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Session 2006 - 07
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Public Bill Committee Debates
Welfare Reform Bill

Welfare Reform Bill

The Committee consisted of the following Members:

Chairmen: Mr. David Amess, †Mr. Jimmy Hood
Afriyie, Adam (Windsor) (Con)
Alexander, Danny (Inverness, Nairn, Badenoch and Strathspey) (LD)
Banks, Gordon (Ochil and South Perthshire) (Lab)
Boswell, Mr. Tim (Daventry) (Con)
Brown, Mr. Russell (Dumfries and Galloway) (Lab)
David, Mr. Wayne (Caerphilly) (Lab)
Engel, Natascha (North-East Derbyshire) (Lab)
Heppell, Mr. John (Vice-Chamberlain of Her Majesty's Household)
Hunt, Mr. Jeremy (South-West Surrey) (Con)
Laws, Mr. David (Yeovil) (LD)
McGuire, Mrs. Anne (Parliamentary Under-Secretary of State for Work and Pensions)
Mountford, Kali (Colne Valley) (Lab)
Murphy, Mr. Jim (Minister for Employment and Welfare Reform)
Penrose, John (Weston-super-Mare) (Con)
Robertson, John (Glasgow, North-West) (Lab)
Ruffley, Mr. David (Bury St. Edmunds) (Con)
Seabeck, Alison (Plymouth, Devonport) (Lab)
John Benger, Chris Shaw, Committee Clerks
† attended the Committee

Public Bill Committee

Tuesday 28 November 2006


[Mr. Jimmy Hood in the Chair]

Welfare Reform Bill

New Clause 16

Local Housing Allowance: transitional arrangements
‘Regulations may make provision for those in receipt of Housing Benefit to be entitled to claim Local Housing Allowance from the coming into force of this Act.’.—[Danny Alexander.]
Brought up, and read the First time.
Question proposed,[this day], That the clause be read a Second time.
4 pm
Question again proposed.
Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): It is a pleasure to be back here this afternoon under your chairmanship, Mr. Hood. I shall pick up where I left off in moving new clause 16. Ministers have previously suggested that they have no plans to make local housing allowance available to existing housing benefit claimants, but that position will be reviewed after a two-year period. I have expressed several concerns, not least the risk that landlords will seek to evict their existing tenants to let to new tenants at a higher rate, if local housing allowance happens to be at a higher rate. Local citizens advice bureaux have reported many cases of landlords increasing their rent to local housing allowance level.
It seems not impossible, although I am not a fortune teller, that landlords will respond similarly in the national roll-out and will not necessarily distinguish, in their rent-setting behaviour, between tenants whose housing benefit is assessed under the existing rules and those whose housing benefit is assessed under the local housing allowance rules. That could leave some tenants at a disadvantage. One can envisage a situation in which some landlords would be pushing rents up towards the local housing allowance level, causing shortfalls, potentially, among the tenants who were in receipt of existing housing benefits.
The new clause, as I said earlier when probing the Government’s intentions, would address the problems by allowing existing claimants to choose whether to transfer on to local housing allowance, or, at any rate, by giving the Secretary of State powers to make regulations to allow that to happen. Such an approach would be consistent with another of the Government’s priorities for the local housing allowance, which was, after all, to promote choice, in terms of shopping around with benefits and local housing allowance. In addition, such an approach could perhaps ease acceptance among claimants of some of the changes, because it would allow them greater choice.
The Minister for Employment and Welfare Reform (Mr. Jim Murphy): It is a particular delight to welcome you, Mr. Hood, to the Chair in our third from final sitting of the Committee, where, as the hon. Member for Bury St. Edmunds said, we have had particular consensus about important principles. He of course alluded to the lack of such consensus yesterday in the Chamber. [Interruption.] That demonstrates again once and for all that there are substantial—
The Chairman: Order. I feel obliged to remind Opposition as much as Government Members that we expect better order in this Committee.
Mr. Murphy: You are right, Mr. Hood, because that behaviour was worse than anything in the Chamber yesterday. Nevertheless, the level of disagreement yesterday demonstrates that there are substantial policy and priority differences between the two major parties, particularly about poverty and child poverty. The Bill is an important contribution in that area; I remind hon. Members that one in six of current incapacity benefit customers has a dependent child and the Bill would make a substantial impact on the child poverty measurement.
I acknowledge the comments on new clause 40 made by the hon. Member for Daventry in the debate on new clause 38. I thank him for giving us advance notice of his questions and comments in that way.
Mr. Tim Boswell (Daventry) (Con): For the avoidance of doubt, or perhaps to avoid concern on the part of the Committee, I think that the Minister means clauses 38 and 40—not new clauses. Fertile we may be on these Benches; disrespectful and even stroppy we may be from time to time. Nevertheless, our book does not run to creating 38 new clauses, although, if tempted, we might be inclined to add to their number.
Mr. Murphy: As is often the case, the hon. Member for Daventry is entirely right. Of course, it was clause 38 rather than new clause 38. I was going on to compliment the hon. Gentleman, but I do not know whether I should do so now. It is a matter of public record that he has chosen to serve his remaining time in Parliament on the Back Benches, and we have seen over the years that he has been a free thinker on the Front Benches as often as one can be. We look forward to his continuing contributions from the Back Benches. He is someone to whom compassionate Conservatism came naturally over the years, whereas for others, it seems that that is not their mother tongue. However, the hon. Member for Bury St. Edmunds has done very well thus far in convincing the Committee that it is indeed his second language.
I turn to the points made by the hon. Member for Inverness, Nairn, Badenoch and Strathspey. The tone in which he offered his comments suggests that it was a probing new clause. As he rightly said, we intend to begin by rolling out local housing allowance only to new claimants and to those existing claimants who move house. Although that is different from the approach taken in pathfinders, there are good reasons for doing it.
The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Stirling (Mrs. McGuire)—I take a temporary foray into her area of expertise in local housing allowance—has commented before on the matter. The evaluation reports have made clear the importance of effective and targeted communication and support. Although some customers will be able to handle the transition to manage their own benefits effortlessly, there will, of course, be others who need more help and support. That is an important lesson learned from the pilot tests held across the country. At national roll-out, we think that it will be important to target support where it is most needed, rolling out new claims only, to allow us and local authorities to concentrate our resources and efforts on that target group.
On the other hand, extending the provisions to all—new and existing—claimants from day one would dilute the available support, and would not enable such a controlled implementation, which I know that all members of the Committee would wish to see. As noted during our earlier discussions, a smooth implementation will in part depend on the success of local authority IT systems.
As noted in the 15th monthly operational report, which I am sure the hon. Member for Inverness, Nairn, Badenoch and Strathspey has in his folder and would be able to quote from in some detail, a number of local authorities experienced technical problems in re-assessing awards on the anniversary. Brighton and Hove was the first big bang authority to do that, and its impact was underestimated. It was, as one interviewee put it, “almost like starting again.” That contrasts with those authorities that phased in the introduction: there, the annual assessment of awards presented no problems.
In addition, careful consideration was given to the Green Paper respondents’ views on the issue. Although some stakeholders were concerned about the potential administrative complexity, others were keen to see the gradual implementation that we envisaged in the Bill. For example, the National Housing Federation supported that approach. The Chartered Institute of Housing strongly supported the phased approach to implementation, recognised the importance of doing the groundwork before roll-out, and appreciated the potential risks posed by such a large-scale change for 408 separate local authorities.
I hope that I can also reassure the hon. Gentleman about his fear of landlords’ behaviour about eviction of customers.
Danny Alexander: Before the Minister moves on from his point about learning from the pilot experiences, he has quite rightly talked about the benefits of the phased approach. However, as I understand it, the approach now proposed by the Government is different from the phased approach that took place in the pilots. That approach transferred people from the old benefit to the new benefit at the time when their benefit claim was reviewed or re-assessed, whereas what the Government are talking about in this case is not transferring people even at that assessment period for a period of at least two years.
Mr. Murphy: I want to say a few words, if the hon. Gentleman will allow me. Six out of the nine pathfinder local authorities chose the phased approach, so the principle of the phased approach is well established. Of course, the way in which that phase-in works has been changed as we look towards national roll-out, but the principle of phased introduction is well established in two thirds of the pathfinder local authorities that were involved in the pilots.
As I have already said, offering such technical detailed advice to our customers has been a great learning experience and it has empowered them to make the transfer from housing benefit to local housing allowance. As well as learning from that experience we are seeking to ensure that the various resources for advice—including the civil service, local authority advisers and welfare rights officers—can support customers in the way that we envisage by means of the phasing that is set out in the Bill.
The hon. Member for Inverness, Nairn, Badenoch and Strathspey mentioned a reasonable concern about landlords—a concern that others may have, too. The lessons of the pathfinders programme should be considered, however, because there is no evidence from that programme of such behaviour by landlords. Despite that, there will be a continuing closely examined review of local housing allowance during a two-year period, and as the national roll-out is implemented the concern that he has mentioned will be a factor in assessing its effectiveness.
We recognise the hon. Gentleman’s concern that local authorities will be required for a period to operate two separate, parallel schemes. As he said, existing housing benefit arrangements will need to run alongside local housing allowance. He was also concerned about existing customers being denied access, and about the number of people who will not be transferred to local housing allowance. Let me share with him some of our assessments of the likely turnover numbers. The turnover rate in the private sector is naturally very high, as he is aware. We estimate that within a three-year period only 20 to 25 per cent. of customers in the deregulated private rented sector will remain on housing benefit. The rest will have moved on to local housing allowance or off housing benefit altogether. That is, three quarters will be transferred over to local housing allowance or will not be on the benefit at all.
I have already alluded to our plans to review the impact of local housing allowance after the first two years. One of the main aims of that review will be to consider options for transferring housing benefit customers in the private sector to local housing allowance if, at that time, such a step is considered necessary. We therefore believe that our approach will allow us to extend the benefits of LHA to all, at the earliest opportunity, while managing the risks inherent in such a fundamental and wide-ranging change in the benefits system—a system that is administered by 408 separate local authorities. I hope that that reassures the hon. Gentleman sufficiently for him to withdraw the motion.
Danny Alexander: I am grateful for that response. I am not sure that the Minister has answered all my concerns in detail, but I hope that that will be addressed as the Bill goes through another place. In the meantime, I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.

New Clause 17

Overpayment of benefits
‘(1) For the purposes of section 75(1) of the Social Security Administration Act 1992 any amount of housing benefit paid in excess of entitlement may not be recovered if the overpayment was the fault of the Secretary of State.
(2) For the purposes of section 76(1) of the Social Security Administration Act 1992 any excess benefit may not be recovered if the payment of excess benefit was the fault of the Secretary of State.’.—[Danny Alexander.]
Brought up, and read the First time.
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Prepared 29 November 2006