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Earl Russell: My Lords, I am grateful to the Minister for giving way. I was merely going to say that I am reluctant to pay more tax in order to implement these regulations, which are not beneficial and are excessive.

Lord Mackay of Ardbrecknish: My Lords, the noble Earl is therefore suggesting that any savings we

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propose to make he would prefer to forego because he feels that the money saved ought to continue to be spent on housing benefit. I believe that I paraphrased him correctly.

I come back to my point, which is simply this. As always, the noble Baroness makes a case that paints a picture of people who need a great deal more money. That is the only logical conclusion of the language she uses. Fine.

Baroness Hollis of Heigham: My Lords, I thank the Minister for giving way. The reason young people need more money for their housing is that government policy has deregulated the rents that they are forced to pay. We would not have been in that situation.

Lord Mackay of Ardbrecknish: My Lords, the noble Baroness would re-regulate.

Baroness Hollis of Heigham: My Lords, I did not say that. I wish the Minister would not attribute words to me that I did not use. I said that we would not be in that position had we been in power. The Government are responsible for the crisis in housing benefit that they created, not us and not young people under 25.

Lord Mackay of Ardbrecknish: My Lords, I am at a loss. Perhaps it is too late in the day for me to follow the logic. But if the problem is deregulation, then the alternative is regulation. Therefore, when the noble Baroness says that there is a huge problem with deregulation, logic tells me that she is suggesting re-regulation. But there is obviously another course of action which is beyond my mental capacities to work out. I shall be interested to see--it may well be revealed at some time in the next few months--the alternative to spending any more money in this field. We either have to do something about regulating, controlling--whatever word we use--or reviewing the private housing market, or we must spend more money if the points made by the noble Baroness are correct regarding how poor the situation is and how inadequate is the housing benefit that we give to people.

The noble Earl in his amendments seeks to have these regulations declared invalid and replaced by new regulations only when the Government can show that the measures will significantly reduce overpayments of housing benefit and there is sufficient shared accommodation available. I believe that your Lordships can be satisfied on both accounts and that these regulations should proceed as planned.

I begin with periodicity. Local authorities are responsible for administering the housing benefit scheme. They currently pay housing benefit wholly or partly in advance to claimants who rent from private landlords. Payments to local authority tenants are made by way of a rebate and are not affected by these amendments. In practice, that means that private tenants are usually paid every two weeks in advance or every four weeks; that is, two weeks in advance and two weeks in arrears. Payments may be sent to the claimant to enable him to pay his rent or in some circumstances--

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for example, where there are substantial arrears of rent or where the claimant has requested--the benefit may be paid directly to the landlord.

The noble Earl raised the question of delay in processing claims as a point of concern. Local authority performance in that area has been improving. Currently, over 80 per cent. of claims are determined within 14 days of all the information being made available. These regulations do not affect the authorities' statutory obligations to decide claims quickly and, where there is a delay, to consider making payments on account. The Department of Social Security constantly monitors local authority performance in that regard.

There is a major disadvantage in paying benefit in advance. Quite simply, it presumes a future entitlement to benefit based on what local authorities understand the claimant's circumstances to be at the date of the claim. It also relies to a great extent on the honesty of both claimants and landlords to report changes likely to affect benefit. While the majority of claimants and landlords are completely reliable, your Lordships will not be surprised to learn that claimants do not always tell local authorities promptly when their circumstances change. But even when they do, the current benefit rule of paying in advance often prevents authorities from changing the amount of benefit straightaway. That may result in the claimant being overpaid or underpaid benefit.

On other occasions a landlord who receives payments direct from the local authority may be tempted to delay reporting a change if he thinks he will gain financially from so doing. In some cases, people receive the payment in advance but do not pay it over and then it takes the landlord three or four months to obtain access to his property again.

There were approximately 2 million recorded overpayments of housing benefit in the private rented sector during 1994-95. Recent studies also suggest that fraudulent encashment of housing benefit costs as much as £1 billion a year. Other overpayments cost an estimated £400 million last year, including £165 million in the private rented sector alone. We must curb this loss by whatever means at our disposal. It would be irresponsible of any government to do otherwise.

That is why these amendments to pay housing benefit in arrears from 7th October represent an important step forward. From that date, new claims from private sector tenants, and claims made following a move to private sector accommodation, will be paid wholly in arrears. However, the amount of benefit payable will remain unchanged and payments will continue to be made at the same two or four weekly intervals as before, but in arrears. Payments made direct to landlords in such cases will be made four weekly in arrears.

That will immediately reduce the amount of benefit overpaid or underpaid by local authorities because they will be able to take account of changes in circumstances much earlier than at present. This effect

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was acknowledged by the Social Security Advisory Committee in its report. We do not, of course, maintain that paying housing benefit in arrears will prevent fraudulent activity, but we expect it to reduce the amount of benefit overpaid in the vast majority of cases.

Another abuse which we discovered when talking to landlords' representatives concerned a practice by some claimants to abscond with the first payment of benefit--which may be a significant sum--without paying their rent. We are determined to stamp that out.

These amendments will enable local authorities to make the first benefit payment payable to a landlord, but to send it to the claimant. This will send a clear message to claimants that it is their responsibility to pay their rent and at the same time offer positive safeguards to landlords. It has been widely welcomed both by the Social Security Advisory Committee and by landlords.

These amendments contain advantages for taxpayers, for claimants, for landlords and for local authorities. I can assure the House that the new rules will have no effect on local authority obligations for determining claims as quickly as possible.

I turn now to the question of young people. The new rules governing the payment of housing benefit to young people were announced in another place, as the noble Baroness, Lady Hollis, said, during the social security Statement in November 1995. My right honourable friend Peter Lilley saw them as essential in discouraging benefit dependency and encouraging young people to take up employment. The noble Earl wants the Government to demonstrate that the supply of shared accommodation is adequate before this measure is implemented. That cannot be done because the availability of accommodation depends, in part, on the demand for it. Any research in this area can only be of limited use because the change we are seeking to implement is designed to encourage behavioural changes on the part of both landlord and tenant.

There is evidence to show that the private rental market has been able to respond to the demand from students for shared accommodation. We have every confidence that landlords and young people will be able to adapt to this change. We are not withholding housing benefit. We are saying that young people who decide to set up their own households must make sensible accommodation choices where they expect the taxpayer to help meet their housing costs. We are asking them to behave responsibly and to make the same decisions as their counterparts who are in employment or in full-time education. Most young people expect to live in modest accommodation, such as bedsits and rooms in shared flats and houses. There is ample scope for young people to share houses and flats without landlords losing rental income. I do not believe there is any risk of the amount of available rented accommodation declining because of these moves.

Housing benefit should not provide an incentive for young people to leave the parental home nor encourage migration to seaside areas where

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unscrupulous landlords arrange expensive accommodation for young unemployed people. The initial proposals for this measure provided exemptions for couples and those single people with the care of children, and that is still the case. This was to ensure that all households would be able to occupy accommodation which is suitable to their needs.

The right reverend Prelate asked about those youngsters in need of care, support and supervision. It was decided from the outset that young people who live in accommodation provided by housing associations, charitable or voluntary bodies, where an element of care support or supervision is provided, would be exempt from the proposals. We are confident that this exemption will provide protection for the majority of disabled young people who tend to live in accommodation where care is provided. Other vulnerable young people are often housed in this type of accommodation as well, so they would also be protected.

As the measures apply only to the private rented sector, all local authority tenants will be exempt. We consider that this will also protect a proportion of vulnerable young people from being affected by the changes.

The amendments were submitted to the Social Security Advisory Committee and the local authority associations prior to being made. A number of helpful comments and suggestions were made, for which we are grateful. As a result of the submissions received, two changes have been made to the original proposals.

A number of submissions expressed concern for vulnerable young people who find themselves living independently on leaving local authority care, a group to which the noble Baroness referred. As some of these young people are as young as 16, and often have no family support to rely on, we considered it reasonable to make a further exemption for this group. We have decided to allow all young people who leave local authority care to be exempted from these changes up until their 22nd birthday. We hope that this will enable young care leavers to live in accommodation where some support is available to them--for instance, supported lodgings--until they are able to live independently.

We also decided to exempt from these provisions all those young people who live in self-contained accommodation provided by a registered housing association. Many young people who are housed by registered housing associations have a priority need for social housing. We believe that this exemption, taken with those mentioned already, will provide protection from the changes for most of the vulnerable young people for whom exemptions have been suggested.

The discretionary funding which was available to alleviate cases of exceptional hardship under the January changes to housing benefit will also apply to this measure. The Government will increase their cash contribution to local authorities to enable them to prevent exceptional hardship to those young people

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who are not within the scope of the agreed exemptions. We are currently consulting the local authority associations on the proposed increase.

We intend to monitor this change to gauge its impact on the rental market as a whole as well as the effectiveness of the change in relation to young people's choices of accommodation.

These amending regulations will safeguard public funds and continue to provide protection to tenants and landlords. They will also encourage young people to make sensible accommodation choices that are within their own and taxpayers' means, just as other young people, either in employment or in education, have to do. I commend the regulations to the House.

6.28 p.m.

Earl Russell: My Lords, I thank the right reverend Prelate and the noble Baroness for a helpful pair of contributions. I congratulate the Minister, who really is a trouper. His skill in making bricks without straw I admire very much indeed. I told your Lordships he would say that the Government are confident. He did. He gave us no reason for that confidence at all. Above all, he gave us no statistical information on which to base his arguments.

Perhaps I may deal first with fraud. Fraud is a crime. Because it is a crime it must be proved beyond reasonable doubt. Because it is a crime it must be dealt with by punishing the individual who is found guilty; not by a collective punishment for everyone in any way associated with him. It was suggested that there might be £1 billion of fraud. There is no evidence for that; or at least there is none before us at the moment. If the Government are publishing any tomorrow, I shall look at it with great care.

What do the Government actually say? They say:

    "The Government acknowledge that there is little evidence about the number of landlords who are left with substantial debts because new tenants have absconded with their Housing Benefit. However, this proposal illustrates the Government's determination to protect the taxpayers' interest and stamp out abuse".
It sounds like an argument for, "There must be fraud because we stamped here".

The Minister said that he cannot carry out any survey of the amount of shared accommodation available. If he cannot do the one thing, then perhaps he should not do the other. The maxim, "Look before you leap" has a great deal of sense behind it. I am not alone in my belief that there is simply not a sufficient supply of shared accommodation. The National Association of Citizens Advice Bureaux thinks so; the National Federation of Housing Associations thinks so; the Social Security Advisory Committee thinks so; most universities with which I have talked, think so. In fact, everyone thinks so except the Minister. It really cannot be the central item of government policy that we are all out of step, but our Johnny. I commend the Motion to the House.

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6.31 p.m.

On Question, Whether the said Motion shall be agreed to?

Their Lordships divided: Contents, 58; Not-Contents, 122.

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