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Baroness Hollis of Heigham moved Amendment No. 101:

Page 46, line 4, leave out ("£62.45") and insert ("£64.70").

The noble Baroness said: Amendments Nos. 101 and 102 change references to rates of benefit in Clause 67 in line with the increased rates of benefit provided by the Social Security Benefits Up-Rating Order 1998. These are simply uplifting arrangements and I am prepared to stop at that point and simply say that I commend the amendments to the House. Obviously, I am very happy to give a very full explanation if the Committee is so minded. I beg to move.

On Question, amendment agreed to.

Baroness Hollis of Heigham moved Amendment No. 102:

Page 46, line 7, leave out ("£59.90") and insert ("£62.05").

The noble Baroness said: I have already spoken to this amendment.

On Question, amendment agreed to.

Clause 67, as amended, agreed to.

2 Apr 1998 : Column 478

Baroness Hollis of Heigham moved Amendment No. 103:

After Clause 67, insert the following new clause--

Validation of certain housing benefit determinations

(" .--(1) Subject to subsections (3) and (4) below, in so far as a housing benefit determination made before 18th August 1997 purported to determine that housing benefit was payable in respect of--
(a) charges for medical care, nursing care or personal care; or
(b) charges for general counselling or any other support services,
it shall be deemed to have been validly made if, on the assumption mentioned in subsection (2) below, it would have been so made.
(2) The assumption is that, at all material times, such charges as are mentioned in subsection (1) above were eligible to be met by housing benefit where the claimant's right to occupy the dwelling was conditional on his payment of the charges.
(3) Where the effect of a review carried out on or after 18th August 1997 was to revise the amount of housing benefit payable in respect of any validated charges--
(a) the revision shall be deemed not to have been validly made in so far as it had the effect of increasing that amount; and
(b) housing benefit shall cease to be payable in respect of those charges as from the beginning of the period for which the benefit was paid on the first pay day after the review.
(4) Housing benefit shall not be payable in respect of any validated charges for any period falling after--
(a) 5th April 1998 where the rent is payable at intervals of a whole number of weeks; and
(b) 31st March 1998 in any other case.
(5) In this section--
"the dwelling", in relation to a housing benefit determination, means the dwelling in respect of which the determination was made;
"housing benefit determination" means a determination under section 130 of the Contributions and Benefits Act or the corresponding provisions of the Social Security Act 1986, or a decision on a review of such a determination;
"medical care" includes treatment or counselling related to mental disorder, mental handicap, physical disablement or past or present alcohol or drug dependence;
"pay day" means a day on which housing benefit is paid;
"personal care" includes assistance at meal-times or with personal appearance or hygiene;
"validated charges" means charges in respect of which housing benefit is payable only by virtue of subsection (1) above.").

The noble Baroness said: We now move on to another subject.

These Amendments Nos. 103 and 161 propose to legitimise, from the date of Royal Assent, most payments of housing benefit where this has incorrectly met charges for general counselling and support or personal care. This will prevent local authorities from having to reassess past housing benefit claims and will ensure that local authorities are not required to refund to the department subsidy for benefit previously incorrectly paid for these services.

This has a long history. Housing benefit is a means-tested benefit that helps people on low incomes pay their rent. It is designed so that it also helps with their accommodation-related service charges. In supported accommodation the rent and service charges often contain an element to cover charges for personal general counselling and support. These can be covered by housing

2 Apr 1998 : Column 479

benefit, but only where the so-called 50 per cent. rule is satisfied--that is to say, where the majority of the time spent in providing services is spent in providing other, accommodation-related services which housing benefit is able to meet. For the most part we are talking about warden-supported accommodation.

We understand that the majority of local authorities may have been adopting a wider interpretation of the provision of adequate accommodation than is permitted by case law. They may therefore have been meeting a wider range of charges for general counselling and support than intended. Of these a small minority of local authorities may also have been meeting charges for personal care; for example, counselling for drug-alcohol addiction, or supervising the taking of medication. Housing benefit was never intended to meet such charges. This is why charges for personal care are outside the scope even of the housing benefit primary legislation.

A Divisional Court judgment on 24th July 1997 upheld the department's view and earlier case law, that only those service charges for general counselling and support which relate to the fabric of the building satisfy the basic housing benefit eligibility criteria in that they relate to the provision of adequate accommodation; for example, arranging for adaptations to cope with a disability, or undertaking minor repairs such as unblocking sinks.

Outside commentators have estimated that some 500,000 vulnerable tenants on housing benefit, such as the elderly, people with learning disabilities and those with mental health problems, may have received benefit for a wider range of service charges than permitted under the court ruling. We are conducting a major research project to quantify the extent to which supported housing is dependent on housing benefit. But it is clear that many tenants were getting benefit for charges which were not permitted by the regulations.

The court ruling meant that as of July 1997 there was the danger of a potential crisis in community care. The Secretary of State immediately announced a broadly cost-neutral package of measures to prevent this. As a result, first, interim regulations were introduced on 18th August 1997 to allow housing benefit to meet all reasonable charges for general counselling and support in existing supported accommodation, payable as a condition of occupying the dwelling.

Secondly, a compensation scheme was introduced at the end of December last year to enable local authorities to compensate landlords of such accommodation who had lost income because housing benefit was no longer meeting charges for personal care.

Thirdly, we have actively moved forward consideration of the future funding of supported accommodation, which is subject to an ongoing inter-departmental review, by publishing, and seeking views on, the Government's long-term objectives. Over 200 responses have been received from a wide variety of stakeholders and are helping to inform the debate. We intend to implement a sustainable funding system as soon as possible. But this is an extremely complex area with possible repercussions across the supported housing sector. We want a stable, rational funding regime which protects and maintains this extremely important component of community care.

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In the mean while, we have acted quickly to introduce a package of measures to provide stability for tenants and landlords in existing supported accommodation. This new clause now seeks to provide stability for those local authorities which have previously met a wider range of support charges from housing benefit than intended.

The bulk of local authorities' expenditure on housing benefit is subsidised by the department. Lower rates of subsidy are paid for incentive areas where authorities have most scope to control spending; for example, overpayments caused by local authority error attract no subsidy. Outside commentators have further estimated that housing benefit claims assessed on a wider interpretation of the law than intended may have cost up to £500 million a year. The majority of any incorrect expenditure would have been subsidised by, and therefore would otherwise be refundable to, the department. However, those payments have helped to meet support charges which have enabled many thousands of vulnerable people to live independently in the community. We believe therefore that the right course is to legitimise those payments as properly made.

The new clause will, therefore, first, remove from authorities the administrative--and costly--burden of calculating overpayments which may, in some cases, go back to the start of the present housing benefit scheme in April 1988. Secondly, it will ensure that authorities are not required to refund to the department the subsidy previously paid in respect of support charges for either general counselling and support or personal care. Thirdly, it will prevent vulnerable claimants from having to repay benefit overpaid in respect of these support charges where this would otherwise be considered appropriate.

I am sure that the Committee will regard the amendments as entirely benign. I commend them to the Committee and I beg to move Amendment No. 103.

9.30 p.m.

Lord Higgins: I fear that, over time, my Treasury halo may have become somewhat tarnished; nonetheless, I find this an extraordinary proposition. The Minister was kind enough to write to me about it. However, for reasons for which I am sure were not her fault, I received the letter only this evening. I do not know the reason for that, but it matters not. The noble Baroness was kind enough to write to me and I had an opportunity during the dinner hour to look at her letter. I have also listened to what she has had to say.

At this stage, I should like merely to ask some questions. In her earlier remarks, the Minister uttered a throw-away line about the provision being "cost neutral". I am not at all sure about how it is cost neutral other than the fact that the money has been spent and we are now proposing to validate it. Perhaps that is what the noble Baroness has in mind. At all events, that is my first question.

Secondly, given the court case--apparently there is no question of reversing it or of appealing against it; indeed, it seems difficult to appeal against the decision given, that in all the circumstances now described, it seems a most sensible decision--I am not clear about what the basis of any payment has been since July 1997. Perhaps we could be told something about that.

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Other complex questions also arise. First--I admit my inexperience here--when the Committee stage begins in another place financial resolutions are provided to the Committee. My understanding is that we do not normally have those resolutions before us; but I am not clear about the financial resolutions which support this proposal. Why was it not raised--the Government knew about it in July 1997--during Committee stage in another place? Given the financial responsibilities of the other place, it would have been much more appropriate for it to have been raised there rather than here. Can the noble Baroness tell the Committee what financial resolutions there are to support the clauses now before the Committee?

Secondly, is it appropriate that the central exchequer should pay? While I admit my ignorance in this matter, presumably this forms part of the grant from the central exchequer to local authorities for housing benefit. Clearly, this money has not been spent on the intended purpose. If so, why is it now proposed to let the burden fall wholly on the Treasury rather than in part on local authorities? I would have thought that to some extent the cost should fall on the council tax payer. I may be quite wrong about that and I am quite prepared to be corrected. But it appears that the distribution of money between one local authority and another has been rather arbitrary, in as much as it depends not on the particular social service needs on which the money has been spent but the allocation of housing benefit between the same local authorities. Therefore, the allocation is somewhat difficult to understand. Is it to come out of the contingency fund? If not, from where is it to come? Given the commitment of the Government to stick to the former government's public expenditure plans, is this in addition to those plans? If so, are there to be savings elsewhere? Perhaps that is what is meant by "cost neutral". If so, I am sure that the Committee would like to know where the savings are to be made. It may well be that one should spend it on something other than the particular items that have been covered.

The noble Baroness has said--I understand why--that these are all highly desirable objectives, such as dealing with the problems of mental handicap, medical care and alcohol and drug dependence, but if Parliament had intended that it should be spent on these matters it would have allocated the money accordingly. It is extraordinary that just because a mistake has been made it is suddenly decided to reallocate expenditure from housing benefit, for which it is intended, to these other admittedly highly desirable matters but not matters on which Parliament has intended the money should be spent. It is now proposed that by these nice, quick amendments to the Social Security Bill £500 million should be reallocated to other quite different purposes. I am not unsympathetic to the need to provide such facilities but, with great respect, this is not the way in which we should be allocating resources between one competing use and another. The case has not been made out. As I understand it, it is an entirely accidental allocation of resources.

2 Apr 1998 : Column 482

In that context, since the decision has apparently been made by local authorities, in the absence of these amendments are the local councillors liable to be surcharged? The noble Baroness has said that a minority of authorities has been meeting charges for other personal care which are specifically precluded from being met by housing benefits. If local councils have been doing this at least someone should question, without nodding this matter through at a late hour, the other place not having considered it, whether it is appropriate that local councillors should effectively be indemnified in this way.

The wording of the amendment is also somewhat curious. It provides that the:

    "charges for general counselling or any other support services"--
that is wide wording--

    "shall be deemed to have been validly made if, on the assumption mentioned in subsection (2) below, it would have been so made".
It continues:

    "The assumption is that, at all material times, such charges",
and so on.

So it is deemed on the one hand on the basis of an assumption. We are apparently being asked to validate that assumption. That, I am afraid, was rather off the top of my head, in the sense that I had not turned my mind to that matter previously. It may well be--I shall well understand it--that the Minister may not be able to answer all those questions this evening. If that is so, we might need to return to the matter on Report.

Let me stress that with my remarks about Treasury halos, I am not in any way saying that that money has not gone on entirely admirable causes. As far as one can see, it has. It seems equally clear that it is not some expenditure which the other place intended it to be spent on.

Finally, if we agree to this clause, and it goes into law, does that mean that the NAO and the PAC will feel that they have no right to inquire into why that happened in the first place? I am not making a partisan point. It has clearly happened, as the Minister said, since 1988. So we can go back to the old Labour government to see what happened then. Perhaps the Minister will give us such information on these points as she can, and we might return to it on Report.

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