housing benefit reform where we need to monitor the risks. I know that there are risks, and we have all discussed them. That is why proper research, considered properly and taken very seriously, is right at the heart of the protections that we are looking at in this area.
I fully support the intention behind this powerful amendment. I want to go on record as saying that. I can tell noble Lords that the department is currently in the process of planning its research programme for 2012-13 onwards, subject, I have to add, to available funding—and I hope that noble Lords do not take that away from me in other ways. I intend to cover the size criteria and underoccupancy in housing benefit. We are considering separately how to evaluate universal credit. Noble Lords will be aware of the constant-piloting clause that we approved in Committee, which provides for a radically new way of looking at this important benefits system.
All research commissioned by the department is published. I am sure that noble Lords will accept that it is not necessary to provide for this research in the Bill. I know that this is a probing amendment and we will look to providing this research at the right time. With those reassurances, I hope that the amendment can be withdrawn.
“Payment of housing costs
(1) This section applies to payments of the housing cost element of the universal credit.
(2) Payment of the housing costs element of the universal credit must be made to a person’s landlord where that person has requested or consented to such payment in agreement with their landlord.
(3) Regulations made by the Secretary of State may prescribe the circumstances in which subsection (2) does not apply.
(4) Regulations made by the Secretary of State shall prescribe the person who is to be treated as the landlord for the purposes of this section and shall make provision as to the discharge of liability consequent upon the making of any payments to the landlord.”
Lord Best
My Lords, the amendment relates to the payment of help with housing costs—at present in housing benefit and later as the housing cost element of universal credit. The Minister has announced that in future the payment for rent must go directly to the tenant, not, as is possible at present, to the landlord. The amendment preserves the current option for the tenant to choose that the rent should be paid straight to the landlord where the tenant thinks that that will help with their budgeting and housekeeping.
When I introduced a similar amendment in Committee, I pointed out that private landlords were already often very reluctant to take on tenants in receipt of housing benefit or local housing allowance. However, where the benefit is paid straight to the landlord, thereby minimising the chances of arrears, the reluctance of landlords can be much reduced. There is backing for the amendment from the private sector—the Residential Landlords Association, the British Property Federation and others. There is also backing from social landlords. This morning at the LGA, I addressed a conference on housing finance and was surprised at how strongly local authorities expressed their view that the direct payment of rent to tenants would lead to arrears and difficulties for councils in handling housing accounts. The amendment is also strongly supported by those who represent tenants—residents in the rented sector. Associations of residents in social Housing—TARAs—Shelter, Crisis and others are right behind the amendment, not least because surveys have shown that a high proportion of tenants would wish for their rent money to go to the landlord.
The Government have agreed that this choice will be available to those of pension age. This amendment would extend that possibility to make this kind of sensible choice available to all tenants. The housing associations organised a pilot of their own in which they experimented to see how things worked out when rent was paid directly to the tenant. They found that arrears increased from 3 per cent to 7 per cent. If that was applicable generally, the cost to the housing association sector would be some £320 million a year in additional arrears. Local authorities have a similar stock of social housing which would double the figure to some £640 million a year. Housing associations also discovered that their administrative costs were very much higher when the rent did not come straight to the landlord in the form of housing benefit or—in future—the housing element of universal credit. The extra costs on administration for that are estimated at £100 million.
If housing associations face those kinds of costs, the hazard is that lenders will not be so keen to lend to them. The Council of Mortgage Lenders is in favour of the amendment, as are the individual lenders, because they worry that housing associations will get into difficulties if they do not get the rent that they need. The Minister has set up some important pilot schemes to test ways of assisting tenants to handle the money provided for rent, and new arrangements for low-cost banking may be developed in the months and years ahead. However, the Minister undertook to look further at the option of giving more vulnerable tenants the right to choose to have their rent paid to the landlord. I know that he has been considering how a fast-track arrangement might be implemented to switch the payment of rent from tenant to landlord when arrears are mounting.
These changes would be useful but they do not address the fundamental problem. Surely the best approach is to continue to give tenants the right to choose to have their help with housing costs paid directly to their landlord, and not to give them the temptations which are bound to be placed in their path if sums, perhaps in the region of £500 or £700 a month, were paid to them, and possibly used to satisfy the requirements of loan sharks and less salubrious lenders and creditors, rather than paid to their landlord. Can we not preserve the existing right of tenants to choose to be assisted in their budgeting? I beg to move.
Baroness Howe of Idlicote
My Lords, having listened to that explanation from my noble friend Lord Best, I have been completely converted to this approach. I certainly appreciate that the Minister is trying to educate people better to take care of their own finances, but the choice already exists for the individual tenant to decide whether to pay for themselves or to opt in to a system which is, from what we have heard, more satisfactory and reassuring to the landlord—whether a local authority or whoever. As all of us in this House are beginning to get a little older and, sometimes, a little forgetful, perhaps that is a helpful thought for later, when we get even more forgetful about things such as paying our rent.
All I am saying is that this sounds the better way to do things. I am all for running courses to help people to cope better with their finances, but from the point of view of not wasting money, this is clearly a way forward.
Lord Freud
I am saying that we are working really hard with the banks and the banking community to make sure that we have an escrow arrangement of that nature, and we are doing this at several levels. We can have a general agreement, which I shall discuss with the banks as a whole, to provide a generalised protection. However, I am quite interested in getting particular banking products that will provide a simple bank account and elaborating on what could be a new level of support for some of the poorest people in our community. We have a one-off chance with universal credit to ramp up support for the poorer people in our community, and we are putting a lot of energy into achieving that. I have talked about this before. It is one of the hidden gains that we can get out of the introduction of this new system. Rather than people living on drips of money from here and there, we can really start to help them, supporting them in managing their finances and getting true independence. This is a core part of what we are going to be doing with universal credit, and part of that relates to housing. Housing will be a major part of people’s total income stream. We are not doing this for fun or to annoy anyone; this is absolutely part of what we are trying to do with universal credit.
I need to deal with one other point—the issue of safeguards raised by the noble Baroness, Lady Lister. We are concerned about the safety and welfare of claimants and, where we have a concern, we need to put direct payments in place. There are vulnerable groups who are not able to manage the potential freedoms, and for them we will make sure that we go on with existing arrangements for direct payments.
We have commissioned a consortium led by Professor Paul Hickman—I am sorry, but this is a bit of an announcement late at night—from the Centre for Regional Economic and Social Research at Sheffield Hallam University to evaluate the effects of direct payments to claimants in the six demonstration project areas, which I shall announce soon. The other key team members are Dr Kesia Reeve, Peter Kemp of the Oxford Institute of Social Policy, and Stephen Finlay from Ipsos MORI, names that I know that the noble Lord, Lord Best, approves of. That will give us a cumulative understanding of the impacts of direct payments and inform the detail of delivery under universal credit.
Research published by the Joseph Rowntree Foundation in 2007, Paying Housing Benefit to Claimants, on both private and social tenants’ experiences of and their hypothetical attitude toward the management of their own housing benefit confirms that a significant proportion of social tenants have the potential to manage their own housing benefit payments. We will also have an advisory group for the demonstration projects and a wide range of local government, money advice, voluntary sector and other external stakeholders who will be invited to join that group.
We had a slight exchange about what “choice” means and we have been teasing each other about the imbalance of power when you have choice. It concerns us that while there is theoretical choice today, only 5 per cent of people take it. As it stands, tenant choice does not go far enough, which is why I am concerned about it. I hope that the noble Lord, Lord Best, will accept that we are making incredible efforts here to be transformative and not to undermine the housing sector, and on that basis will feel that there is enough going on for him to withdraw this amendment.
Lord Best
My Lords, I am very grateful to all of those who have joined this debate. I am sure that we all feel much reassured by the passion that the Minister brings to this subject and by the genuine efforts that he is making to see that the behavioural change that he wants is triggered and that the disadvantages of going down this route are mitigated. The excellent research that he is announcing tonight—and I thank him very much for it—might show that it is not possible for only 20 per cent of the tenants within the social sector to be regarded as vulnerable and to have their rent paid directly and that there is a rather larger number.
However, I think the Minister is keeping an open mind as to what proportion of the sector will get their rent paid directly, and I greatly welcome him saying how much he is concerned not to undermine the social housing sector, the production of new homes, the sector’s lending and the security of income within that sector. If those discussions with bankers fail and the products do not materialise, we must place our faith in the Minister and hope that he will recognise that the difficulties still exist and that rent direct to the landlord is going to be necessary for a larger proportion of people. On that basis, I am happy to withdraw my amendment.
Welfare Reform Bill
Lord Best Excerpts(14 years, 11 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Freud
My Lords, the best piece of information I can provide the Committee on that question is that it is the noble Lord, Lord Kirkwood of Kirkhope. I think I am reduced to going back to the basic principle that there should be a limit and we have set that limit at the equivalent of £35,000. We are going round in circles slightly.
Lord Best
I thank the Minister for helpful and hopeful words about the transitional arrangements—the 26-week period of grace that was the subject of my amendment. On my other amendments relating to excluding sheltered and supported housing and temporary accommodation, I think the Minister was saying that that was still a work in progress, so my hopes are not dashed on that.
The overarching point that I have repeated a little here is that it is fair enough to have a limit, if the Government, for political or wider reasons, believe it to be necessary, but the limit affects people in very random ways. If you live in a nice three-bedroomed council house in Wales—as I described it earlier—costing £85 a week, you will have £415 left to spend on other things. If you live in a crummy flat in the East End of London at a rent of £325 a week, you will have an awful lot less to spend out of your £500 on all the other things you need. The cap hits people in a rather random way, which is why I have been arguing that we should take housing out of the equation and look at the other factors where the fairness principle might have greater applicability.
The underlying question I would leave with the Minister is: how are we going to manage the movement of people from a high-rent area of the country—they may be in privately rented property or have a number of children—to the cheaper areas of the country? We are looking at something like 200,000 people and 50,000 households. The Minister has suggested that some people will deploy savings, but savings will run out quite quickly if they are being dipped into at an average rate of £93, and for some people up to £150, per week. Such people do not have large amounts of savings and their savings will run out quite quickly. We know it is rather improbable that landlords will drop rents dramatically to cover these and other benefit caps.
In most cases we do not expect people to be going out to work—90 per cent of them are not required to go out to work—so although some might be coerced or incentivised to go out to work, the great majority of the 50,000 will still be in homes where they will not be able to stay because the gap between what they will receive to pay their rent and the rent itself is too wide. They will have to leave. Are we making contingency plans for this movement of a couple of hundred thousand people from the more expensive parts of the south-east and south-west to the inexpensive parts of the country? The move will be expensive.
I pick up on the point made by the noble Lord, Lord McKenzie, about the cost of this cap. If people stay put and wait until they are evicted, an eviction will cost the housing association or social landlord something like £9,000. It is not just the legal costs but the fact that when the people move out you have to redecorate the house and you have a period of vacancy. All those things add up. We reckon that an eviction costs about £9,000, but if people go voluntarily and we can move in at the right time and do things in a more sensible way, the cost is about £2,500. However, on average you are looking at the landlord paying several thousand pounds when people move out.
There is also the question of providing education. When people arrive in new areas, their children will need to attend new schools. Social services departments will have to be notified if children are under the care of social workers. All these things will cost an awful lot of money, let alone just the simple transportation of people’s belongings, the cost of their rail fares and the costs involved in searching for a new home. All this is incredibly expensive. If we are to move 200,000 people because we feel, for whatever reason, that it is not fair for them to continue to occupy homes in expensive areas, are we putting in place the contingency plans that the local authorities in particular will need to get their heads around?
Lord Freud
My Lords, I thank the noble Lord, Lord Best, for that area of inquiry. We are looking to get early support for families in a number of ways well before the cap comes in. We are looking at a process whereby families on benefit face the same choices that low-income working families face. We are looking to achieve significant behavioural change through this measure. I assure the noble Lord that we are working hard with local authorities and other departments as well as with the devolved Administrations on the implementation of this measure.