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At the time, I was pleased to hear the noble Baroness, Lady Morgan, say that funding to support the financial advice services had been set aside for the national rollout of local housing allowance. Set aside is one thing, but will the Minister say whether this money is now in place or whether it will be on 7 April next year? I was also reassured by her statement that regulations will ensure that payments can be made to the landlord where customers are known to have difficulty managing their financial affairs. However, as the noble Lord, Lord Oakeshott, has said, housing departments are not expected to be proactive in this matter. Indeed, they seem to be almost prohibited by the guidance. Waiting for non-payment for eight weeks will only mean that the private rented sector will dwindle more and more for housing benefit recipientsa point that I made back in March.
Although I accept that customer election does not preclude payments to landlords direct from the local housing authority, how does the Minister square those two statements? What authority remains to allow such direct payments? Where can I find the information in the ordersI looked, I searched and combed through them and failed to find it. Perhaps the Minister can do better for me.
My other concern about these orders lies in the apparent untoward speed with which they have been made. Prompted by the comments by your Lordships' Merits of Statutory Instruments Committee earlier this week, I looked at the department's website in general and housing benefits/LHA evaluation in particular. I was alarmed to find only remarks on how and when the evaluation was to be conducted. There was nothing about the completion of such evaluation. Eventually, with further searching, I discovered report No. 10 dated 5 October 2006, which I assume is the most recent report and is headed in part final evaluation. I would not describe it as an evaluation at all. It is a press release giving a rather gloomy summary, especially as it concludes with a bullet point saying the following:
On balance the net effect, after allowing for set up costs and some specific implementation difficulties, is positive, but not considered a substantial advantage to housing benefits administration and delivery.
Why, then, is the department rushing these regulations for a national rollout, or has something happened since October last that the department has not revealed, in which case will the Minister kindly reveal it now?
Talking of revelations, the paper Evaluating the Local Housing Allowance Pathfinders referred to an independent consortium of the universities of Birmingham, Loughborough and York, along with the National Centre for Social Research,
We are being asked to approve these regulations on what I regard as the flimsiest of evidence. I agree with the noble Lord, Lord Oakeshottalthough he did not quite put it this waythat it simply is not good enough.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord McKenzie of Luton): My Lords, this has been another interesting debate and I will try to respond to the points raised. However, I first remind the House about the wider context for these regulations and why they are such an important step not only for housing benefit reform but more widely for transforming the way we pay social security benefits in this country.
It is clear to me that housing benefit plays a vital role in the Governments programme of welfare. Indeed, the objectives we set out when we first floated our plans for housing benefit reform back in 2002 show that local housing allowance aims were at the very forefront of the welfare reform principles that have now become so prominent.
First, as regards promoting choice and responsibility, allowing people to have rent payments made directly to them was a rather bold prospect when we first raised it more than five years ago. We heard the fears and worries of those people who suggested that tenants would run off with their rent money rather than paying their landlords. Now, not only have we proved the pessimists wrong but the choice and responsibility objectives that we promoted are at the very heart of what this Government want to achieve. With the local
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Secondly, we said that we wanted to use housing benefit to help to support incentives to workand again, this is very clearly at the centre of what we do. Improving the speed of housing benefit processing times in itself should help to give people the reassurance and security they need that benefit claims will be reassessed quickly when they take a job. I am convinced that treating people with respect and encouraging them to manage their financial affairs will go a long way to preparing people for the world of work.
Thirdly, we have seen the financial inclusion agenda grow quickly over the past couple of years. I am delighted that the local housing allowance plays an important role in encouraging people to use bank accounts and to become financially independent.
It is important to point out that the specifics of the regulations have been comprehensively tested. The local housing allowance evaluation is probably the largest single evaluation of a housing benefit scheme we have ever undertaken and is a true example of evidence-based policy. The findings of the evaluation have certainly been very positive, and were referred to by noble Lords.
At the outset, concerns were raised that the introduction of the local housing allowance would force landlords to leave the market. In fact, private lettings have increased overall by about 7 per cent during the course of the pathfinders. Of course, this is not all down to the local housing allowance but it shows that the fears that landlords would leave the market in droves have simply not materialised. There is a similar outcome as regards the fears raised that tenants would not pay their rent and would abscond with their benefit payments. On the contrary, the evaluation has shown that tenants in receipt of the local housing allowance were less likely to be in arrears than those on the control areas that were used during the evaluation.
Finally, it is important to point out that 84 per cent of tenants in the pathfinders received direct payments, proving conclusively that most people are quite capable of managing their own money. That is a really positive move towards financial inclusion. We have also learnt lessons from the evaluation and made changes to the scheme as a result. Many of these changes are set out in the regulations before us. For example, customers can keep any excess benefit they receive as a result of shopping around for accommodation, but only up to a maximum of £15 each week.
People should be able to take advantage of the choices available to them, but we do not want to erode their incentive to move into work. We needed to strike a balance between implementing simplicity and providing choice with the need to ensure that we are delivering one of our key housing benefit objectives to support people into work. We changed the way that the rent officers calculate local housing allowance
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Some other points were raised in the debate. The noble Lords, Lord Oakeshott and Lord Skelmersdale, asked about funding being provided to local authorities. We have already provided funding of £59 million to local authorities for the rollout of local housing allowance, including money advice. It is for the authorities to decide the nature and extent of the service that they wish to support by way of money advice. That funding was provided at the end of August.
Lord McKenzie of Luton: My Lords, it is a matter for local authorities. I think I am right in saying that in the pilots the amount that was finally spent on money advice was less than originally anticipated. If I am wrong on that, I will write to the noble Lord. Essentially, it is up to local authorities.
The noble Lords, Lord Oakeshott and Lord Skelmersdale, focused on whether local authorities should be proactive in dealing with vulnerable people. The previous guidance said that local authorities did not need to be proactive in identifying vulnerable claimants. Noble Lords will be pleased to know that the current version removes that stricture and encourages local authorities to act in the interests of claimants. The noble Lord, Lord Skelmersdale, asked why we have four sets of regulations. There are two main sets of regulations that need to be amended. One of those relates to working-age claimants and the other to pension credit claimants. Those users need only look at one shorter set of regulations for the local housing allowance amendments instead of a single combined set, which would be twice as long.
The noble Lord, Lord Oakeshott, asked about the 12-month review of vulnerability. The new version of the guidance says that where a condition is likely to be of a long-term nature, it may be decided that it is not appropriate to set a review date. He also asked what help had been provided to support rollout and whether the national rollout would run less smoothly than the pathfinders. We have worked extremely hard with pathfinder authorities to develop and publish a range of support material for the wider national rollout. We provided a comprehensive guidance manual and implementation task sheets, which describe a range of good practices from the appointment of project managers to liaison with landlords. Those are built on the experiences
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On the question of whether the new arrangements are more efficient, the pilots showed that processing times for the local housing allowance were on average 33 days, compared to 42 days for private sector claims under current arrangements. That is a not insignificant improvement.
The noble Lord, Lord Oakeshott, suggested that landlords would allege arrears to receive direct payments. There is no evidence of that in the pathfinders. As we have discussed, 84 per cent of customers are receiving their benefits themselves and are paying their rent reliably. Of the remaining 16 per cent, three-quarters have their benefit paid to their landlord because of discretionary safeguards that work to stop arrears getting out of hand. Only a quarter had their benefit paid to their landlord because they got into arrears of eight weeks or more.
The noble Lord, Lord Oakeshott, raised, as I had anticipated, the issue of single room rent. We are aware that sharing is common among younger people. Three-quarters of single young people without children and who are not on housing benefit live in shared accommodation. We do not think, therefore, that it is unreasonable to expect young housing benefit tenants to share accommodation. Abolishing the single room rate would mean that young tenants in receipt of housing benefit could potentially access accommodation that would be unrealistic for a large proportion of their peers. However, we acknowledge that the single room rent causes difficulties for some people for whom remaining in the family home is not an option. However, less than a fifth of customers bound by the single room rent live in shared accommodation; in fact, the majority live in self-contained accommodation.
I should say that officials have been carrying out some analysis of the single room rent and looking at the availability, accessibility and affordability of shared housing for young benefit recipients. We are particularly grateful for the help and discussions we have had with the noble Lord, Lord Best, and the noble Earl, Lord Listowel, who, unfortunately, are unable to be with us today. They have a wealth of experience in this area and will know from recent meetings that it has been determined that many people on housing benefit stop claiming after a short period. We need to understand why that is the case and where those young people end up.
Lord Skelmersdale: My Lords, I hope the noble Lord will forgive me, before he begins to perorate. He has told us that the private rented sector has increased in the past two years. Indeed, it has. Has it increased access for those on housing benefit? That is the key question requiring the key answer.
Lord McKenzie of Luton: My Lords, I understand the point. I think that the evaluation of the pilots indicated that housing benefit claimants are not always universally welcomed by landlords, but I think that I am right in saying that the evaluation of local housing in the pathfinders produced no evidence of a further restriction on private sector landlords, but I shall write to the noble Lord to clarify that.
I hope that I have addressed the points raised. The local housing allowance that we will introduce next year, for which this package of regulations provides, will be based on the fundamental principles of choice, fairness and responsibility. Thousands of customers have benefited from the local housing allowance in the pathfinder areas and we want to extend those benefits to housing benefit customers nationwide. This is a positive step in modernising housing benefit and I look forward to national rollout building on the clear successes of the pathfinders.
Lord Oakeshott of Seagrove Bay: My Lords, to use the word of the noble Lord, Lord Skelmersdale, you will be pleased to know that I am all perorated out. I just want to thank, first, the noble Lord, Lord Skelmersdale, for his support on certain issues. I am sorry if he felt that I was not tough enough. Perhaps we should not have been talking about flags. Perhaps on this day of national mourning we should be talking about red cards and yellow cards. I am sorry if I have not waved the yellow card strongly enough for him. I thank the Minister for his comprehensive reply. I am grateful for his clarification that the latest version of the guidance manual has taken on board the points that we were concerned about. Obviously, we will read carefully and reflect on the rest of his speech. I am sure that we will return to these issues in the near future as evidence builds up on the ground on how it is all working. Meanwhile, I beg leave to withdraw the Motion.
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