Welfare Reform Bill

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Mr. Boswell: As my hon. Friend has mentioned the magic word “finally”, could he reflect on what one might call the rent profit cap, about which he spoke a few moments ago? Is it not worth considering, at least in principle, whether that cap should be linked to the level of local rent determination rather than being somewhat arbitrarily determined as a monetary amount?
Mr. Ruffley: There is no end to my hon. Friend’s skills. He is a wordsmith, a life enhancer, a caring and compassionate historian and a guide, philosopher and friend—to me, at any rate. Importantly, he has added being a policy wonk to his list of accomplishments, because he has just come up with a policy idea that had not occurred to me. That might indeed be one way of doing it. I have already asked the Under-Secretary why the policy cap has been set in the way in which it has, and I am extremely keen to hear the answer.
In the interests of time, I shall not detain the Committee, but I hope that the hon. Member for Colne Valley (Kali Mountford) will detain us on the issue of the size of what is referred to under the current regime as a locality. Worrying data have been produced by Citizens Advice. In one particular part of the country, Barnet, the locality—the Bill will change the term, but I shall call it the locality for the sake of simplicity—is very large, which leads to the midpoint of rents for the area being completely unrepresentative of what a real market rent would be in some parts of the locality.
I trust that we shall hear more about that, but if the research conducted by Citizens Advice in Barnet is correct, something must be done. From the evidence that Citizens Advice has provided, it seems that there are serious shortfalls, which need not occur if the rent officer draws the map more sensibly. Why have the localities been allowed to grow so large for the purpose of rent determinations by the rent service? I am not sure what the logic is, but I am sure that it is leading to very large shortfalls in certain parts of the country.
Although LHA is a sensible proposition, there are a few questions, and we need the answers if we are to have full confidence that people whom the scheme is designed to help, and who need and deserve that help, will receive it.
Kali Mountford (Colne Valley) (Lab): I shall not continue with the weather theme in our conversations, but I note that the Room is considerably chillier than before. In the interests of hon. Members at some point being able to go and warm their hands on a hot drink, I shall try to be brief, despite the scope of the clause.
I have not tabled an amendment, because I believe that there will be an opportunity to examine matters when regulations are made. However, I look to Ministers to consider my concerns during passage of the Bill and to return with further recommendations or reassurances that will satisfy me and those who have advised me.
I should like to thank the CHAS Housing Aid Service, for which my husband worked until 1998 as a director in Kirklees and for which I have some affection. I no longer have any direction connection with it, but Niall Holland came to see me and has been extremely helpful in advising me about its concerns. CHAS is a small organisation and therefore was not involved in the consultation, but perhaps that could be remedied in the course of our further deliberations, so that it can discuss matters directly with Ministers and so that proper solutions can be found in the future.
The hon. Member for Bury St. Edmunds (Mr. Ruffley) mentioned shortfalls, and the way in which they have come about. We do not wish to exacerbate an already difficult situation by what we are about to do. The CHAS report, “Behind Closed Doors”, covers a number of large metropolitan areas, including Kirklees, and one of its studies covers south Kirklees in my constituency. For single rooms, the current shortfall is approximately £18, but in more typical rental accommodation, the shortfall is £28 for one-bedroomed accommodation and £16 for two-bedroomed accommodation. For bigger properties, the differences vary considerably. Those shortfalls in my area were replicated in all the areas that were studied, including Bradford, Doncaster, areas right across south and west Yorkshire and beyond to, for example, Exeter. The study concentrates largely on areas in Yorkshire—it is none the worse for that, but the concerns do not only apply to Yorkshire. I suspect that shortfalls are replicated to varying degrees across the country, depending on market rents and on housing demand and availability.
There is another way in which shortfalls may be exacerbated: the move from a mid-point assessment to a median assessment. On the face of it, the Government’s Green Paper entitled “A new deal for welfare: Empowering people to work” gives a useful explanatory note on how median rent could improve the situation. The example given is of a range of 13 houses with rental values between £50 and £200. In that group the median is £150, and the mid-point is £125.
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My next problem arises out of the work of rent officers. When rent officers were asked how they apply their own values and about the research that they do in setting those values, we found that they cut out the lowest and the highest of those 13 properties available for rent in order to reach their mid-point.
In a parliamentary question, my hon. Friend the Member for Huddersfield (Mr. Sheerman) asked how the median would be reached. He asked specifically whether the median that has been referred to would include all rents or would exclude significantly high or low rents. The answer was that it comes from the rent officers’ market evidence database. Our problem with that is that we know in our own area that the rent officers’ market evidence database already excludes the lowest and the highest rents available in our area. We need to ask whether guidance will be given to rent officers. The median, which would on the face of it bring about an improvement for people, needs to be a true median and not one that is being disguised.
Mr. Ruffley: Am I right in thinking that the size of the locality exacerbates the problem that the hon. Lady is describing?
Kali Mountford: The hon. Gentleman, perhaps not unusually, is a little ahead of me because I am about to come to the size of the locality, which has an impact on deciding a median because the bigger the locality, the larger the variation in rent for similarly sized properties. My area has some leafy and quite wealthy areas. Holmfirth, for example, is a relatively wealthy area when compared with England as a whole, with average annual household incomes of £30,000. Even in Colne Valley—which is not the worst-off in Britain—the average income in the poorest ward is £20,000. Therefore, there is a £10,000 difference in incomes. That is followed by a difference in house prices and rental markets. However, Huddersfield and Dewsbury, which are included in the Kirklees area, have significantly lower incomes per household and a following variation between house prices and rental values.
It is not only that Holmfirth—if anyone wants to visit it, it is the location for “Last of the Summer Wine”—is extremely beautiful and a great tourist attraction. However, the fact that it is a tourist attraction affects its house prices. That is noticeable in my village, Slaithwaite, which is also a tourist attraction due to the production of “Where the Heart is.” It shows how a market can be so easily affected by something that does not appear to be a market change. However, the fact that the television crew decides to film there changes the value of the properties. [Interruption.] That may also have a negative impact on prices—we may look at that in future—but it is currently seen as a beautiful place and one that has a sense of community, something that cannot be easily quantified. I do not know how a rent officer would evaluate that. While a sense of community is one of those things that changes market values, it cannot easily be put into a guidance note to rent officers. Nevertheless, they might look more closely at what is affecting market values in their own areas.
Mr. Jeremy Hunt (South-West Surrey) (Con): Is the hon. Lady concerned that having a single rate for a large area could discourage labour mobility, because it could mean that people looking for work might feel restricted to living in a particular part of the area and might not be able to move to some of the areas that she has referred to? It might impede the desire for people to move back into the labour market if they are out of it.
Kali Mountford: Indeed. The report produced by Labour MPs in 1997-98 was about that very point. It was one of the first surveys of rural communities and was carefully produced, considering the reasons why people were leaving rural areas and going to urban areas to find work: the travel-to-work problems, the community effects, rising house prices that meant that they could not afford to stay and the need to follow the work. There are other effects. In an area such as my constituency, for example, most people go to work in Manchester, Leeds or Sheffield. People going to those towns are followed by the development of four-bedroomed houses, because when people can afford to get on the motorway and tootle on to work in such places but come home to the beautiful Colne Valley with its fantastic scenery, they want to live in the houses that they desire. They change the whole housing market for the people who already live there.
Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): I have been following the hon. Lady’s remarks carefully, and I agree with most of what she is saying. Does she think that there is a further problem with the phenomenon that she is describing? A lot of evidence in housing policy suggests that we need to create mixed communities where people of all income groups, families and so on live in the same area. Allowing the broader areas that she is worried about risks putting that policy in jeopardy.
Kali Mountford: Of course, some of that can be catered for by looking at planning guidance, which makes a huge contribution. I have taken many an opportunity to object to some developments that I thought did not add helpfully to the social mix. This is not the only way in which social housing can be provided, and it is not the only way in which we can ensure that houses of a suitable type for rent or cheap purchase can be provided, or indeed some mix of the two so that people can have part-equity. There are other ways of looking at the market, but what does not change is the variation between one locality and another.
Mr. Boswell rose—
Kali Mountford: I am feeling generous, because I am so fond of the hon. Gentleman.
Hon. Members:Favouritism!
Mr. Boswell: I am mortified, but also deeply flattered. Has the hon. Lady seen the dilemma that I see? She cogently made the point about striking off the outliers in determining the median. She also made the point about the huge variations within wards that we may all have between affluent and less affluent areas. I am sure that is true. However, given the need to have a good statistical base to inform the rent officer’s determination, one needs a large enough sample, and given the need to be precise enough to deal with local market conditions, one needs a local solution. Does the hon. Lady at least acknowledge that that is a dilemma whoever is in government?
Kali Mountford: Of course it is a dilemma. In order to get more information, CHAS contacted our local authority and asked for the information in order to make a better assessment of the rents available. Unfortunately, the rent officers did not feel—some for not such good reasons, but others for good reasons—that they could provide all the information that might have informed us better in this debate. In their decision not to provide that information, they cited the exemptions under the Freedom of Information Act 2000 about revealing information that might be against economic interest or would affect the financial interests of the UK Administration. That is a pity. I can understand some of that. I can understand some of the other reasons that they gave. But given that most of us in a locality know the general amount of rent that is on offer and the kind of benefits that are paid for that type of property, I do not entirely accept what the rent officer said. It might have informed our debate better if we had had a clearer picture of what was really happening in Kirklees, but unfortunately I cannot advise the hon. Gentleman further on that because I simply do not have the information.
But any fool can see by looking in the adverts in the local paper the type of variation that exists. That gives rent officers considerable problems. One would not want to skew a market or to attract a higher rent to an area simply by setting a level that its market value would not attract. That would be a mistake. I do not see why taxpayers should pay for something that the market would not attract. Also, reasonably, people should be able to find a mechanism to ensure that the rent that the market attracts is true and fair and does not lead to further, unexpected and unnecessary consequences, especially around the issue of rent shortfalls. That is what we must focus our minds on.
We must also take account of the fact that markets change constantly. There is not one fixed locality that we can draw a red ring around on a map and say that it is there for all time. This problem surfaced in the case of Heffernan v. Rent Service, which was heard in Sheffield. I will not read out all the determinations by Judge Gilbert on that occasion, but in his examination of the issue of locality he talked at some length about the difficulty of defining a locality. If anyone wants to read the judgment, this is in paragraphs 84 to 87. The problem in that case was that the definition of locality that was being used at that time was not being properly applied. The definition was,
“a broad geographical area made up of a number of neighbourhoods with a mix of property types and tenure where a tenant could, as an alternative to the property in question, reasonably be expected to live and benefit from similar amenities.”
I do not want to go through all the particular types of tenure, property and amenities that this case looked at. We all know about the changes that can happen in an area. A new school might attract more properties and different types of properties; a new amenity and proximity to other desirable amenities can also change markets. There is not one fixed area. That gives us a problem. We need to look at ways through the regulations to advise our rent officers on how to determine what a locality is, rather than use too broad a brush. Unless I am misadvised about how the median will be used, it might mean that people find themselves with a bigger shortfall than we would wish.
We also need to find a way through the system for particular tenants. It is difficult sometimes to understand how rent officers come to their conclusions. Some people have asked me to ask for greater transparency on rent officers. I have thought about this a great deal. If the information about every property that a rent officer looked at were made available for anyone to see, would that in and of itself cause a skewing in the market? Would transparency alone be the solution? I am not absolutely convinced that it would but I should like the Under-Secretary to think about and respond to that. In her assessment, will the greater transparency of the work of the rent officer aid the process or inhibit it? There is scope for greater transparency and perhaps greater liaison between rent officers and other departments. Sometimes rent officers have seemed reluctant to engage with other sectors, especially the housing association and social housing market sector. If they had a better understanding of how the market operates—I am not talking about controlling it—they could come to an understanding about how a reasonable rent could be set in an area.
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I am not sure that transparency alone would lead us to the result we want. There may still be times, as in the Heffernan case, when people feel that they have had a raw deal. That being so, at present they either pay their rent or they do not. They either decide to live in a property or they go elsewhere. People have to do their best and get on with what is available to them or make another choice.
There is a problem in the attitude of, “Never mind, if you can’t live in that house go and find a cheaper one”. We all know why people choose to live in a locality. Opposition Members have already raised the issue of people in a travel-to-work area wanting to be nearer to places where there are job opportunities. Some people, for example, parents who are having trouble raising their children, want to be near to relatives or friends who can give them support. I have had cases in my constituency of women who were intimidated by a former partner and who needed people nearby whom they could trust. They were reluctant to move out of their locality and away from those who provided an important support network in their daily lives. That is a reason for people wanting to stay where they are, in the community they are used to.
People do not necessarily want to move their families around. There is much credit in a family having stability, which can be found in the community that people live in, as I know from my constituency experience. It is a credible, and creditable, reason for wanting to stay in a locality, even if the accommodation is much smaller than rent officers think is appropriate.
Another way of dealing with the problem is to consider the work of the rent advisory committee in the Kirklees authority, for example. As well as rent officers, the committee includes estate agents and other people with a housing interest who come together to discuss the area’s general housing needs. They are well informed about what is happening in their local housing market and know what is available, what the houses prices and rentals are likely to be, and what types of amenities are planned that might have an effect on the market. Those people are under-utilised at present and they could add something to the mix, especially if they were used as a point of appeal by those who felt that the rent officer had sent an unreasonable rate for their benefits, given the locality.
Will the Under-Secretary consider regulating for a group as a mechanism for providing an over-layer, so that people can be certain that what they have been offered has been properly considered and know that they have a right of appeal? It is a right that exists throughout the benefit system, yet it seems to be curiously unavailable in this proposal.
That brings me to another point that was raised in respect of the Heffernan case: the appropriate maximum housing benefit, to which the hon. Member for Bury St. Edmunds alluded. Whether we are talking about the median, the mid-point or any kind of average, it is the maximum that in the end causes the crunch, and all these matters will affect that. If someone as eminent as Judge Gilbart could not find an absolute answer to that because, in his own words, he was having to determine only whether or not the rules had been applied correctly, rather than whether or not the rules were correct, I should like to ensure that the rules that we have are correct and that all tenants feel that they receive a fair deal.
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