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Lord Higgins moved Amendment No. 24:

("( ) any local authority").

The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendment No. 26.

Amendment No. 24 seeks to establish whether local authorities should be paid for operating the Bill's proposals and, if so, how much they should be paid. In Committee, the Minister discussed that and was courteous enough to write to me subsequently setting out details of the Government's weekly benefits savings anti-fraud incentive scheme and of the new anti-fraud incentive scheme. The first of those schemes involves a sliding scale, which changes depending on how much fraud the local authority prevented. However, it also imposes penalties on local authorities if they fail to meet individual thresholds by 75 per cent.

Our debate in Committee revealed considerable differences between the position of central government and that of the Local Government Association as regards the extent of the payment. The LGA has also written to me since the Bill's Committee stage. It continues to maintain that the support that central government give to local authorities in terms of housing benefit administration is inadequate and meets less than two-thirds of actual costs. It also points out that "the current incentive regimes" are not "sufficient" to meet the costs of tackling fraud and are ineffective. It states:

    "Resources are insufficient and notice of funding is frequently given far too late to meet the local authority's budget cycle".

That is obviously an important consideration because it affects whether the scheme is likely to be operated with the degree of determination that noble Lords would wish. The LGA also states that the shortfall that results from the way in which central government allocate funds to local authorities means that any funding has to be made up through council tax. Those are the reasons why it feels that the Bill's proposals are not compatible with a reasonable and equitable approach to the problem that the Bill seeks to address. The LGA is also concerned about the extent to which the so-called "two strikes and you're out" provisions

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might within three years have important implications for local authorities if specific benefits were withdrawn and the burden fell on local authorities.

Baroness Hollis of Heigham: My Lords, I take the noble Lord's first point about subsidy arrangements and I shall return to it. His second point was that local authorities feel that a burden will fall on them if benefits are withdrawn. Which bodies does he have in mind? People for whom a local authority has responsibility under housing legislation because they are vulnerable will have, almost by definition, only a partial arrangement involving either 20 per cent or 40 per cent of their personal allowance. They cannot therefore be left without benefit. The same definition of vulnerability applies to local authorities that have the relevant responsibilities and to those who are protected by the hardship regime under the DSS. I hope that the noble Lord can help me--I absolutely do not understand this point.

Lord Higgins: My Lords, that may make two of us!

My understanding is that the view of local authorities is that if a benefit is withdrawn under the "two strikes and you're out" principle, as set out in the provisions, the costs would have to be covered in another way. Unfortunately, the noble Earl, Lord Russell, who is expert in these matters, is no longer in the Chamber.

Baroness Hollis of Heigham: My Lords, the noble Lord's argument is not possible. Local authorities have responsibility under housing legislation and under social services legislation. Under housing legislation they have an obligation to house someone if he or she becomes homeless only if he or she is vulnerable. Anyone who is vulnerable is also protected by the hardship schemes that operate under the "two strikes and you're out" principle. In terms of social services, local authorities have a responsibility to intervene only when people are vulnerable through ill-health or disability--they may be an ex-prisoner--or if there are dependants and children. Those people are protected by the hardship clauses. There is not an overriding responsibility on local authorities; a path by which local authorities can pay money to single individuals who have no benefit does not exist. If people are vulnerable, they are protected under the DSS and the vulnerable are the responsibility of local authorities. I do not understand this point.

Lord Higgins: My Lords, I am stuck between two groups, both of which are obviously expert. As I understand it, local authorities argue that in some cases the local authority may have a homeless duty. If the applicant is deemed to be vulnerable, the local authority will not be able to recover the costs of rehousing the applicant. If the applicant has dependants who are likely to suffer hardship, social services authorities may also have to provide assistance. The Government have given no indication of the fact that they will reimburse local authorities for those additional costs.

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Baroness Hollis of Heigham: My Lords, housing benefit is not affected by the Bill; it is not a sanctionable benefit. People cannot therefore become homeless in this regard even if they were cheating with regard to their housing benefit. The deductions would come from JSA or income support, not housing benefit. Therefore, people cannot become homeless because housing benefit would not have been withdrawn. There may be a profound misunderstanding in this context.

Lord Higgins: My Lords, local authorities will doubtless read our exchanges and the Minister's arguments and we shall see whether they come back to us. A similar situation arose in Committee, when the view of local authorities seemed to be at variance with that expressed by the Minister. They have come back to us about the extent to which there is a deficit with regard to meeting the relevant costs. Members of the House and local authorities should consider the Minister's comments. In the light of those further considerations we should carry out further consultations. I shall go into the matter in greater depth and consider how we might resolve what appears to be a conflict of understanding in this regard between the Minister and local authorities. Having said that, if she would spell out her response to my other points, we could take the matter further at a later stage. I beg to move.

Baroness Hollis of Heigham: My Lords, I am baffled by the noble Lord's argument. The concept of vulnerability, for which, as I said, local authorities take responsibility, affects precisely those groups of people for whom a hardship scheme is in place under the DSS. The relevant situation should not therefore arise. Housing benefit cannot be taken away if someone is on income support or JSA, which is a hardship benefit. It can be touched only if a person is not on income support or JSA, in which case he or she would have other sources of income. I do not understand this part of the argument.

I return to the first part of the noble Lord's argument. Essentially, the basis of his case was that the level of subsidy provided to local authorities was insufficient. We may have to disagree in this regard. I understand that local authorities may seek additional funding. In their place, I did exactly the same. However, they could not say that we have behaved unreasonably. We have increased the sums available to local authorities for the next three years.

The increase for 2000 to 2001 is 2.5 per cent in line with inflation, but the housing benefit case-load has decreased by approximately 6 per cent. That recognises that local authorities have transferred some of the housing stock to housing associations and that housing benefit cases now may be more complex. Local authorities have received increased resources in line with inflation to meet a reduced case- load. This can be probed further with the local authorities. I agree that it will not be even across the country. I have the statistics for each local authority's subsidy

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arrangements should the noble Lord wish to pursue it, including that for Wandsworth. From my knowledge of local government, these seem reasonable.

It was mentioned that local authorities may be under pressure because we are changing the subsidy arrangements which provide an incentive for them to detect fraud. We are changing the arrangement from the weekly verification scheme to the new verification framework. The changes will increase the emphasis on awareness, prevention and prosecution as well as detection and increase the incentive to prevent and detect fraud. The change is from April 2001. Precisely because local authorities said that they were under pressure to make these changes in the time-scale envisaged, we have agreed that they can continue to use their current scheme until April 2002 if they wish. We have a one-year transitional period that they can choose. Many local authorities are seeking to start the new scheme straightaway because they agree with us that in the long term it will be more advantageous for them to do so. Those local authorities not fully geared up have another year.

I believe that we have met the concerns of the local authorities. I realise that these concerns were raised by the noble Lord in Committee. I thought that I had replied by letter and sought to address them. Understandably, local authorities have come to him and said that they are not satisfied.

On the point about local authorities' responsibilities for those who might become homeless, I do not understand that argument from my experience. They are welcome to come back to us on the subsidy arrangement. It may be that we have to agree to disagree. I can understand local authorities wishing to augment their revenues. From the information I have it seems that they have been treated reasonably and fairly, particularly in terms of the overlap of one year in moving on to the new verification framework. I hope that in the light of that the noble Lord, Lord Higgins, will feel able to withdraw his amendment.

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