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Lord Strabolgi: I should like to support everything that has been said. There is even more cause for concern since I understand, as my noble friend Lady Hollis said, that there is a proposal to pay housing benefit under the Housing Benefit (General) Amendment Regulations four weeks in arrears. That will mean even greater risk to tenants since under most tenants' contractual obligations rent is almost always required in advance. With some tenants permanently four weeks in arrears, even a short-term unexpected change could result in a claimant being eight weeks in arrears. If the
Government intend to press ahead with the payment of housing benefit in arrears, it is surely essential that the mandatory possession ground is not simultaneously reduced from three months to two months. I support what has been said.
Lord Mackay of Ardbrecknish: I shall deal first with the part of the amendment of the noble Lord, Lord Meston, concerning housing benefit. I imagine that he fears that tenants who have made an as yet undetermined claim for housing benefit may be evicted through no fault of their own. I wish to assure the noble Lord that his fears are misplaced. Even under the new limits proposed in Clause 94, a tenant is unlikely to be evicted until at least three to four months have elapsed since he first started to get into arrears. Perhaps I may explain why.
First, the tenant will have to be at least eight weeks in arrears before the landlord can start any action. The landlord must give the tenant two weeks' notice of proceedings. It will then take at least a month for the case to reach court. A court order can only be made if eight weeks' arrears still exist at the time of the hearing. The whole process will take at least three or four months, which I submit is a reasonable period for a responsible tenant to sort out his financial affairs.
I heard the concerns about the implications of change for tenants whose housing benefit claims are subject to delay. However, under social security legislation, housing benefit claims should be processed within the statutory 14 days of all the required information being received. Department of Social Security statistics show that over 80 per cent. of claims are now processed within this deadline and performance is steadily improving.
Baroness Hollis of Heigham: I wonder whether that is the correct statistic. The Minister has used it several times. I may be working on last year's figures, but my information is that the target is for 80 per cent. of housing benefit payments to be made within 14 days and that 70 per cent. of local authorities meet it. It is not as the Minister suggested.
Lord Mackay of Ardbrecknish: I repeat what I said. The statistics we have show that over 80 per cent. of claims are now processed within the deadline of 14 days. The noble Baroness mentioned in her contribution that if the deadline is not met local authorities have a statutory duty to make payments on account where the delay is not the fault of the tenant. Although the noble Baroness warned me against using that argument, I still believe that it is valid. If the local authorities are fearful of using that responsibility because they fear that the district auditor may challenge them, it gives them a motive for ensuring that they meet the target of the statutory 14 days.
The Department of Social Security has strengthened its guidance as recently as April, to remind local authorities of their legal duties to make payments on account. Housing benefit claimants should therefore not be affected by the change.
The noble Lord, Lord Strabolgi, raised the question of new claimants and claimants who move having their housing benefit paid wholly in arrears from this October. The change will not affect their entitlement to housing benefit or the frequency of benefit payments. Most people coming on to benefit will have already received some kind of income, such as final wages, which they can use to pay their rent before they are due any benefit. Eighty per cent. of housing benefit applications are delivered within 14 days and I cannot see the situation beginning to get near the eight weeks, let alone the eight weeks plus the two weeks and the month it takes to get to court before matters can be sorted out.
Local authorities must also ensure that the method and frequency of payments suit the reasonable needs of the tenant. They have wide powers to pay housing benefit direct to the landlord. They have discretion to make direct payments if the tenant requests it or if it would be in the best interests of the tenant. They must make payments direct if the tenant is eight weeks in arrears. Recent guidance from my department recommends them to give serious consideration to direct payments if there are about six weeks' arrears. We would therefore expect that where the tenant is receiving benefit and is in arrears with his rent, benefit will be paid direct to the landlord long before the case gets to court. A recent sample survey suggests that some 70 per cent. of payments are made direct to the landlord.
The landlord is contractually entitled to his rent. Furthermore, his lender will not consider his monthly loan or mortgage repayments to have been repaid just because his tenant's housing benefit may be in the pipeline. The amendment would enable a tenant to avoid a possession order by making an application for housing benefit before the court hearing, even though he knew that he would not be eligible for benefit. That cannot be right.
Perhaps I may turn to the other part of the amendment, which seeks to prevent the court from making an order for possession if it is satisfied that the tenant has an arguable set-off against the unpaid rent of an amount of liquidated or unliquidated damages capable of reducing the rent outstanding to below the amounts claimed. The noble Lord, Lord Meston, is concerned about cases where a landlord fails to meet his repairing obligations. But tenants have a common law right to undertake repairs to the property where the landlord is in breach of his repairing obligations and to recover the costs by deduction from the rent, unless there is an express term in the tenancy agreement to prevent that. The court would be able to take this into account as a defence where the landlord is seeking possession under Ground 8 and may decide that no or insufficient rent arrears exist to grant an order for possession.
Tenants also have an equitable right to set off against rent due any damages, whether liquidated or unliquidated, for breach by the landlord resulting from disrepair, provided the damages relate to the property on which the rent is due and there is no express term in
the tenancy agreement to prevent that. The court would be able to take into account such a counterclaim by the tenant in deciding whether to grant the landlord a possession order under Ground 8. But requiring the court to offset liquidated or unliquidated damages against rent arrears would encourage tenants to counter-claim for damages due to disrepair in all Ground 8 cases. That would lead to long and protracted disputes and create so much uncertainty that landlords would be deterred from letting property.The Committee will be aware of the recent Law Commission report on the landlord's responsibility for the state and condition of property. We are considering it carefully and will publish our response in due course. It will cover some of the ground which concerns the noble Lord, Lord Meston. On the basis of what I have said about the housing benefit system and Ground 8, I hope that he will withdraw his amendment.
6.15 p.m.
Lord Monkswell: I wish to question the Minister on one point raised by the noble Baroness, Lady Hollis. He gave a glowing account of how admirably administered housing benefit was and how quickly it was paid. As I understand it, the statistics he quoted were on the basis of all the relevant information being available to assess the benefit claim. One of the questions which my noble friend Lady Hollis raised concerned the situation where the tenant had provided all the information but the local authority was not in a position to complete the assessment because of other information which was required from employers.
Can the Minister advise the Committee whether there is any legal duty on employers to provide such information, which the tenant may not have? It must come from the employer. Is there a legal duty on the employer to provide that information? Also, is there a time limit on the delay which the employer could cause in providing the information required?
Lord Mackay of Ardbrecknish: The noble Lord is right that the provision is for 14 days after all the required information has been received. It could be no other than that. I am sure that he agrees that the tenant has therefore an obligation to ensure that all the relevant information is received. We now turn to the employer. In the case postulated by the noble Baroness, if the employer were responsible for the delay, what would the situation be? For most of the afternoon the landlord has been the wicked fairy, but we appear to have moved on and now the employer is the wicked fairy. There is not much change in the historic position of the Labour Party on wicked fairies.
In the case of housing benefit, most of the information comes from the tenant. If a tenant has given all the information that he or she can give, the question of payment on account immediately arises. That is the position. I noticed the noble Baroness throwing her hands up in the air. If a tenant has given accurate information about his employment, and even if the employer is dilatory in backing that up, I cannot believe that the employer will do other than present evidence that will simply back up the information that the tenant
has already given. In those circumstances, I cannot believe that the district auditor would find that the local authority had given a wrong payment.
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