Housing Benefit

  86. Many submissions pointed to the role of Housing Benefit in the poverty and unemployment traps.[142] Housing Benefit is administered by local authorities on behalf of the Department of Social Security.[143] Arguably, the role of housing costs is the most complicated factor in the tax and benefits equation. The issue of how best to help people with housing costs has vexed politicians and policy analysts since Sir William Beveridge looked at the issue over 50 years ago. Ms Pamela Meadows of the Policy Studies Institute emphasised the importance of Housing Benefit in the poverty and unemployment traps equation:

    "I think we do have to finally grab the Housing Benefit thorn because what is clear is that the interaction between Housing Benefit and the rest of the benefit system does not work terribly well because it is not integrated."[144]

Ms Meadows added that poor administration by some local authorities, with waits of 12 to 14 weeks for Housing Benefit claims to be dealt with, could lead to eviction and would deter people from taking work.[145]

  87. The Institute for Fiscal Studies outlined the difficulties of integrating Housing Benefit with the tax and benefit systems:

    "It would certainly not be possible to include anything approaching the current Housing Benefit system in an integrated tax and benefit system. To do that the minimum change would involve no longer relating Housing Benefit levels to rent levels and instead have a `housing allowance' in benefit levels. The problems associated with such a move would be large. In particular significant numbers of winners and losers would be created relative to the current system. How it would work in the social sector where people have little or no control over their rent levels is also questionable, and the possible increase in `ghettoisation' as recipients traded down and down to the cheapest areas, possible away from jobs, might be a source of concern."[146]

  88. Shelter outlined some factors that need to be considered if Housing Benefit were to be more closely integrated with the tax and benefits systems:

-    that locally determined calculations of eligible rent for Housing Benefit purposes based upon a knowledge of the local housing market are crucial in order to ensure fairness and accuracy;

-    that Housing Benefit regulations in some areas have to be related to landlord and tenant law, and are therefore very complex;

-    that 63 per cent of Family Credit recipients also claim Housing Benefit and that therefore the sole introduction of a scheme similar to EITCs would not remove altogether the stigma of claiming social security benefits. [147]

  89. The Chartered Institute of Housing also pointed to the role of housing costs in the poverty and unemployment traps and proposed the introduction of a Housing Credit scheme covering mortgage costs as well as rents.[148]

  90. The National Housing Federation drew attention to the poverty and unemployment traps, which they believed were particularly acute in the housing association sector:

    "The combined impact of higher rents and lower proportions of new housing association tenants in employment has resulted in some four in every five new housing tenants being eligible for Housing Benefit (compared to two out of three council tenants and existing housing association tenants)."[149]

Advice and Information

  91. Whatever final method is decided upon as the model for tax/benefits interaction, the need for comprehensive and accurate advice and information about benefit entitlement, tax and national insurance liability and total in-work income will be of paramount importance. Mr Kelly of the DSS stated that access to advice and information was a central part of Government policy:

    "I think the basic point is to recognise that this is a very important area and it is one on which the New Deal focuses. One of the advantages of the personal advisers who are operating and will operate under the New Deal is that it will be possible for people to have their hands held in going through the calculations. A very important part of advice that the personal advisers can offer to people with whom they are dealing is how much better off the would be in work."[150]

Ms Janet Allbeson of the National Association of Citizens Advice Bureaux described the complexity of assessing in-work benefits and the many different bureaucracies that have to be dealt with,[151] and stressed the importance of receiving accurate advice from a trained adviser.

Conclusion

  92. This interim Report reviews the evidence we have received on this important and complex area. It is clear that the many outstanding problems will not be solved or even ameliorated in isolation from each other. As the Child Poverty Action Group told us:

    "It is necessary to look at a combination of inter-related policy areas rather than focus solely on social security."[152]

We have set out in this interim Report the wider context of, and the historical background to, the Taylor Task Force on the interaction of tax and benefits. Amidst the competing priorities and possible pitfalls of moving forward in this most intricate and complex area, we believe that it is important that Parliament should have some clarity about its objectives for the development of policies affecting low income groups for those in or out of work. We look forward to studying the pre-Budget Report and the forthcoming Green Paper on the Reform of Welfare and observing the continuing development of the Welfare to Work programme, including the New Deals for lone parents and for sick and disabled people. The next stage of our inquiry will be to examine the relevant proposals in the pre-Budget Report, and to report again to the House before the Spring Budget next year.