Memorandum by Lord Avebury (GTS 49)
I enclose a note on the problem of housing benefit
and rent assessment on local authority Gypsy sites, which was
referred to in evidence to the Select Committee on 29 June and
13 July.
HOUSING BENEFIT
AND RENT
ASSESSMENT ON
LOCAL AUTHORITY
GYPSY SITES
In evidence to the Select Committee on 29 June
2004, Mr Ian Cairns, Gypsy Liaison Officer, Somerset County Council,
said (Q230):
"Our biggest problem in managing sites is
the intervention of the Rent Service where simply because we are
a county council, for some undetermined reason, our sites are
classed as private land and as such the Rent Service set an artificial
benefit level. If you are a Gypsy living on a district council
site then you will get your full benefit paid. If you are a Gypsy
living in housing you will get your full benefit paid. If you
are a Gypsy living on unitary authority land you will get your
full benefit paid. If you are on a county council you will get
this artificial level—and in Somerset it is £26 a week
for a family, in Kent it is £22.50—and councils are
forced then to help the Gypsies themselves to either run the sites
at a deficit or the Gypsies themselves are forced into hardship".
The Committee questioned the Minister Mr Keith
Hill on this matter, but he said that responsibility lay with
the DWP (13 July, Q343); they were aware of the problem, and were
seeking to identify solutions. The Minister agreed to let the
Committee have a note on the time scale.
Under the Rent Officers (Housing Benefit Functions)
Order 1997 (1987 No 1987), the housing benefit payable to Gypsies
on sites owned by County Councils is limited to an amount determined
by a formula in the Order, which is invariably less than the economic
rent previously charged. The consequence is either that the Gypsy
residents build up large arrears of rent, or that the County Council
landlords have to write off the difference, so that less money
is available to spend on maintenance or improvement of the sites.
The Order provides that a "local reference
rent" (R) is ascertained, being the mean of the highest (H)
and lowest (L) rents being charged in the "locality"
for occupation of a pitch on a caravan site, after excluding any
rents which in the judgement of the rent officer are "exceptionally
high" or "exceptionally low". The local reference
rent R is the maximum amount of housing benefit allowable.
The rents examined to give L and H are entirely
those on private sites—on the grounds that these are the
only open market rents—and since Gypsies do not normally
live on private sites, the determination is based on the rents
charged to non-Gypsies, for a level of facilities which may be
quite different from what is normally provided on a Gypsy site.
In some counties, notably Hampshire, the determination of L was
based on holiday sites, because the rent officer there said he
was obliged by the regulations to include them in the calculation.
The Rent Service headquarters took the view that holiday sites
should be excluded. Another problem was that on some private sites,
a levy of 10% of the value of the caravan was charged at the start
of occupation, but this was not taken into account in calculating
L.
The "locality" within which the determination
is made us not defined in the Order, but is chosen by the Rent
Officer so as to contain a reasonable number of private sites.
The individual whose housing benefit is being reduced by the process
of determining the reference rent does not know what are the boundaries
of the "locality" unless there is an appeal.
On sites owned by District or Unitary Authorities,
housing benefit covers the entire rent, and there is no reference
rent determination. The rationale for this difference in treatment
appeared to be that since these authorities are housing authorities,
they would have no interest in charging rents that were higher
than necessary to cover their costs.
Registered Social Landlords, as defined under
the Housing Act 1996, are also not subject to rent determination,
and their tenants have the whole of their rent paid in housing
benefit.
This problem was drawn to the attention of the
then Minister at the Department of Social Security, Ms Angela
Eagle MP, on 20 February 2001 (copy attached). Her successor Mr
Malcolm Wicks MP explained in a letter of 20 June 2001 (copy attached),
that
"The rent levels of local authorities [meaning
district and unitary authorities], Registered Social Landlords
and prescribed tenancies (listed in Schedule JA to the Housing
Benefit Regulations) are either regulated, or in some other way
controlled, often through subsidy, so as to be lower than the
market rent. Those rents charged by County Councils are not subject
to such control and are therefore subject to Rent Officer determinations,
as with any other rent allowance case, and thereby restricted
to a comparable open market rent, which tend to be higher as they
would include an element of profit".
The Minister appeared to say that if the rents
on County Council sites were not limited by the formula in the
regulations, they would include an element of profit.
On 24 July 2001, Malcolm Wicks acknowledged
that there was an anomaly (copy attached), and said that the Rent
Service would be "carrying out an internal review of current
rent officer practices to ensure that a consistent approach is
being adopted towards Agency policy and DWP legislative requirements".
On 22 September 2002, Mr Wicks said that "officials
are currently looking at an option to change the way that rent
officers determine local reference rents for those on gypsy sites
to take account of the fact that such sites tend to incur higher
maintenance and management costs. In doing so, we also need to
ensure that the current anomaly, whereby district and county council
sites are treated differently for Housing Benefit purposes, is
addressed". (copy attached)
On 15 May 2003, according to Mr Wicks, DWP officials
were still looking at this option, and the initial thoughts of
the Rent Service were that they would not need any additional
resources to extend their assessments to district and unitary
sites, because they already covered private and County Council
Gypsy sites and would only need to inspect each [district or unitary]
local authority site once or twice a year to set values (copy
attached).
On 11 November 2003, Mr Chris Pond MP wrote
that while he "very much regret[s] the difficulties that
the delay is causing to both the tenants of county councils and
to the county councils themselves, unfortunately, pressures elsewhere
continue to mean that we have not been able to progress the work
as quickly as we would have liked".
It seems incomprehensible that the DWP should
be going to such lengths, and taking four years to reach a solution
to make sure that local authorities do not cheat the benefit system.
Of course, local authorities which operate Gypsy sites should
not charge more than is necessary to cover their costs, and for
the avoidance of doubt it would be desirable to issue guidance
on what may be included in the costs, to cover the overheads as
well as direct operating costs. This would eliminate the need
for bringing the apparatus of rent officers to bear, with the
imposition of reference rents on all the local authorities running
Gypsy sites. But if they did charge more than was necessary to
cover their costs, the surplus would be used in long-term maintenance
of sites, and would thus reduce the necessity for the authorities
concerned to rely of the ODPM's refurbishment grant, so that no
net increase in public spending would arise. It is suggested that
guidance would be a sufficient check on the charges made on all
local authority Gypsy sites, which have never been said to be
excessive in the past.
In the meanwhile, letting the matter drift has
meant that all the while, county councils are being deprived of
income which could and would have been applied for the benefit
of the Gypsy and Traveller communities. If district and unitary
authorities are now to be treated in the same way, their income
too is certain to be reduced, and no public purpose is served
by the extra bureaucracy. Mr Chris Pond argues (8 December 2003,
attached) that it has never been considered reasonable for central
government to simply reimburse local authority's expenditure without
some form of check on the amount being spent, but for the last
seven years this has been the case on district and unitary authority
sites, without any evidence that public funds have been wasted
or mis-spent.
Eric Avebury
28 July 2004
Dear Ms Eagle
My attention has been drawn to a problem which
has arisen with regard to housing benefit on Gypsy sites. Most
of the residents on sites managed by local authorities are claimants
who depend on housing benefit to pay their rent, and where the
landlord is a county council, the benefit is often less than the
economic rent charged by the local authority.
In the Rent Officers (Housing Benefit Functions)
Order l997, a determination could be made of the "reference
rent", which is the mean between the highest and lowest payment
(H and L) a landlord could reasonably expect to obtain under an
agreement for the occupation of the land on which a caravan or
mobile home stands. In determining H and L the rent officer has
to gather market information about all the caravan site charges
in a "locality", which is not otherwise defined in the
Order. The extent of this "locality" may vary from time
to time, and for different classes of dwelling, at the discretion
of the rent officer, and the person in respect of whose licence
a determination is made has no idea of the boundaries of the locality;
nor of the sites which yielded H and L, until he appeals. Nor
can he be aware of the "exceptionally high" or "exceptionally
low" charges which are excluded from the calculation, again
at the absolute and unfettered discretion of the rent officer.
No distinction is made between Gypsy sites and
others, and no variation is allowed for the wide differences existing
between sites in many "localities". The "reference
rent" is the same for a hard standing with a tap in a field,
and a large plot with purpose built amenity unit and community
facilities.
The Districts and Unitary Authorities which
manage Gypsy sites are not affected by the Order, because they
are Registered Social Landlords. Counties, however, are treated
as private landlords, and the result is that occupiers of pitches
on their sites now get less housing benefit than the economic
charge for their occupation. Some counties may reduce the charge,
and cut down on maintenance at the same time, with predictable
results. The sites will fall into disrepair, and local residents
will no doubt complain that the dereliction is the fault of the
Gypsies.
I cannot believe that this was the deliberate
intention of the framers of the Order. There is no logic in making
a distinction between the occupiers of Gypsy sites, according
to the type of local authority which owns the land. Would you
consider making an amending Order so as to remove this anomaly?
Lord Avebury
20 February 2001
Dear Lord Avebury
Thank you for your letter of 28 March to Angela
Eagle in response to Angela's of 27 March 2001, about the restriction
of county council gypsy site rents within Housing Benefit.
As Angela said in her reply, rent officers define
"locality" for individual claims, based on their expert
judgement, and "locality" will depend on the housing
market in the area. Localities have to be flexible as the market
is subject to change and rent officers decisions are bound to
reflect this. We are confident that rent officers have sufficient
experience and knowledge of the market to enable them to carry
out their functions effectively making their assessments based
on the market as they find it. From 2 July, rent officers will
be required to provide reasons for their decisions to enable a
claimant and local authority to understand how the rent officer
has made their decisions and the information they have used to
support it.
You are concerned about the difference in treatment
of site rents for gypsy sites managed by local authority and county
council. The rent levels of local authorities, Registered Social
Landlords and prescribed tenancies (listed in schedule 1A to the
Housing Benefit regulations) are either regulated, or in some
other way controlled, often through subsidy, so as to be lower
than the market rent. Those rents charged by County Councils are
not subject to such control and are therefore subject to Rent
Officer determinations, as with any other rent allowance case,
and thereby restricted to a comparable open market rent, which
tend to be higher as they would include an element of profit.
Officials from this Department have recently
had a fact-finding meeting with officials from both the DETR and
Rent Service to discover the reasons behind local authority gypsy
site rents being higher than the maximum rents being used in the
calculation of Housing Benefit for other gypsy sites. As I am
sure you will appreciate, this is a complex matter, but we will
give it careful consideration.
Malcolm Wicks MP
20 June 2001
Dear Lord Avebury
Thank you for your further letter of 22 August
concerning Housing Benefit and gypsy sites.
As you are aware, Housing Benefit is intended
to help those on low income pay their rent to secure the occupation
of their home. This has to be balanced by our responsibility to
the taxpayer, in that help with that rent is kept to a reasonable
level. As you realise, this is achieved in a variety of ways for
the various types of tenancies that exist and where there are
no built-in controls on rents, Rent Officers are used to provide
a determination which reflects reasonable rent levels within the
locality. The rents of Registered Social Landlords can also be
referred to the Rent Officer but only where the local authority
considers the rent to be unreasonably high or the property too
large for their needs.
As you are also aware, it came to light over
a year ago that there was a discrepancy between the way the rents
for those on district and county council gypsy sites were dealt
with in the assessment of Housing Benefit. I can assure you that
my officials are currently looking at an option to change the
way that rent officers determine local reference rents for those
on gypsy sites to take account of the fact that such sites tend
to incur higher maintenance and management costs. In doing so,
we also need to ensure that the current anomaly, whereby district
and county council sites are treated differently for Housing Benefit
purposes, is addressed.
You suggest that gypsy sites be treated as Registered
Social Landlords for Housing Benefit purposes. However, Registered
Social Landlords are special cases as their rent levels are kept
low by way of housing subsidy. I accept that both county and district
councils are responsible bodies who are not likely to overcharge
their tenants. However, it would be inconsistent to treat such
bodies in a different manner to any other landlord.
Malcolm Wicks MP
25 September 2002
GYPSY SITES AND HOUSING BENEFIT
Thank you for your letter of 22 August 2002,
enclosing correspondence from Lena Lee of 4 Cranham Hall Caravan
Park, Wheelers Hill, Chelmsford, regarding Gypsies and Travellers
and rent allowance benefits, the contents of which I have noted.
I am fully aware of the issues surrounding Gypsy
site rents. Currently, Gypsies and Travellers who live on county
council or privately owned sites are subject to housing benefit
restrictions. Their sites attract rent allowances, and therefore
are subject to rent officer controls which can discourage Gypsies
from using these sites.
On the other hand, those Gypsies and Travellers
who live on district or unitary authority sites where these are
managed by the authority, are not subject to housing benefit restrictions
as their sites are classified as "public sector" and
not subject to rent officer controls.
That said, I hope you will appreciate that the
Department for Work and Pensions (DWP) are in lead on rent officer
controls and benefit. However, the ODPM takes an active interest
as we are very conscious of the need for the existing network
of over 300 sites to remain open and available for use.
Therefore, I appreciate that changes will need
be required in the Rent Officer's Order and Housing Benefit Regulations,
to allow the Rent Service to make determinations on local authority
Gypsy site rents.
ODPM officials are currently in consultation
with the DWP regarding rent controls, and both Departments hope
to resolve this issue in due course.
Tony McNulty MP
26 September 2002
Dear Lord Avebury
Thank you for your further letter of 17 February
about rents on gypsy sites. I apologise for the delay in replying.
As I explained in my earlier letter, my officials
are currently looking at an option to change the way that rent
officers determine the Local Reference Rents for gypsy sites,
and in doing so ensuring that the current anomaly in the treatment
of district and county council sites is addressed.
We do, of course, need to evaluate this option.
To this end we have asked officials from the Office of the Deputy
Prime Minister to provide what information they can on gypsy site
rents. We understand that they will be seeking evidence from a
variety of sources including the National Association of Traveller
and Gypsy Officers.
Once we have evaluated this option we will be
better able to judge its impact an the work of the Rent Service.
Their initial thoughts are that they would not require any additional
resources to do this work as they already cover the private and
county council gypsy sites and would only need to inspect each
local authority gypsy site once or twice a year to set values.
This could be accommodated as part of their standard inspection/market
evidence collection work.
Where gypsy sites are transferred from local
authority to housing association ownership Housing Benefit becomes
payable by rent allowance and rents may be referred to the Rent
Officer. Housing association rents are generally excluded from
referral to the Rent Officer but a referral can be made where
the authority decides that the rent is unreasonably high or the
tenant over-accommodated.
The Secretary of State is required to consult
with representatives of local authorities on any changes to Housing
Benefit legislation as well as the Social Security Advisory Committee
who may well consult more widely where they consider it to be
appropriate. Through this means a wide variety of views will be
considered when formulating the legislative changes.
Malcolm Wicks MP
15 May 2003
Dear Lord Avebury
Thank you for your further letter of 13 November
about Housing Benefit and Gypsy site rents.
1 am afraid there is little I can usefully add
to the previous replies from Malcolm Wicks and myself. The option
to change the way that rent officers determine local reference
rents for those on all Gypsy sites is not intended to ensure that
local authorities do not cheat the benefit system. The purpose
is to achieve consistency of treatment for all those who live
on Gypsy sites. the same consistency that you have striven to
achieve. To my knowledge It has never been considered reasonable
for central government to simply reimburse local authority's expenditure
without some form of check on the amount being spent. As there
is presently no such check on the setting of district and unitary
authority Gypsy site rent levels it is only reasonable to bring
them under the umbrella of the proposed scheme in order to achieve
That consistency of treatment and value for money for both tenant
and taxpayer.
I am, however, grateful for your further comments
and can assure that we will continue to keep the situation under
review.
Chris Pond MP
8 December 2003
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