Local Housing Allowance: Nottingham

Will Quince Excerpts

Monday 17th June 2019 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)]

I thank the hon. Member for Nottingham South (Lilian Greenwood) for securing this debate. I have not yet had an opportunity to visit Nottingham in my role but I look forward to doing so, hopefully over the summer.

Since taking up my post two months ago, I have been keen to engage with as many people as possible, including key stakeholders such as Shelter, Crisis, Homeless Link and the Joseph Rowntree Foundation, to understand housing issues from all perspectives. Like the hon. Lady, I have a keen and long-standing interest in housing and ensuring that people have a safe, decent and affordable place to live that meets the needs of the household, and I would like to start by confirming that we have committed to end the freeze on local housing allowance in March 2020.

Reform of housing support was a central part of this Government’s plan to create a welfare system that both supports the most vulnerable and is fair to taxpayers. To help ensure a fair balance between these two elements, LHA rates are not intended to meet rents in all areas. The intention behind the welfare reform programme is that the same considerations and choices faced by people not in receipt of benefits should be faced by those claiming benefits, and the LHA policy is designed to achieve this.

Between 2000 and 2010, housing benefit expenditure had risen by over half in real terms, reaching £25 billion in today’s prices. If left unreformed, by 2014-15 housing benefit would have reached £29 billion. That was not sustainable.

The measure to freeze LHA rates for four years from April 2016 built on reforms introduced in the previous Parliament, which saved £6 billion in total by 2015-16. Savings from freezing LHA rates are estimated to be around £655 million for Great Britain over the four-year period of the measure. Our reforms provide greater fairness and are part of our wider goal to move people from welfare and into work.

However, we have recognised that some places have seen big increases in rents, so we have made provision to further help people in those areas. That is why we have used a proportion of the savings from the freeze to create more targeted affordability funding, which is used to reduce the gap between frozen LHA rates and the 30th percentile.

Initially, targeted affordability funding was based on 30% of the savings from the freeze, but at autumn Budget 2017 we invested an additional £125 million in targeted affordability funding for the final two years of the freeze—2018-19 and 2019-20. This was based on 50% of the savings rather than 30%.

This additional funding enabled us to increase 213 LHA rates—there are 960 in total—by 3% last year, in 2018-19. This year, a total of £210 million has been made available, the highest amount of targeted affordability funding since its introduction in 2014, enabling us to increase 361 LHA rates by 3%. As a result, it is estimated that this year 500,000 households will benefit from an increase of around £250 per year.

In addition to this targeted affordability funding the Government have provided over £1 billion in discretionary housing payments to local authorities since 2011. Discretionary housing payments allow local authorities to protect the most vulnerable claimants and support households affected by different welfare reforms, including the freeze to LHA rates.

In Nottingham specifically, two of the five LHA rates in the broad market rental area were eligible for targeted affordability funding this year: the three-bedroom and four-bedroom LHA rates, both of which have been increased by 3%.

[Lilian Greenwood]

I thank the Minister for taking an intervention. As he rightly says, the levels for three and four-bedroom properties have been increased. I set out the levels of increase: for example, for a four-bedroom house, it has been increased by £4.55, but that still leaves a shortfall of £1,452 over the year for someone in that position renting that four-bedroom house. The Minister has quoted the rates but the shortfall that people are being asked to make up is huge. Is he really saying that that is the sort of money someone should have to find from their other benefits, whether child benefit or disability benefits? Is that really right?

[Will Quince]

I thank the hon. Lady for her question. That is exactly why we have introduced the targeted affordability funding and we have made available discretionary housing payments, but it is also why more broadly, as I explained in the urgent question last week, I am looking at this in some detail, as I did before being a Minister as part of the all-party group for ending homelessness.

As I said, the three-bedroom and four-bedroom LHA rates in Nottingham have both been increased by 3%. The remaining rates in Nottingham did not fall within the criteria of those rates that had diverged the most from local rents and therefore were not eligible for targeted affordability funding this year, and so remain frozen. As I have said, the Government have committed to end the freeze to LHA rates in March 2020 alongside the freeze on other working-age benefits.

Before I go on, I am aware that the hon. Lady mentioned a few other points which I would like to cover: homelessness, housing supply and “no DSS”. I did a huge amount of work, alongside the hon. Member for Bermondsey and Old Southwark (Neil Coyle), on the causes of homelessness and rough sleeping as co-chair of the all-party group for ending homelessness. Those causes are understood to be both complex and multifaceted. In order to fully evaluate these factors, we have commissioned a feasibility study and a rapid evidence review of the causes of homelessness in partnership with the Ministry of Housing, Communities and Local Government. This report has now been finalised and we are working on the next steps.

As I said earlier, we want everyone to have security in their homes and a roof over their head, and that is why we have committed over £1.2 billion to tackle homelessness and rough sleeping. We published a strategy to end rough sleeping by 2027 and halve it by 2022, and that is backed by £100 million of initial funding. And we have changed the law so that councils can place families in private rented accommodation so they get a suitable place sooner. Last year, statutory homelessness acceptances fell, and we are going to build on this; and the Homelessness Reduction Act 2017 will mean that more people get the help they need sooner.

The hon. Lady rightly touched on landlords not letting to those in receipt of benefits, also known under the old term of “no DSS”. This is a hugely important issue, and in February, the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for South Derbyshire (Mrs Wheeler), announced a Government campaign to end “no DSS” practices. We recently had a No. 10 roundtable on this very issue with a number of key stakeholders, and we are working with those stakeholders to find a satisfactory resolution.

Everyone deserves a safe and secure home, regardless of whether they are in receipt of benefits. Blanket bans do not take account of the individual and their circumstances, which is why we strongly discourage them. We would encourage landlords and agents to consider all potential and existing tenants in receipt of housing benefit and universal credit on an individual basis. We have already seen some positive changes from property sites that have committed to remove “no DSS” wording adverts from across their platforms, and lenders have changed their policies to remove mortgage restrictions that would prevent landlords from renting to tenants in receipt of housing support. Metro Bank is one of the latest to remove such restrictions, and I hope others will follow, but work is ongoing and we will continue to bring the sector together to tackle these practices.

[Jim Shannon]

It would annoy us greatly to find that rental landlords were discriminating against people because they were in receipt of benefits or were DSS applicants. Does the Minister agree that if there is discrimination, which clearly many of us in this House think there would be, under discrimination laws it would be illegal to do that? Also, what action would the Minister, in co-operation with colleagues of course, take to make sure that did not happen?

[Will Quince]

The hon. Gentleman makes a good point. Although that might be discrimination in terms of the terminology we would use, it might not fall under the legal definition of it. As a result, we believe that the best way of tackling this issue is to work with key stakeholders such as landlords and mortgage lenders, as well as with those who provide insurance, because we know that there is a particular issue in that regard. We had a successful roundtable at No. 10 recently, where I genuinely believe we had a good cross-section of all the key players from across the board. We are starting to see progress in this area, and I am sure that by taking this collaborative approach, with the Government working with business, key stakeholders and the charitable and voluntary sector, we will truly get a grip on this issue and tackle it. We do not want to see anyone who is in receipt of benefits being discriminated against in this way.

[Alex Norris]

I am grateful to the Minister for allowing an intervention before he moves on. I am going to test your patience, Mr Deputy Speaker, but I know that the Minister’s dogs were successful in the dog of the year competition not so long ago, as were my own, and I just want to raise a point about pets. Has he had a chance to consider the fact that another hidden way of excluding people in an overheated rental market is to adopt a no-pets policy? The Opposition have said that we want to get rid of that policy in tenancies, and I wonder whether the Minister has considered that as well.

[Will Quince]

The hon. Gentleman is a dog owner, and I am as well. I would not be without our Charlie, and I think that my two daughters would rather throw me out than the dog. In answer to his question, this is an action issue for the Ministry of Housing, Communities and Local Government, but I can assure him that I am working closely across the board with my counterparts in that Department, and I have a meeting with them tomorrow at which I shall raise that very issue.

The hon. Member for Nottingham South also touched on the question of supply, which follows neatly on from the hon. Gentleman’s point. As I have said, I work very closely indeed on this with my counterparts at the Ministry of Housing, Communities and Local Government, and I am sure that the hon. Lady would expect nothing less. Any changes to LHA rates must go hand in hand with how we look at supply, which is why it is essential that we have those meetings. I have them regularly, and I shall have one tomorrow. It will come as no surprise to her that I will continue to push my colleagues in the Department to look at how we can increase the supply of council, social and affordable housing. She mentioned Matt Downie of Crisis, but she missed the three letters that he now has the end of his name. I understand that he was recently awarded an MBE by Her Majesty the Queen, and I would like to send my congratulations to Matt, who is a huge asset to that organisation.

As a Government, we are proud of the progress we have made on our welfare reforms. We now have a record-breaking labour market, with over 3.6 million more people in work across the UK than in 2010 and with unemployment at its lowest rate since the 1970s, having fallen by more than half since 2010. This Government will continue to reform the welfare system so that it promotes work as the most effective route out of poverty. That is fairer to those who receive it and to the taxpayer who pays for it. Work is the pillar of a strong economy and a strong society. We believe that work should always pay, and we need a welfare system that helps people into work, supports those who need help and is fair to everyone who pays for it.

[Lilian Greenwood]

I hear what the Minister says, but he must be as concerned as I am that so many of the people who are now in poverty are also in work. In addressing the issue that we are talking about today, why is it right to force those who are least able to pay for the cost of welfare reform to do so, rather than looking at placing a control on rents as a way of controlling expenditure on welfare payments and protecting those who are most vulnerable from the impact of having to reduce expenditure?

[Will Quince]

I do not entirely recognise the picture that the hon. Lady paints. There have been huge positive changes for some of the lowest paid in our country. The national living wage has risen to £8.21, increasing a full-time worker’s pay by more than £2,750 since 2016. Our tax changes will make basic rate taxpayers more than £1,200 better off than they were in 2010, and we have doubled the free childcare available to working parents of three and four-year-olds to 30 hours per week, saving them up to £5,000 per child.

I was about to mention universal credit. Universal credit replaces the outdated and complex benefit system of the past, which too often stifled people’s potential, creating cliff edges at 16, 24 and 30 hours and punitive effective tax rates of more than 90% for some. The system was punishing claimants for doing the right thing. In the autumn Budget last year, we listened to concerns about universal credit delivery and funding, and announced a £4.5 billion cash boost to universal credit to ensure that vulnerable claimants and families would be supported in the transition to universal credit and that millions would keep more of what they earned. We announced a package of additional support worth £1 billion for all those being moved on to universal credit. This includes a two-week continuation of legacy benefits, a 12-month exemption period from the minimum income floor, a reduction in the deductions cap and an extension of the advances repayment period.

In conclusion, this Government remain committed to a strong safety net for those who need it. That is why we continue to spend more than £90 billion a year on welfare benefits for people of working age—

[Lilian Greenwood]

I would not like the Minister to finish without ensuring that I have understood what he is saying. He said earlier that the freeze on local housing allowance rates would end in April next year. Can I check whether LHA rates will also be restored to at least the 30th percentile of local rents, or whether they will just be allowed to rise from the level that they are now? Given that he has said that the freeze will end in April 2020, what additional help will he provide for those who are struggling to pay their rent now?

[Will Quince]

I thank the hon. Lady for her further intervention, just as I was reaching the end of my conclusion. I will comment on what she has just said in a moment. The Government continue to spend more than £90 billion a year on welfare benefits for people of working age, and the freeze to LHA rates and working-age benefits will end in March 2020. In answer to the further questions she rightly asked, that is a decision for the Secretary of State, and I will be working closely with her on that in the coming days, weeks and months.

Question put and agreed to.