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Lord Meston: I shall resist the temptation to identify the good and bad fairies in this debate. I am grateful for the support I received from the noble Baroness, Lady Hollis, and from the noble Lord, Lord Strabolgi.
My hope was that the Minister would make clear at this stage the underlying case for Clause 94. We may have to wait for the debate immediately following. Whether or not housing benefit delays happen, or should not happen, is by the way. In practice there are delays in providing housing benefit. I have evidence of that from practitioners in this field. At a later stage I wish to reinforce that evidence by introducing an amendment along similar lines.
So far as the second part of the proposed new clause is concerned, I remember sufficient landlord and tenant law to know the common law right and equitable rights to which the Minister referred. However, there still appears to be an uncertainty in the law in that, as I said in opening, the Court of Appeal has apparently left open the question as to whether a tenant with a counterclaim for damages can resist a Ground 8 possession claim. That again is something I wish to research further.
I certainly challenge the Minister's suggestion that this amendment would tempt a tenant to raise a specious set-off when confronted with a claim for rent arrears and a Ground 8 possession claim. To avoid that, it may be that I should return at a later stage and, instead of using the expression, "an arguable set-off", use an expression such as, "a reasonably arguable set-off".
My remaining concern is that Clause 94 relates to mandatory orders for possession. Some care must be taken on the face of the Bill before abbreviating the period of arrears that must arise before a mandatory order can be made. These amendments are designed to mitigate--and only to mitigate to some extent--the otherwise drastic effect of Clause 94. I reserve the right to come back on this matter. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 94 shall stand part of the Bill?
Baroness Hollis of Heigham: I wish to oppose the Question that Clause 94 stand part of the Bill, as indicated in the names of my noble friend Lord Dubs and the noble Lord, Lord Meston.
I remind the Committee of the cumulative pressures surrounding housing benefit that we now see building up. I should like to bring together a whole series of different issues, some in different departments, all of which bear on the issue. I ask the Minister: do the Government really understand the effect that all these interlocking and cumulative decisions have on the housing market?
First, the Bill reduces the mandatory grounds for possession from three months to two months (from 13 weeks to eight). The court has no discretion; it must grant possession. Therefore, tenant insecurity is being
increased. Secondly, however, the Government are introducing this measure at the very time when poorer tenants are experiencing real cuts in housing benefit, partly because of the new regulations. We are likely to find a growing percentage, beyond the existing 40 per cent., of those who now find that housing benefit does not cover their rent. The percentage is increasing.In addition to cuts in housing benefit, we shall also see further delays in payment of housing benefit. I accept that in some cases that may be due to the inefficiency of local authorities. But before the 14-day clock can start ticking, all the information has to be collected.
The Minister was baffled as to why any tenant should not be able to produce identical information to an employer. The Minister does not seem to appreciate that something like 40 per cent. of all workers are now in part-time, casual, contract or shift work, and the percentage is growing. Those are precisely the sorts of low-paid occupations in which people are likely, while in work, to claim housing benefit. The man or woman in a 38-hour or 40-hour full-time job will almost certainly be earning enough to float him or her off housing benefit levels. That is not always the case, but it is usually so. It is precisely the poorer worker in the part-time, casual, low-paid or irregular job who is likely to be claiming housing benefit and is least likely therefore to be able to produce the information for the statement of earnings for the four prior weeks, and where the local authority will rightly need corroboration from the employer as to average earnings. That is what it is like out there when you are seeking work. This week a person may receive £60; in another week it may be £80, and in another £72. The local authority has to make a judgment in order to assess housing benefit. Of course the information has to be corroborated by the employer. In any case, the employee may very well not have all the appropriate records. So delays arise as a result of the need to collect information.
Another reason why delays occur is that local authorities have, quite rightly, been made aware of the extent of landlord fraud. Mr. Lilley seems to think that housing benefit fraud presently accounts for some £1 billion a year. The latest information to the Select Committee on Social Security suggests a figure of nearer £2 billion a year. Almost all that is landlord fraud--claiming, for example, for 35 tenants, nine rooms and the like. Local authorities agree with the Government that such fraud should be stamped out, because a penny mis-spent is a penny denied somewhere else. But investigation of fraud takes time; and the more it is investigated the more delays will occur. Already, some London boroughs are refusing to pay tenants housing benefit while the landlord is being investigated for fraud.
What would the Government have the local authority do--particularly when the cheques are being paid direct to the landlord? Would they have tenants stop the cheques and risk eviction, or pay the cheques and let the taxpayer risk fraud? What choice would the Government have us make? They have to answer that question in dealing with this clause.
We see cuts and delays in housing benefit; we are to see housing benefit paid four weeks in arrears; and by the time the Bill becomes law another measure will have made the administration of housing benefit catastrophic--namely, the exposure of this service to compulsory competitive tendering. Private companies which may gain the tender, will have no experience and will be in a learning curve. We shall see error, fraud and problems of take-up all being magnified in the process of handover.
So tenants can be evicted more quickly; housing benefit is to be paid in arrears; we see increased delays in the ability of local authorities to be sure that they are paying the right sum; and we see cuts in the amount of housing benefit being paid. Taken together, those factors increase the risk of tenants being evicted by landlords for non-payment of rent.
We are seeing increased insecurity in the private rented sector; increased evictions from that sector; a growth in homelessness coming out of the private rented sector; and added pressure on the ability of local authorities to meet the needs of the homeless. None of that is necessary. This clause is not necessary. There is no evidence at all that we need Clause 94 in the Bill. If we removed it, we might produce a fraction more security in the housing benefit system. I move that the clause do not stand part of the Bill.
6.30 p.m.
Lord Mackay of Ardbrecknish: We have already gone over some of this ground and I apologise if I do so again. Clause 88 amends Ground 8 of the Housing Act 1988 which requires a court to grant an order for possession of a property let on an assured tenancy when a specified level of rent arrears has accrued. The current level is at least 13 weeks or three months' rent, depending on whether the rent is payable weekly or monthly. That level of rent must be unpaid, both when the landlord serves notice of possession proceedings under Section 8 of the 1988 Act and at the date of the court hearing. Clause 88 will reduce that level to eight weeks or two months' rent.
The vast majority of tenants pay their rent on time and in full. However, our research shows that landlords are concerned that, although the Housing Act 1988 made it easier to recover possession of their property, they continue to have problems regaining possession when the tenant is in rent arrears. The noble Baroness argues the case from the point of view of the tenant. I ask her to consider for a minute what having a tenant in rent arrears, with no prospect of recovering the arrears, means for the landlord. One quarter of lettings are owned by a landlord with only one property. For those landlords, having a tenant who withholds the rent will be very difficult, particularly if they have a mortgage or loan to repay. Small landlords will only let property if they are confident that they can cover their loan or mortgage. They need the certainty that when a specific amount of rent arrears has accrued, they can get their property back.
Even under the proposal in Clause 88, the tenant is unlikely to be evicted until at least three or four months have elapsed since he first started to get into arrears. Perhaps I may just explain the procedure "out there", about which, of course, I know nothing and where the noble Baroness is continually inviting me to look. Under the new proposal the tenant will have to be at least eight weeks (it was 13 weeks) in arrears before the landlord can start any action. The landlord must then give the tenant two weeks' notice of possession proceedings, so 10 weeks will now have elapsed. It will then take at least a month for the case to reach court. In fact, the average time is nearer three months. So should I be kind or unkind in this calculation? I shall be kind and take the month--just four weeks--though I point out to the Committee that it could easily take 12 weeks. Indeed, it is more likely to be nearer 12 weeks before the landlord and tenant have their day in court.
A court order can only be made if, at that point, eight weeks' arrears still exist. The whole process will take at least three or four months, if not more. I should have thought that that is a reasonable period for a responsible tenant to sort out his financial affairs.
I know that there are concerns about the implications of the change for tenants whose housing benefit claims are subject to delays. I have already covered that ground and have no desire to go over it again. But I do not believe that the noble Baroness has proved her case about the difficulties that might arise in regard to housing benefit. We all know that there is a certain amount of fraud in housing benefit. The Secretary of State, Mr. Peter Lilley, has spoken about it. We believe that it amounts to about £1 billion. The noble Baroness has quoted £2 billion, which is the figure now favoured by her party. That figure comes from the Select Committee of another place and is based on the evidence of one person extrapolating from the experience of one London borough. We do not believe that that is a fair and proper calculation. Our calculation is much more detailed. A great deal more work has been put into it. We reckon that the figure is £1 billion. But we are certainly happy to have on board the party opposite in our pursuit of fraud in the benefits system--in housing benefit and anywhere else. One landlord fraud is that there is no tenant. There cannot be an eviction if there is not a tenant to evict, so I do not feel that there is a huge problem so far as concerns that particular fraud.
This clause, reducing the period to eight weeks from 13 weeks and to two months from three months, provides a better balance between the interests of the landlord and tenant than do the current requirements, especially when account is taken of the two weeks' notice and the time taken to get to court. Then the tenant will usually ask the court for four weeks in which to find a new house. "Out there" the court usually grants the additional four weeks. At the end of the four weeks, if the tenant has not moved and still has not paid anything, the landlord has to apply for a bailiff's warrant. That may take another two or three weeks. So perhaps 36 weeks may elapse from the day the tenant stops paying rent. At any time during that period the
tenant can deal with the problem of arrears. I should have thought that that is a fair and reasonable balance between the tenant and the landlord.As I said, the small reduction helps the balance. It will give confidence to those people who currently have property they would like to let but who are fearful about letting it. We believe that, along with the other steps--this has to be looked at as a package--it will encourage further development of the private rented sector. The more properties in the private rented sector, the less may be the market rents in that sector. That is the way market forces work. I should have thought that the noble Baroness would welcome any step that we take to free up the market and get more houses on the market. That way we might see a reduction in the levels of rents which can be charged in certain areas, because shortage--supply and demand--is, of course, a major factor in the market.
I hope that the noble Baroness will withdraw her suggestion that the clause should not stand part of the Bill. If she does not do so and divides the Committee, I trust that those who support me--I am sure, the majority--will accompany me into the Lobby.
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