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Grand Committee

Thursday, 20 October 2011.

Welfare Reform Bill

Committee (6th Day)

2 pm

Clause 11 : Housing costs

Amendment 37

Moved by Baroness Hollis of Heigham

37: Clause 11, page 5, line 23, at end insert-

"( ) Regulations shall provide that any deduction or deductions to be made from the housing costs element of universal credit in respect of non-dependant members of the household shall not exceed 50 per cent of such amount."

Baroness Hollis of Heigham: Noble Lords will be relieved to hear that I shall be brief on this.

A non-dependent adult is likely to be a grown-up son or daughter, still living at home, with his parents on HB. It is assumed that the non-dependent adult will contribute towards the rent, and his parents' HB is reduced accordingly. That is the present system, for those not familiar with it. This amendment would cap that deduction at 50 per cent of the total HB going into the property. Of course, it is sensible that he should contribute but, as the level of his contribution doubles up over the next couple of years to £90 a week, which is at or even in some cases exceeds the level of the entire social rent for the property, this may well exceed the full HB of his parents. So although he is in effect paying the entire rent, he has no legal claim on the property. He, a low-paid worker-otherwise he would probably be in a place of his own-is carrying the full rent bill for his parents in that situation. Not surprisingly, this is currently a source of family tension, which will grow and which affects about 200,000 people, as far as I am aware. In my own local authority in Norwich, 427 council tenant families, 63 housing association and 58 private tenants are currently affected; of those, 100 already have deductions on their HB of over £30 a week as a non-dependent adult, which is set to double. In modest accommodation, that would virtually cover the entire rent being paid for by an adult son, living at home on low earnings.

The Minister may tell us-I do not know, because I am not very good at predicting what he is going to say-that we are only catching up with the freeze of a couple of years ago on NDADs. I accept that this a political point, but can he tell me in that case why it is okay to continue to freeze council tax but not to freeze NDADs along with cutting CTB, which fall on the poorest of us? I think that that is very unfair, and I do not think the Minister can think that that redistribution is right.

I ask your Lordships to think what they would do if they were in the son's place. He can do one or two things. Either he will move out into a more expensive private rented flat of his own, which he may share, if he is under 35; as a low earner, he may be eligible for some HB of his own. That will leave his parents entitled to their HB, so the total HB would therefore

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rise. Or he may decide to stay with his parents but calculate that it is not worth working given the £90 per week penalty out of his take-home pay, which will mean that his MDRs are up in the 80 per cent region. If he moves out, his parents become underoccupying in turn and lose some of their HB, ultimately risking running up arrears and losing their home, whereas if he stays at home and working this will be a sensible and economical use overall of housing space as well as a practical support for them if they need it. If instead he does not move out but drops out of work as he faces punitive MDRs on his low wage, the full HB bill on that house must be paid and two generations of workless family may then be in the same household. Neither of those possibilities seems sensible or desirable, but if you have an economic model of rational behaviour-it is not one that I fully share, but if you do-he is likely to take one of those two routes and to drop out of work or move out of the house: hence this amendment, which suggests that he should contribute to the rent but no more than half of it and that his parents should keep an entitlement to HB but only to half of what it would have been. Its virtues include using the housing space sensibly, keeping the house fully occupied and striking a decent balance between his responsibilities and contribution, that of his parents and that of all of us towards the rent. I beg to move.

Baroness Hayter of Kentish Town: I shall also be brief. As my noble friend Lady Hollis has made clear already, the non-dependent adult deductions to housing benefit and council tax benefit are calculated at the moment according to the earnings of the non-dependant or a fixed rate if the non-dependant has no earnings. This amendment seeks to ensure that the amount of housing cost element of the universal credit that is reduced by those deductions cannot be more than 50 per cent of the total cost.

The non-dependent deduction is a sensible one made to a claimant's housing benefit entitlement if they share with a non-dependent adult, who could also be a sibling. It is assumed that non-dependent adults will contribute towards the housing costs, although those of us in this Committee who are parents may know that our offspring do not always pay rent when they continue to live with us. Nevertheless, it is a fair assumption and one that we would not argue with.

There are a number of problems with the non-dependent deductions, however. The housing benefit is reduced by a pre-set amount, regardless of the total rent payable, which can actually leave the non-dependants liable for virtually all the total rent owed, even though, as my noble friend has said, they have no legal claim on the property. The amendment would ensure that the tenants remain responsible for at least half the rent, which we believe would support the Government's ambition to promote financial responsibility. It would also go some way towards addressing many of the problems with high rates of non-dependent deductions, which I do not think any of us would want to see continue, with all the disincentives to work and the tensions within families that it creates and that have already been mentioned. It is a very common-sense amendment, and I look forward to hearing the Minister give his support to it.



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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): My Lords, the principle of non-dependent deductions has been accepted by successive Governments since 1948. The principle is that adults who live in a household of people getting help with housing costs through the benefit system should be expected to make a contribution towards those costs.

Universal credit will provide a streamlined welfare system that makes clear to claimants the financial advantages of taking work or increasing working hours. As part of this clear system, we will define simple rules for the benefit unit and the treatment of income other than earnings which some claimants will have. In many cases, the benefit unit will be the same as the household, but other households could comprise more than one benefit unit. An example would be an older couple with one or more adult children living at home. The older couple would be joint claimants, and the adult child would claim in their own right as a benefit unit. Another example would be two adult siblings sharing a home.

In taking a claim for universal credit, one of the first questions is to establish what the benefit unit for that claim is. We have guiding principles for the rules on the treatment of income. Where claimants have income available, their entitlement to universal credit should be adjusted accordingly to meet some or all of their everyday living costs. The principle that available income reduces entitlement to income-related benefits is long established. However, when support for housing costs is considered, there are currently varying rules on the treatment of income in the welfare system which will be harmonised through the introduction of universal credit. As I have previously explained, we will define in regulations the full list of income types and benefits that must be declared under universal credit in order to be taken into account. The drafting of regulations will aim to provide a more accessible account of the system which claimants and their advisers will find easier to follow.

The existing manner in which we treat non-dependants does not fit with the principles of universal credit, and I am considering how we refine the current rules so that we can bring forward proposals in due course. There are, and always have been, various factors to take into account in the design of the non-dependent deduction scheme: for example, transparency, simplicity, setting the rate of deduction at a fair level, the potential to affect household formation, as well as work incentives and fairness to the taxpayer. These factors, as I am sure the noble Baroness will recognise from her time in government, have always meant that non-dependent deductions are a complex issue. We need to look at the treatment of non-dependants along with the treatment of boarders, lodgers and sub-tenants. Furthermore, we need to ensure that there is some sensible fit with the provisions for underoccupancy that we debated earlier this week. We want a scheme that provides incentives for tenant and non-dependants to work and at the same time preserve incentives for households to stay together.

As we are still considering these issues in detail, I urge the noble Baroness to withdraw her amendment.



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Baroness Hollis of Heigham: I am very grateful for that. If I may say so, because I do not want to sound patronising, it is a very intelligent response. It is difficult. We accept that there should be a contribution, but if the contribution doubles in the way projected, the other considerations that the Minister listed, which I entirely share-simplicity, work incentives, house information, occupancy-could be undermined by a progression to a rigorous and inflexible definition of a non-dependent deduction, which would undermine and subvert other equally desirable, and in some cases more important, objectives of the Government. I hope the Minister will continue to keep us briefed on his thinking on that. It would be helpful if he could do that before Report, but it may be too early. I do not know. I realise that this is something that may have to go across departments and into DCLG. I very glad that the Minister recognises the complexity. We are all on the same side on this and want to balance somewhat conflicting objectives here, and it is not an easy choice to make. I thank the Minister for his reply and beg leave to withdraw the amendment.

Amendment 37 withdrawn.

Amendments 38 to 44 not moved.

Amendment 45

Moved by Baroness Hollis of Heigham

45: Clause 11, page 5, line 29, at end insert-

"( ) Regulations shall provide that where the award for housing costs is restricted to the shared accommodation rate, this shall not apply to any claimant who-

(a) is severely disabled;

(b) is a care leaver aged under 22 years;

(c) has resided in a homelessness hostel and received housing support for a period of at least three months;

(d) is considered a risk to others;

(e) is pregnant;

(f) is considered vulnerable as a result of mental illness, or mental or physical disability, or other special reason;

(g) is considered vulnerable by reason of violence from another person or threats of violence from another person which are likely to be carried out;

(h) is considered vulnerable as a consequence of previous homelessness, drug or alcohol addiction;

(i) is considered vulnerable as a consequence of their institutional background;

(j) is a non-resident parent and it is considered that living in shared accommodation would adversely affect his or her relationship with his or her child or children."

Baroness Hollis of Heigham: I shall speak also to Amendment 46. These amendments are on shared accommodation. Thanks to the alertness of the noble Lord, Lord Kirkwood, we had a debate last Wednesday on the affirmative regulations. As a result of that, I wondered whether we needed to run this amendment today. I thought it would be useful to do so in Grand Committee, so it is in this format, and we can perhaps revisit some of the arguments that were helpfully elicited by the noble Lord, Lord Kirkwood, in the response by the Minister.



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At the moment-forgive me if I repeat some of the arguments that the noble Lord, Lord Kirkwood, ran on the affirmative regulations, but not everyone was present-young people under 25 get housing benefit that covers the cost of a room in a shared house, student-style, in which there are four of them in a three-bedroom house, one of them occupying the front room, with a common bathroom and kitchen, although, of course, students are not eligible for HB. However, some 80,000 other young people receive HB for such shared rooms: 53,000 under-25s and 36,000 aged between 25 and 35. The Government propose to raise the age range for the shared room rate to 35, so I gather that a further 62,500 who would have received housing benefit for a one-bedroom flat will receive HB for only the single room rent.

To make things worse, the HB for shared room rent will, like that of other property, now reflect only the 30th percentile of room rent rather than the 50th percentile. Demand for very limited stock will double at just the time that the HB to pay for it will be cut to the 30th percentile. Some 20 per cent of existing claimants in one-bedroom benefit-funded property will now get HB only for shared room rent. The average difference in HB in the private-rented sector between those two figures is over £40 a week, but in London it is likely to be over £100 a week. You get £88 if you are on HB for single room rent and £188, on average, if you are in a one-bedroom flat. That is far too high for anyone to make good the shortfall out of their other benefits, even if they sought to do so. In some cases, it would wipe out their entire benefit allocation.

Let me talk about the supply. There are fairly few HMOs around. They form perhaps less than 1 per cent of the country's stock, apart from in Greater London, where they formed 2.3 per cent in 2001. Finding shared accommodation for HB tenants is already difficult as landlords avoid them, preferring students with a university behind them or people in full-time work. With the percentile cuts to HB, even fewer landlords will risk taking them. Certainly in my city, what little shared accommodation of an HMO sort there is is mopped up by students and the rest is of poor quality. With good reason, housing associations and local authorities that are not yet affected by these changes, and I hope never will be, and who have, as we had, bedsitters or HMOs as part of their stock, have over the past few years been converting, as I have been doing, two of them into one-bedroom flats for young people precisely because shared rooms provide poor accommodation in terms of space, storage, personal safety and sound insulation for the young, single and often fragile who end up there.

In the past, such property in my housing association has been the source of endless neighbour complaints about noise and anti-social behaviour. Young tenants, especially women, also had a strong aversion to moving into house-sharing with strangers. As a housing association, we have few if any left. You could argue that, until now, those young people under the age of 25 were treated more like students in terms of the accommodation that they were expected to occupy, unsatisfactory though it was. Even then, most housing associations were changing their stock. We have had

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plenty of evidence over the years that most of them preferred to top-slice their benefit by £10 to £20 per week and frankly underpay on their diets to afford something more salubrious than the shared-room rented accommodation on offer.

Now the Government are raising the age threshold so that anyone under 35 will receive only the single room rent. For 62,500 people, that will mean a cut on average of £41 a week and a reduced HB on 30 per cent of a shrinking market. We shall press them into the poorest and least salubrious properties in the market. Although the PRS is growing, as the Social Security Advisory Committee told us on page 19, the amount of shared accommodation has fallen in absolute terms. The price will go up while the quality declines and less and less is available to this group: hence these two amendments.

Amendment 46, with which I start, does not say "no change". It would exempt for one year the situation of someone of, say, 35, who is in work as a secretary, renting a small, one-bedroom flat with no HB. The small firm she works for closes and she loses her job. Under the Government's proposals, when she applied for HB she would be covered for 13 weeks but after that would get only enough to cover a shared room. To stay put, she would have to cover the shortfall herself from JSA. She would soon be in arrears. Having lost her job, she would lose her home. Instead of looking for a new job, I fear that much of her energy would be deflected to looking for a clean, safe room in an HMO. She would feel stressed and possibly fragile.

Were she to share with women friends-people of her choice-she would probably be okay if her HB stretches far enough. As the Minister said in response to the noble Lord, Lord Kirkwood, maybe she could move to a two-bedroom flat to share with a female friend-if there are such friends floating around currently non-housed-in the hope that their combined housing benefits for SARs will meet the rent. Perhaps they will, but two-bedroom accommodation is in the shortest supply across the whole of the housing field. Landlords already make it clear that they will not let to people on HB except as a last resort. Rents are soaring and HB will cover less and less of it. In practice, three-quarters of those in one-bed accommodation affected will be men.

So what is available and on offer? If the young woman could do what the Minister suggested-the odds on her being able to do so are extremely unlikely, at least for a while-her other option would be to move into an HMO: that is, a house in multiple occupation. Those are usually now occupied by people who have arrived there from some sort of crisis-a relationship breakdown, a row with parents or because they are emerging from institutional life. Few landlords can make an HMO pay without at least three or four tenants, often unknown to each other. The larger the HMO and the greater the profit to the landlord, the greater the problems for all the tenants. A shared tenancy with strangers-they may all be men and she is a woman-will be at best, noisy and intrusive, with late-night parties because they are young and unemployed, loud music and banging doors. The other tenants may perhaps be overfriendly, with chaotic lifestyles, casual

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about helping themselves to anything that she puts in the fridge, and careless about keeping the shared kitchen or bathroom clean. That is at best.

I know that, at worst, often the older men in HMOs are ex-offenders with a history of violence, people with poor mental health, aggressive men with anger management problems who never hold down a tenancy for more than a few months, or current drug users whose various associates move in and out of the property-with numerous, multiple keys in circulation. There will be dirty common parts, stained lavatories, never-cleaned baths, an open front door and only a thin, plywood door to her room to keep her safe. She has had to find somewhere clean and decorate if she can, move her things, get rid of most of her furniture for lack of space, sort out utilities, notify her change of address-all the clutter that impedes her job search, which should be her priority-as well as find desperately needed cash for agency fees, a month's deposit a month in advance, compulsory contents insurance, and fees for a credit search at £125 a time. The cost may be £500, or £1,000, and she has just lost her job. Having found a room, somewhere away from where she lived and worked, she is no longer meeting friends at lunchtime to gossip about job vacancies and the like, even though we know that 80 per cent of all job vacancies go not through Jobcentre Plus but through networks.

In practice, we have sharply increased her likelihood of not finding a job and of staying unemployed. Yet we know that 90 per cent of all people on JSA who have lost their job get back to work within nine months or so, and almost never because of Jobcentre Plus. They do not need to be chivvied; they are desperate to find another job, and they will do so. In that case, the young woman will come off HB and hopefully all will be well, and again she will move-not back to her old flat, because that has gone, but to yet another flat, with all the associated costs and disruptions: the search again for affordable furniture such as curtains and kitchen equipment, a month's deposit a month in advance, and another agency fee. All that could be another £1,000. She has had to pay for two moves in the space of nine months, which has wiped out her savings, strained her health and made it much harder for her to find a job. She has been put through the ringer for no point at all. We have made it harder for her and delayed her re-entry into work, instead of supporting her. Stats and the Social Security Advisory Committee show that two-thirds of all HB claims for one-bedroom flats last for one year or less, because the claimants get back into work. We are impeding this young woman in making that sensible move.

This amendment, very simply, gives the young woman a breathing space of a year, during which she receives HB for a one-bedroom flat. Hopefully within the year she will be back in work and will need no HB at all, and we will have avoided rather a lot of distress and misery, avoided wiping out her savings in forced moves as we compound her problems for no point at all. If however, after a year-I am mindful of the expenditure implications-she is still dependent on HB, she can consider her options and will have had time to find the safer, more attractive option which the noble Lord

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outlined in response to the noble Lord, Lord Kirkwood, of sharing a two-bedroom flat with someone she has got to know, rather than resorting to unsafe and insalubrious HMOs amid strangers. The Government will get their benefit savings over time from long-term stayers on HB, but they do not need to send this fragile woman, who has lost her job, to the rock bottom of the housing ladder as well.

Amendment 45 deals with exemptions. The previous amendment was to give someone who was previously in work and has lost their job a breathing space so that they can concentrate on seeking work rather than go through the revolving doors of changing homes and moving to an HMO. This amendment seeks equally to prevent people who are already on benefit and who for one reason or another are especially fragile from going into HMOs. Some of these groups of people are so obvious that they hardly need to be spelt out, and perhaps the Minister will be able to reassure us on this: disabled people; care leavers; those who might be a danger to others, including, I fear, in some cases, substance abusers or those with a fairly severe mental health problem; and people with learning difficulties, who may be financially exploited by other tenants. Some of the most heart-wrenching stories from housing associations that I have come across are about people with learning difficulties being exploited in an HMO.

We might, for example, hope that a young ex-offender will go straight or a recovering addict will stay clean, or be talking about a young person with a dysfunctional family background who is coming out of care and trying to be independent. The last thing they need is to go to an HMO, where they might be surrounded by the chaotic, the insecure, the petty criminal, or those who sometimes have abusive lifestyles from which their problems emerged in the first place.

One young man coming off drugs had two options of an HMO available-one with five ex-users, or one with two who had just started again. He was asked which he preferred. Such HMOs increase the risk of recidivism. Landlords certainly do not want such tenants, and often only the worst landlords with the poorest accommodation will take them. I hope that others of your Lordships will speak to their knowledge of particular client groups and the unstable, chaotic housing biographies that will result from the Government's proposals.

I shall now spend a moment on two groups in particular: women at risk of domestic violence, and non-resident parents. I should declare an interest as I set up a refuge back in the 1970s for what we then called battered wives. Let us say that he and she share a one-bedroom flat; they are both around 30 and on HB. He knocks her around but tells her that if she gets him excluded from the flat she will lose it and be forced into an HMO. At the HMO she could expect to be with strangers and men with alcohol or substance abuse issues or with anger management issues, and men who have been excluded from the marital home also because of domestic violence. Already frightened, she will be terrified. She will have little or no protection if he has stalked and followed her there, as some more predatory partners do.

The other group involves non-resident parents-usually men. This is perhaps a less obvious group. We know

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that the best predictor of a girl child in a lone-parent family making a good life, who stays on at school, passes her exams and does not become pregnant is if her mother works and raises her aspirations. UC will really help in this and I hope that it will transform her life. We also know that what matters to a boy child-so that he does not truant or get into trouble with the law, he stays on at school and does not lock horns with a stepfather-if he is excluded from the home and in time finds a job is if he is in regular contact with his natural father. A stepfather is six times more likely to harm a child than a natural father, so such contact is a crucial form of safety, especially for the boy child. It is only possible if the non-resident parent-nearly always a man-has a safe home for that child to stay for the weekend.

Even if the HMO is salubrious, safe, clean and comfortable, which is, frankly, unlikely, a father could not decently have his 12 year-old daughter sleeping in the same single room as he does. If the HMO is less than safe and salubrious, his son will not want to stay over either. Indeed, the father may not want to bring any children into an HMO that is dirty and where there is drug use and petty criminality. A mother would not let either of them visit and stay, and in those circumstances the child will probably not want to. York University did a study with Crisis and reported that,

We know that after two years half of all men have lost contact with their children, partly because of accommodation reasons.

Two things flow from that. If he is paying maintenance he may well say, "If I don't have contact I am not paying". We are then into the desperate roundabout of CMEC pressures and prosecution. The children, especially boy children, who I am most worried about, lose the opportunity of having their natural father in their life. We know that half of all fathers lose contact within two years. This measure will increase their number and the lack of contact. The father must have a one-bedroom flat so it is safe for the child to stay.

When I was chair of housing in Norwich, I used to offer two-bedroom flats if possible, but if not always a one-bedroom flat, to men in such circumstances when they broke up with their partner. It meant that parents did not then war over who should have the tenancy of the marital home and the children moved freely and happily between the two. There was shared parenting and shared residency. Civilised relationships between the couples were more likely to be maintained when they were not fighting over access to the children as a way of getting access to a home. A one-bedroom flat would suffice but a room in a shared house not at all. I hope, therefore, that the noble Lord will help with these amendments.

The amendments ask, first, for an exemption for one year for those who have lost their job and are coming on to HB for the first time; and, secondly, to take into account the particular circumstances of those who are vulnerable and will continue to be so in HMOs. The groups on which I have focused are women

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coming out of domestic violence and men who are non-resident parents, when we are desperately anxious in every other part of the DWP to maintain contact. That is how maintenance flows. If we undermine contact through our housing legislation, we will undermine payment, which the CMEC is trying to achieve. I beg to move.

2.30 pm

Lord Kirkwood of Kirkhope: My Lords, the Committee owes the noble Baroness a debt. These amendments are entirely appropriate and I support them. She has built intelligently upon the debate that we had on 12 October. That is also valuable as it gives us a twin approach to the Government's reaction to these important issues.

As the noble Baroness said, we are dealing with a relatively small group of 62,000 or 63,000 people, but they are extremely vulnerable to being prejudiced against by up to £41 a week, which is an enormous sum of money to lose in their circumstances. These two facts in themselves require us to spend some time asking the Government to reflect carefully on how we take this whole thing forward.

I was struck in the Chamber debate of 12 October by the extent to which a lot of expert opinion was deeply concerned about this. There was a York University report, a Crisis survey, the Merits Committee report and, of course, the Social Security Advisory Committee review that the Government received. They all in their different ways picked up on points that the noble Baroness has made, and expressed concern. We should weigh that in the balance as well.

I support these amendments. I am not going to speak for very long, but I will make two points. First, on the spatial incidence of the effect of this measure, the suggestions of the Minister, who gave a full reply in the debate of 12 October, were predicated upon an urban-in fact, a London-based, south-east-context that bears no relationship to Selkirkshire where I live. I do not know what further detailed work has been done as part of the impact statement on the spatial dimension of the client group of 63,000 that we are dealing with, but I would certainly be concerned that those who were left in disparate communities in the United Kingdom would be put in a very invidious position indeed. The Government may be correct in cosmopolitan and busy environments such as the capital city and major cities, but the prospect is entirely different in rural areas.

Secondly, I have a point to make, which the noble Baroness has correctly made on a number of occasions, and it would be helpful to get a considered reflection on it in the course of the Committee. Discretionary housing payments are the answer that the Government properly put forward in many of these interlocking housing issues. We are dealing not merely with shared accommodation and rent; discretionary housing payments are expected to carry the weight of a whole lot of, perhaps unintended, consequences for some of these housing changes.

When the Minister responded on 12 October, I was slightly surprised by two of his sentences. He was talking about the Merits Committee conclusion that

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discretionary housing payments were a temporary solution in their view, but he said that there is no limit on how long they are paid for. He went on to say:

"We review the allocation of DHPs to local authorities annually and will continue to do so".-[Official Report, 12/10/11; col. GC 467.]

We know that discretionary housing payments have been increased to £190 million over the period of the comprehensive spending review. Can we learn a little more about what guidance has been given to local authorities and how the allocation of that money will come? Does it begin to be adequate? Some of us in the Committee are concerned about the quantum of money that is being clawed back from the housing budget over the period of time that the deficit reduction is being applied. You might well mitigate a lot of that by discretionary housing payments if they were intelligently applied, if the guidance was clear and if the finance was adequate, but certainly some of us are beginning to wonder how far £190 million will go in dealing with all these things at the same time. Perhaps the Minister could give us some reassurance, if not now then in the course of Committee and later stages, on this basic question: if it is discovered that £190 million does not meet the task, given the load it is expected to carry, is there an expectation that the Government will look at it again and increase that amount of money? I think it is inevitable that they will have to do so, although this is a guess based on the complexity of the situation we are finding and the number of changes and cuts that the discretionary payments have to make up. I always believed that discretionary housing payments were temporary and in this I agree with the Merits Committee, although the Minister seems not to. If I am wrong and there is some misunderstanding, it would be helpful if he could clear that up.

Baroness Lister of Burtersett: My Lords, I, too, took part in the debate last week and I will not repeat everything that I said then, particularly about some of the implications for women. My noble friend Baroness Hollis has spoken so eloquently today that I do not need to repeat it. I was particularly struck in the debate last week by the contribution by the noble Baroness, Lady Browning, who talked about people on the autistic spectrum. She spoke very movingly and quoted from a letter that someone had sent to her about what it means for someone on the autistic spectrum who is told they will have to share with people they do not know. What is it going to be like for that person and for the other people in the accommodation? How tolerant will they be of what will be perceived as rather odd and difficult behaviour? I remember my flat-sharing days, and it would have been a nightmare to share a flat with a stranger who was difficult.

The noble Baroness made the point that this is not simply about the amount of discretionary housing payment, although I will say a little about that in a moment. In the letter that she quoted from, the mother of a 32 year-old man on the autistic spectrum in this situation describes the anxiety of not knowing whether he will get help through the discretionary housing payment. This is a question simply about the amount;

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because it is discretionary there is no right to the payment, and someone on the autistic spectrum needs certainty. They are incredibly anxious as to what is going to happen.

The Minister did not really address this in his response last week. I was also frankly quite shocked by the harshness of his response on the question of non-resident parents. Perhaps I can read back to the Minister what he said. He said:

"Parents living in hostels or other non-mainstream accommodation will, I am sure, be striving to maintain quality relationships with their children".

Of course they will. He continued:

"Ultimately, it is for individual maintenance and custody arrangements to reflect living arrangements, and it is not appropriate for the state to fund two homes for a child".

He also said:

"But living in shared accommodation should not preclude both parents from playing a full part in a child's life".-[Official Report, 12/10/11; col. GC 466.]

We should think of the reality of this and what it must be like if you are living with strangers. Shared parenting is often very fraught anyway; the Government want to encourage shared parenting, but surely this discourages it. I was very disappointed with that response last week.

I come back to the point made by my noble friend-or rather the noble Lord, Lord Kirkwood; I think of him as a noble friend sometimes-about the amount. This will probably be a running gag of this Committee. Discretionary payments have become the loaves and fishes of the housing benefit world, and even our Lord would have had limits on how far he could stretch those loaves and fishes.

The Earl of Listowel: I thank the noble Baroness, Lady Hollis, for tabling these amendments to ensure that we thoroughly think through the impact of this legislation on the various vulnerable groups that it will hit.

I have three points. The first is about fathers and contact with their children. It was very encouraging on Monday to hear the Minister of State for Children and Families launch new parenting programmes and preface this new parenting support by saying that the single most important aspect for improving children's outcomes in education is the home environment; it is what happens at home with parents that matters. It made me think of my own experience with my father, and the fact that the biggest contribution that he made to my education was that he read to us; we used to sit and read books together with him, and we always used to see him reading. It is very important that we enable parents to keep in touch with their children. Some recent research sent to me highlighted the important impact that fathers have on their daughters' education. It was perhaps surprising to see that at certain stages of their daughters' lives the interest of the father in his daughters' education has a bigger impact on their performance in school than it does on that of their sons. At a certain age there is a bigger difference. So it is so important to get this right. That leads me to reflect again on a concern that concerns many others-about how far the Government are thinking across

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different departments on how we are going to make a difference to children and families in other areas of policy.

My second point is about houses in multiple occupation. I was reminded of a visit that I made some time ago with a health visitor to a young mother in a house in multiple occupation in Walthamstow. The mother had an eight week-old baby. She was African by origin. The father was not interested in her or the child and she had no family about her; she was isolated, and she was crying as we met with her. Her only support was the local church group, which would visit her. When we came to visit her, the front door was open. That is an example of what the noble Baroness was talking about-the lack of safety in such houses in multiple occupation. She was sharing a kitchen and bathroom with five other households in that setting. Then there was an 18 year-old woman in a Centrepoint hostel with whom I spoke some years ago and who described her experience of sharing inadequate accommodation with a number of others, including men. She felt very insecure, as there was not a proper lock on her door or there was not a lock at all, and she worried about that. Those are important concerns to bear in mind, particularly with pregnant mothers, who should not feel pushed to go into HMOs.

Finally, there may be protection for care leavers up to the age of 21 from being hit by the shared room rate, but the issue has always been raised with me as a concern. For many of them, issues will still arise beyond the age of 21, so I would like to have further information about how we might protect them better than they are already protected. What particularly comes to mind is that it might be particularly difficult for a young woman who has been abused in her childhood by a member of the opposite sex to share with men. But I would need to think more about how it actually works in practice and what the particular concerns are.

Again, I thank the noble Baroness for tabling these important amendments, and I look forward to the Minister's reply.

Lord Stoneham of Droxford: My Lords, I, too, spoke in the debate last week that the noble Lord, Lord Kirkwood, initiated, so I will not repeat all the arguments that I made then. I was much more persuaded by the Minister's speech on that occasion than others seem to have been. I thought that he made some very good arguments for what we are doing here, although I still have some concerns. Let us not forget that we are trying to find savings of £200 million here, and that has to be taken into account. What is the priority? I would much rather that we spent money on dealing with the problems that we were discussing the day before yesterday, on the underoccupation issue, than thinking that we can just ignore this change. If we are going to improve on where we are with this legislation, we must be very fine-tuned in what we are trying to do.

2.45 pm

Everyone accepts that it is not right that people not in work should have separate accommodation when people in work cannot afford it. A quite convincing

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statistic-if it is true and I assume that it is-is that, in 60 per cent of the locality, two-bedroom local housing allowance rate is less than twice the shared rate. We have to accept that in these times we should be trying to encourage children to stay longer in their homes. When times are hard that is inevitable. It is happening in the private sector because people cannot take on mortgages. It also has to be accepted in this sector as well. There have to be some economies and that is an obvious one. Anyway, a very high proportion of people in this age group-some 40 per cent-are already sharing. We have to recognise that that happens.

The Government have tried to make a number of exceptions. It should also be said that not all shared accommodation is bad. Some people benefit from it, particularly the lonely and some of the vulnerable people that we have talked about today. The trouble is that there is not enough of it and it could be improved. The Government have also set aside extra money for the discretionary grants. I know that there are various concerns about those grants but how do you define that? How do you get the fine-tuning? In any event, somebody will have to assess the people with these difficulties. Obviously, they can be helped by that route. Everybody was very moved by the comments of my noble friend Lady Browning on autistic people. We would all share that. Somebody has got to assess those people. There will never be any certainty until they are assessed in the situation.

We have to accept that we are into fine-tuning this legislation. I will say four things. First, we need to look at pregnant women as a group. When I went to midwifery classes with my wife, I was always told that you do not have a baby, move home and start a new job all at the same time. I have always passed that lesson on to other people. It is a lesson that we need to look at carefully in this case. We do not want women having to move twice, when they become pregnant and then before the birth or just after it.

A second problem needs looking at. The Minister said in his speech that the market is not static. I agree with that. Looking at the statistics, the rental market has moved quite a lot in the last five years, in all sorts of ways. Yet there is the severe problem of shared accommodation. If we increase the pressure from the 25 to 35s in this market, we will make it more difficult for the under-25s to get accommodation where they most need it. The Government have to look at this area and make it a priority.

I have two other points. In certain areas, we have already heard the issues of London and the south-east but it is rural areas in particular that will have a problem because there is simply no shared accommodation. Extra helps needs to be made available through the discretionary grant and we need to look at providing more accommodation. I say again that this is an area where we are inevitably looking for important savings. We may not want to do that but we have to, so we have to be sharper in pinpointing the real priorities in this area.

Baroness Hollis of Heigham: In terms of the groups that I identified in Amendment 45, which ones would the noble Lord not protect?



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Lord Stoneham of Droxford: I have looked at the group and the Government have already addressed quite a lot of them. The noble Baroness said that someone could be considered vulnerable as a result of mental illness but somebody has to define that. If you put these regulations in, you must have the groups more and more defined. The Government have tried to look at areas where they could define them. Otherwise they have to rely on the discretionary grants.

Baroness Thomas of Winchester: My Lords, I endorse what my noble friend has just said about the scarcity of properties around the country. I take his point about having to save money. I am certainly not against sharing in itself for this age range. However, for vulnerable groups it is very much more difficult. In some areas of the country, it will be very hard.

We have heard a bit about the situations in rural Norfolk, Selkirkshire and London. I have some up-to-date figures on properties to rent in Winchester, where a lot of claimants are being advised to move to Eastleigh or Southampton due to the scarcity of property to rent in Winchester, because people simply are not moving at the moment. Historically there have been between 110 and 150 properties available to rent in Winchester. Last week there were 83, six of which were affordable to people in receipt of local housing allowance. The cheapest two-bed was £75 above the LHA level; the cheapest four-bed was £50 above it. That puts the matter into a bit of context for the moment and is why a lot of us are very concerned about this policy kicking in while the economic situation is so dire and people are not moving.

Baroness Sherlock: My Lords, I have a couple of things to say. To add to what the noble Baroness, Lady Thomas, has just said, I live in Durham and, while there is a lot of shared accommodation available in Durham city, it is all taken by students. The demand for that is such that it drives the price up. It is difficult to imagine how someone in those circumstances could compete in that market. If they are driven out into County Durham, it is hard to find the kind of accommodation that is described, so I can add to the geographical Cook's tour of bits of London where we think the Minister's intentions, even if one were to agree with them, might be a little hard to implement.

On one or two other categories, I read in the Telegraph on a rare occasion in June this year a comparison of runaway dads and drink drivers as people beyond the pale: they need the message rammed home to them,

It goes on. I am sure that the Minister has recognised the quote, from the Prime Minister, Mr Cameron. Consider for a moment how easy it would be for a father who had just split up from the mother of his child or children, possibly even because he had lost his job-we all know the research into the impact of

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financial difficulties in causing relationship and family breakdown-who finds himself in a position where he has to go and live in a room in shared accommodation, if he can find one. It may be that there is none nearby, and he is encouraged, as the noble Baroness, Lady Thomas, described, to move some distance away. How then can he afford to come to visit his children when he finds himself on benefits? It may be that other people sharing the house will not be people who make him feel safe bringing his children into it. He can certainly take them to play football in the park in the summer, but there is a little nip in the air even now in October, and I am not sure that we could expect him to do that come December. So where is he to have this contact with the children? Very often-as we know, too often, especially in the early days-relationships can be quite difficult after they have broken down. To expect the parents to be in the house where the children are living is not always that easy.

I would be interested in the Minister's view when we look at the question of the Child Maintenance and Enforcement Commission. That same father may find himself paying more money towards child maintenance. If he regains a job, be will be paying a lot more of that, or else less money will end up with the mother of his children. What would the Minister like to see? What would be a good result for this? How will he help those non-resident parents to maintain contact?

Is the Minister aware of any evidence about whether or not contact in the early years with the non-resident parent makes any difference to the likelihood of their paying child maintenance? He ought to be in a position to know, and I would be very interested; he might write to me if he does not.

I have two other issues. First, on the position of people who have different kinds of mental illness, which has been mentioned, I do not want to go into detail but I add my voice in support of that. We must all have met people who we can see would find that kind of enforced contact extremely difficult. I urge the Minister to think hard on that.

Secondly, my final word is about the position of pregnant women. I lived in shared accommodation when I was young; I suspect that a number of us have. I have spoken to friends of mine who have done it as well.

Perhaps the Minister knows people who have done so, but could he for a moment imagine what it is like to be a young woman, lying in bed at night, wanting to use the lavatory but trying to work out if she can wait until the morning because she can hear the noise outside in the shared area and she knows that she will have to walk past these men, who have come home drunk, in order to get to the lavatory? I know this sounds as if I am being over-dramatic but I am aware of that happening in, frankly, not-too-bad accommodation in parts of London. It does not happen only in small, unusual, mythical kinds of poor accommodation. If someone is given little choice in a market which, as we have all heard, is going to be much more competitive, they do not have a lot of room for manoeuvre. If that young woman-she could even be a 30 or 34 year-old woman-is pregnant, what is she to do?



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Also imagine for a moment that she is in a job, finds she is pregnant and then either loses her job or gives it up. Is she going to move house in the circumstances that were described so eloquently a moment ago? Are we really expecting her to bring a baby back to that shared house? I am sure the Minister does not mean this.

If the discretionary payments are to cover all of these groups, has the Minister done any costing as to which of these groups should automatically be covered and can he tell us how far it will go? We may be wrong. It may be that, when the sums are done carefully, it is enough to cover all of these exemptions and the others that have been considered and that the amount will be admirable. Will he agree to come back to the Committee with information on that to put our minds at rest?

Lord McAvoy: My Lords, this could be a repeat of a previous debate. I am not going to say anything about Amendment 46 because I think that would only take away from the passionate and informative speech of my noble friend Lady Hollis of Heigham.

However, in regard to Amendment 45, I was a councillor on Strathclyde Regional Council and chairman of a sub-committee dealing with urban deprivation which dealt with organisations that provided services for many of the people on the list outlined in Amendment 45. My noble friend has outlined clearly what life is like in those strata of society. I do not have any figures but it seems to me that, collectively, Governments have failed to reduce the number of people in these categories. I accept that it is a reflection on all of us that it is still going on and that the cycle is still there.

The stories that we heard and the environment and accommodation that we saw on visits to organisations and centres dealing with many of the groups of people were, quite frankly, horrible. Many of our colleagues here can give examples of that. My noble friend Lady Sherlock mentioned pregnant women; I have particular knowledge of someone suffering from mental illness who was trying to get out of single accommodation. What happens is that people move into accommodation but, because of their behaviour-which is not their fault-they make life unbearable and uncomfortable for their fellow people sharing the house and eventually they get eased out. They get eased out time and again and descend into the lower, rougher types of accommodation. They end up with each other and it is a very unhappy situation. I really feel for the people there. This is only anecdotal but I do not see any reduction. The committee I was on covered the City of Glasgow and I do not see any great reduction in the number of people involved in these categories.

I do not want to bring a discordant note into these deliberations because there are so many skilled and knowledgeable people here. However, I will make a comment without taking on too much. There is a continual theme coming from our Liberal colleagues of "Woe is me. It is terrible what we are doing to people but the national deficit requires it". I see Liberal colleagues and friends on the Liberal Benches twisting and turning to justify their position on this type of cut and this way of treating people. It is a comparatively small group of people whom we are focusing on.

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Anybody who knows me knows me that I am not a social liberal, with a capital L or a small l, by any manner of means. I would hammer the benefit fraudsters as much as anybody in this room, so nobody should think that I plead for people like that.

3 pm

This is a small group of people in comparative terms. The Liberals are giving some kind of cover to the hardliners in the Government who are focusing on very vulnerable people. It is a reflection on us all. The noble Lord, Lord Stoneham of Droxford, seemed to be creating a group of people who should be ostracised from society and picked on, who are somehow different from the rest of society. I do not think that it was deliberate, but it shows what happens when you try to twist and turn to justify one's position. I do not agree that we should say, "Well, these people deserve it-there are cuts coming, so this group of people should get it". There is an overemphasis on this group of people, and the £200 million. We are going to have a discretionary fund, but we have had hardly any information from the Government about it, so I would like to hear from the Minister. Despite my previous comments, I do not think that he is a bad man. But then again, it is going to be a long Committee stage and I reserve my position. I would like to hear how he sees these groups being catered for under these proposals.

Baroness Campbell of Surbiton: My Lords, I would also like to support the noble Baroness, Lady Hollis, on these two important amendments. In the last debate, I was concerned about the vulnerability of people with mental health impairment and their housing needs. Although I am partially satisfied that the Minister is confident about the discretionary payments, I guess that I am not so confident.

My question is on a small example. I am extremely worried about people with obsessive compulsive disorder. Shared accommodation can be excruciating for this group of people, so much so that they will not leave their room. So how will they go to the bathroom, without that trust? How will they go down the corridor, not knowing whom they will meet and what will happen? It is an impairment that is very much predicated on the situation and not the physicality.

Disabled people are not vulnerable people; they become vulnerable when they are in vulnerable situations. If this Room dropped in temperature-frankly, if it became any colder than it is now-I would be very vulnerable to hypothermia, but I am not a vulnerable person. It strikes me that we are not again looking through the prism of the social model of disability, which says very clearly that disability becomes exacerbated and that you become a disabled person when your environment and the attitudes around you do not enhance your physicality. It strikes me that relying on discretion is too dangerous for particular groups of disabled people, and certainly when it comes to people with obsessive compulsive disorder.

A latest disability-related harassment inquiry has just been produced by the Equality and Human Rights Commission. Noble Lords all know that disability harassment has increased exponentially for people with

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mental health impairments, especially those whom we do not think of as disabled at all. Guess which of those groups gets the worst treatment: people with obsessive compulsive disorder do, because we laugh at them. We think that it is a joke. We have all seen that film, "As Good as It Gets". That man was laughed at, but we should remember that he lived as if he was in prison until he had the confidence to leave his own home.

Will the Minister assure me again about the discretionary payment, because I do not have his confidence?

Baroness Hayter of Kentish Town: My Lords, we have learnt some interesting things in this debate. First, the Minister is not a bad man; secondly, my noble friend Lord McAvoy is not a social liberal; and, thirdly, some of us have had some interesting shared accommodation in our past, although most of us were rather under 25, let alone 35, at the time.

The shared accommodation rate, which is a lower rate of housing benefit, applies to single tenants under 25. The Government intend to extend that to people up to the age of 35. The estimate is 60,000 and we have to agree that they are somewhat vulnerable people. Assuming that there is no transitional relief, as from January the average loss will be £41 a week, or in London up to £100 a week. None of us doubts that that will mean that most of the 25 to 35 year-olds will lose their current homes.

Crisis, which I still think of as Crisis at Christmas-that shows my age, I guess-has already found a shortage of shared accommodation as the market simply cannot respond that rapidly to these changes, which will come in over a very short time. There is a real risk that some of those affected will become homeless, especially, as we have heard, in rural areas or, indeed, in Winchester, as the noble Lord, Lord Kirkwood, and the noble Baroness, Lady Thomas, have already described. It would be interesting to hear the DWP's own estimates or of any action being taken to promote the availability of appropriate accommodation within that timescale.

As Crisis has said, and as many noble Lords have voiced, sharing can be difficult and even dangerous. It can have serious impacts on vulnerable people, hence our concern about the proposed extension from 25 to 35 years of age. The existing exemptions, which are set out in secondary legislation, are for severely disabled people, care leavers aged under 22, those who are aged 25 or over who have spent more than three months in a homelessness hostel and received resettlement support, and those aged 25 or over who are considered a risk to others-not those at risk, but a risk to others. Those exemptions, announced in July, are undoubtedly welcome and indicate that the Government recognise that sharing can be inappropriate for some sorts of vulnerable groups.

As we have heard, the Government have made the case that discretionary housing payments could be used to protect vulnerable people, but as both the noble Baroness, Lady Campbell, and my noble friend Lady Lister have said, it lacks certainty. My noble friend also referred to the amounts-I was going to use the word insignificant, but she spoke of loaves and fishes, which is a better description of how often those

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discretionary housing payments will be used. The total pot is only £190 million over four years. This is intended to help those who currently have a shortfall as well as those affected by all the cuts to housing benefit. I think the Budget made £1.8 billion-worth of cuts to housing benefit, in addition to the £215 million proposed to be saved from changes to the shared accommodation rate. I argue that the discretionary housing payment will not suffice. We will therefore be interested to hear whether further exemptions will be considered.

I would like to highlight four of the exemptions that have already been mentioned. First, there are pregnant women, but that exemption has probably been well enough described, and I think is even accepted by the noble Lord, Lord Stoneham, which must be a special tick for it. Secondly, there are those who have been victims of abuse or are at risk of violence or fear violence. The fear of someone they have been living with makes a locked door and a completely safe environment a priority for those people, who are mostly women.

Thirdly, there are those who are vulnerable because of previous rough sleeping or drug or alcohol dependency, and I declare an interest as a trustee of CASA, a service for alcohol misusers. As our clients move out of treatment or of previous unsuitable accommodation and learn to live with a new sobriety, it is hard to emphasise the challenges of sharing a home with someone who continues to drink. I do not necessarily mean to drink heavily, but even to drink socially. It is very hard to describe how once you have given up alcohol what the smell of a thrown-away bottle of beer or wine, let alone just having drink available at the time that you are trying to maintain sobriety, can mean. It is a real challenge.

Fourthly, there are non-resident parents, who have been well described already, whose relationship with their children could be adversely affected by this. We are talking about an older age group who are much more likely to have children than the under-25s. I think that 18 per cent of the 25 to 34 age group on single homeless benefits who do not have dependent children are absent parents. That is a high proportion. As has been stressed, a safe place to host one's own children is key to that relationship. As my noble friend Lady Sherlock said, you cannot be outside all day, especially with very young children. Cooking and sharing food with your children is an important part of being a family community.

Other changes in this Bill will already worsen the existing shortage of one-bedroom flats that we have discussed on other days. This change could have a similar effect on the shortage of shared accommodation as it will in effect double the number seeking this stock. We know what that will do to prices. There is not enough of this sort of accommodation available, and the market takes time to respond, especially when the banks are so loath at the moment to make loans, yet investment is needed to create flats of that sort or to improve and adapt housing in this way. As the noble Lord, Lord Stoneham, said, this increase to 35 year-olds will increase the pressure on the under 25 year-olds who are seeking that sort of accommodation.



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As my noble friend Lady Hollis has set out, Amendment 46 seeks to protect those who were renting non-shared accommodation either out of their own resources or when in work. It is to prevent them being evicted because of their housing benefit being cut to cover only shared accommodation and to protect them for 12 months. It would prevent all that unnecessary upheaval for those who might be out of work for quite a short period of time by preventing them having to move from sole occupancy to shared accommodation. Losing a job and a house at the same time creates enormous stress levels that will not help someone focus on stabilising their job search. They will be spending their time looking for a new home. I think it was the report by the noble Lord, Lord Freud, for the DWP that showed that around half JSA claimants find work within three months, so we are talking about a lot of people being able to find work fairly quickly, and it would be dreadful to move them for a short period.

Amendment 46 would prevent the half who are likely to find a job from suffering needless upheaval in having to move. It would give them a breathing space, in the words of my noble friend Lady Hollis.

I should like to say a word in response to the noble Lord, Lord Stoneham. It would be a false saving if cuts in this part of the benefit then appeared as a greater expenditure in other parts when further resettlements, A&E or other things would be necessary. So, in order to help quite a small group of vulnerable people, in the words of my noble friend Lord McAvoy, we support the approach of these two amendments and we hope very much that the Minister will respond sympathetically to them.

3.15 pm

Lord Freud: My Lords, the change to the shared accommodation rate was comprehensively debated last Wednesday, 12 October, following the take note Motion raised by my noble friend Lord Kirkwood. Many of the noble Lords present today also attended and participated in that debate. The issues raised and my responses are therefore a matter of public record, so I do not propose to cover the same ground again today.

For those not present last week, the main points I made are that sharing is commonplace in this age group and it is only right that claimants make similar choices to those not on benefit. The increase to age 35 will save around £200 million by 2013. Exemptions are available for those in vulnerable situations and we have introduced two more for the new age group. We do not yet know how claimants will react to this change, whether they will stay where they are, move into shared accommodation or move in with family or friends. A comprehensive evaluation on the April 2011 local housing allowance changes will also look at the effect of the shared accommodation rate. I can clarify for the noble Baroness, Lady Hayter, that the earliest that new claimants will start to be affected will be January next year. For those making new claims for housing benefit and for customers claiming from April 2011, the change will take place from the anniversary of their claim, if there are no changes of circumstance.

I would like to take Amendment 46 first. This provides for a 52-week exemption from the use of the shared accommodation rate when working out the

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housing element within universal credit for those single and aged under 35. There is already a 13-week exemption from rent restrictions that applies to those who could afford their rent when they first took on that commitment. Most claims for housing benefit are short. It protects a person's ability to pay their rent during that time. That in effect picks up the point made by the noble Baroness, Lady Hollis, and the example that she used for that period. Indeed, half of jobseeker's allowance claimants in the 18 to 24 age bracket have been claiming for less than 13 weeks and fewer than 5 per cent have been claiming for over 52 weeks. The noble Baroness, Lady Hayter, is right in quoting my research from some time ago. Fundamentally, those statistics have not changed. This amendment would erode a significant proportion of the savings expected from the extension of the shared accommodation rate age threshold and would generate new costs through increased entitlement for some claimants aged under 25.

Amendment 45 provides for a series of pre-existing and further exemptions from the shared accommodation rate within universal credit. The proposed new exemptions would substantially increase the number of younger people who could have benefit paid for self-contained properties. I remind noble Lords that we are already providing two further exemptions when the increased age threshold from age 25 to 35 comes into force. These exemptions are for certain ex-offenders who pose a risk to the public and certain former residents of specialist homeless hostels who have been supported back into living in the community. To pick up the point made by the noble Baroness, Lady Hollis, on women in particular fleeing from domestic violence, the definition of a homeless hostel may include a domestic violence refuge or drug rehabilitation hostel, so in practice additional groups may very well benefit from this particular exemption. We believe that the numbers involved are small, as the shared accommodation rate applies, of course, exclusively to people without children.

We looked carefully at the arguments for exempting other specific groups, including people with disabilities, mental health problems and a history of substance misuse, as well as those seeking to maintain contact arrangements with their children. When considering any exemption, we have to ensure that limited resources are targeted most effectively. Those further exemptions are not a cost-effective way to address people's needs given that, within these overarching groups, circumstances vary widely-a point made so eloquently by the noble Lord, Lord Stoneham-when we need to find an efficient way of channelling support to the people who really need it.

The noble Baroness, Lady Lister, referred to disabled groups such as the autistic. The existing exemptions from the shared accommodation rate will remain, ensuring that people who are severely disabled and young people under age 22 leaving care are protected from the restriction. Those who are in supported accommodation or social housing are also not subject to this restriction, so it is not necessarily the case that all or most of those with autism will be affected.

While sharing accommodation may be unsuitable for some, it is not unsuitable for everyone in any particular group. The exemptions proposed in the

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amendment would not be administratively straightforward, making them expensive to operate and more likely to generate fraud and error. They are also very broad and could lead to variations in interpretation. The term "or other special reason" is particularly open to interpretation.

The solution that we are looking at is discretionary housing payments. I am aware that noble Lords are having a little bit of fun with the loaves and fishes analogy. If I am the Minister giving out loaves and fishes, I have to accept the point made by the noble Lord, Lord McAvoy, that I am unlikely on the surface to be a bad man, given precedent. It is clear that a lot changes are going to take place in the marketplace. Markets are responsive; people are going to change behaviour. There will be a residue of hard cases. That is what the discretionary housing payments are meant to deal with. They not only help support one-off adjustments but, as I said last week, provide long-term support in some cases.

Lord Wigley: I hope noble Lords will excuse my ignorance on this, but can the Minister clarify whether, if a local authority runs out of the discretionary money available and he has nothing more to add, they can top it up from their own finances?

Lord Freud: Yes, my Lords. The whole point of the localism agenda is that choices can be made at the local level. A number of noble Lords have said today- and, indeed, last week-that we might make a bit of a saving in this budget but see a very expensive repercussion in another. The whole point of localism is that those circumstances should be able to be looked at in the round on a local basis. The question has been asked whether localities are competent to make those judgments. I would argue that they have every incentive to become very competent in making them.

Lord Wigley: My Lords, I am grateful to the Minister for that response and clarification. He will be as aware as I am that certain locations have a disproportionate number of difficult circumstances and will run up substantial bills. One thinks of some of the old holiday towns, for example Rhyl in north Wales. In those circumstances does the Minister have any fine tuning of the discretionary awards in order to meet what may be excessive charges?

Lord Freud: Yes, my Lords. We are currently looking at how to allocate the additional discretionary payments to councils and clearly we need to look at the factors that will create additional costs for different councils. We are conducting an exercise to do that; we are not just blindly following the current allocation of discretionary payments, because we know that there are additional burdens. We will make those changes.

Lord McKenzie of Luton: The noble Lord was talking about the importance of localism and how you could make local decisions about balancing costs here and savings there. That is right; this is not only a question of local authorities having the power to make those decisions. However, is it not also right that they can do that effectively only if they are properly resourced

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overall in the first place? If they are not, the Government are imposing impossible judgments on local authorities. In a sense, they are moving away from making these decisions and leaving them to local councils, thereby putting them in an impossible position.

Lord Freud: My Lords, it is probably not appropriate to go into great depth on the theory of localism, and the noble Lord has had more experience of this than perhaps he would have liked. If there are large savings to be made by the efficient use of money across particular services, it would make sense overall for local authorities to be in a position to make those judgments. The financial incentive is there, and there is no need to go into this in detail because the noble Lord has had huge opportunities to do so. That is what the philosophy is here.

We reconsider the allocation each year and will continue to do so. Noble Lords will remember that on Tuesday I agreed to write to the noble Baroness, Lady Hollis, about where the money might go and the modelling of discretionary housing payments. I will write that letter and circulate it to Members of the Committee, but I have to preface that offer by saying that the analysis behind that is by its nature very difficult. We are talking about discretionary payments so there is a limit to what I can say about how those payments might be made.

Baroness Meacher: I must apologise to noble Lords that I was unable to be here at the beginning of this debate. However, the Minister very helpfully reminded us that somebody who is a risk to others would not be expected to share accommodation, which is certainly a start. Psychiatrists have to discharge people from psychiatric hospitals into the community all the time. Let us take the case of somebody who is not exactly a risk to others but whose ongoing rehabilitation would nevertheless be incredibly badly hindered if they were moved into shared accommodation. If a psychiatrist was willing to write a letter to the effect that they could discharge this person into the community on the condition that they could have a place on their own, would that be a straightforward decision for the officer to make? Could that officer exercise their discretion? It will be very difficult for officers, other than professional psychiatrists, to assess whether this would be a disaster or very helpful. As the Minister says, it could be helpful but it honestly could be very, very unhelpful for a lot of people.

3.30 pm

Lord Freud: The noble Baroness, Lady Meacher, makes an important point. It is interesting how there is some support for people in this position where they are deliberately made to share. There is a supportive nature to getting a group. I am conscious that there are some wonderful operations that work on that principle, which is why it is so difficult. However, if there were a letter from a psychiatrist that said, "We will not release this person unless it is into self-contained accommodation", that would seem to give the responsible housing authority a fairly clear steer towards what he should be spending his discretionary housing payment upon. I do not think we need to overelaborate on that.



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The noble Baroness's question brings into focus the problem with blanket exemptions: they are not appropriate, even for the particular group that we feel very supportive of-people with mental conditions or recovering from them. In view of this remise of last week's debate, I hope that what I have said allows the noble Baroness to withdraw her amendment.

The Earl of Listowel: I am grateful for the Minister's response. I want to clarify a point about parents and children and fostering the relationship between them. I have no experience in local government, but is it easy and clear enough for local government officials to see that not supporting contact between a daughter and father will be so detrimental to the local environment that that is something that they should prioritise, or should it be more apparent to us in national government to recognise that in 20 years' time we will reap great benefits from having a daughter grow up with a good relationship with her father?

That is a specific question. Behind that, given what the Prime Minister, David Cameron, was quoted as saying, given the recent push from the honourable Sarah Teather, the Minister of State, and given the great concern that this Government particularly have-indeed, that all Governments have had-to support families, is this not perhaps an area where an exemption needs to be given more thought? It is important to be efficient, but some risks are so great that a bit of inefficiency is worth the cost in order to save us from great harm.

I note what the noble Lord, Lord Stoneham, said about pregnant women. I know I am adding another level to this, but it is related to the question of relationships between parents and children. Can the Minister give us a bit of comfort on this point?

Lord Freud: The noble Earl raises the complex issue, which we have been looking at very closely, of whether exemptions are appropriate in this area, and we have reluctantly come to the view that they simply are not appropriate. It is just so complicated to define and difficult to police. As we all know, the costs of family breakdown are extraordinarily high, and it is difficult to organise a state system to manage that in the fullest possible way. When we looked at this, the numbers of non-resident parents who kept in touch with their children were, regrettably, relatively small. On the question of whether that keeping in touch was overnight and whether that was an essential, the numbers shrank even more. So we were looking at a very small issue in terms of numbers and an incredibly high cost due to the way that it would then be used if we had a blanket exemption.

Baroness Hollis of Heigham: My Lords, that does not follow at all. We know that, currently, 50 per cent of NRPs lose contact with their children after two years. One of the reasons, obviously, is that they move away from the area or that the relationship with the parent with care was casual and therefore was not ongoing. But the Minister cannot say that, because of that, the number who would have overnight care would shrink and shrink. One of the reasons for that is precisely the difficulty, even now, of younger NRPs.

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They have the most casual relationships. The under-25s are not entitled to separate accommodation where it is safe to have the child. We know that the older the parent, the more likely the non-resident parent is to have contact with their children. Those coming out of divorce are more likely to because they have the accommodation and the income, and they can afford to keep in touch. For those who do not have contact, that is connected with their age and accommodation. In a way, the problem is being used by the Minister as an explanation. It is not. It is the problem.

Lord Freud: My Lords, to make myself absolutely clear, the scale that I was indicating-perhaps I should write on the precise figures-was in the 25 to 34 year-old group. I was not referring to the smaller group, but to the group that we are talking about. I am very happy to write to the noble Earl on the figures and the scale of the problem. Rather than spending a lot of time on that now, that is the best way for me to proceed.

The Earl of Listowel: I would be grateful to the Minister for that.

Baroness Hollis of Heigham: My Lords, I am very grateful indeed to everyone who took part in a very illuminating and informative debate. My regret is that while we in this Committee have come to value from the Minister, who I rate highly, a willingness to take a wider perspective and understand that costs do not stop when you chop a benefit-they merely get exported somewhere else-I am sorry that today, on something which affects so many vulnerable people, he has unusually taken such a narrow, cost-focused agenda, leaving other bodies, agencies and often children to pay the bill for that narrow agenda. The costs have been exported elsewhere.

We have seen some of the examples offered today by colleagues around the Table: the care and education of children, offered by the noble Earl, Lord Listowel; or contact with children, powerfully argued by my noble friend Lady Sherlock; or the mental health of someone with obsessive disorder from the noble Baroness, Lady Campbell; or women's safety, mentioned by my noble friend; the ability to find work; pregnancy; and health. The costs of addressing all of these issues will be exported to other agencies. They will not go away. The DWP may make its savings. Housing benefit may make some savings. But the costs will be exported somewhere else and, in the process of the hand-on, I suspect from my experience that the costs and the problems will get larger and multiply.

I think that this is the first time since he has taken office that I have said this to the Minister: this is unbelievably short-sighted. This is not an all-encompassing amendment, saying "Get rid of the 25-to-35 rule". It is quite clearly focused on two groups. The first is women, particularly those who are likely to get back into work within a year-it could be a good year for a man. We should not put them through the trauma of possibly three house moves in the space of nine months in order to satisfy some narrow benefit rules.

The second is a group of very vulnerable people. I am perfectly happy-as I am sure that my noble friends around the Table from different areas on this

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have greater expertise than I-to work with the Minister to get a more precise and useful definition of those most at risk. We do not have to take opposite sides on this. I am sure that we share a common agenda. As my noble friend Lord McAvoy correctly said, we do not want to expose this fairly narrow group of people to the risks that may come as a result of the Government's changes. If we can work with the Minister, and the expertise around this Table-which I gently point out matches that of the department-can be drawn upon, then I am sure that my noble friends and all colleagues around the Table will be happy to offer it. But this will not do.

None of us has any problem if people, whether in good health or poor health, wish to share with other people. That is fine, particularly as they are likely to be sharing with friends-and many of them do. But the amendment focuses on two particular groups. I am not trying to repeal this back to 25, although I wish I could, but I accept the cost arguments and the Government's agenda. I am trying to focus on two groups, the first of which is those recently in work and trying to get back into work. They will be sabotaged-I mean that, sabotaged-because their energy, effort and focus will go instead on having to sort out their accommodation. That is folly beyond belief and so short-sighted. I am puzzled that the Minister would run with that argument. The second group is vulnerable people. There are people with far more expertise than I around this Table who would be happy to work with the Minister to come up with more precise definitions and to extend the categories of those who should be protected, either because they would be a risk to themselves or a risk to others if we force shared accommodation on them. Frankly, they will otherwise be on the streets or in homeless accommodation.

My noble friend Lord McAvoy has made it very clear that this is not an all-encompassing amendment. I tried to press the noble Lord, Lord Stoneham, who came in with some ambiguous support for the Minister-the only support he had, I think-as to which groups on my list he would exclude, but answer came there none. But my experience and that of the noble Baroness who talked about HMOs shows that they will be reducing just at the time when pressure on them increases as the numbers rise. Students are in a far better financial position, as the noble Baroness, Lady Thomas of Winchester, said, to access this accommodation. We are now learning that landlords cannot make money out of this unless it involves at least four bedrooms plus, which means that they are mainly going to be picking up large Victorian and Edwardian houses. HMOs for people other than students are going to be reducing just at the point when the numbers increase.

My noble friend Lady Hayter made this point clearly and I am sorry that the Minister did not respond to it. What will happen to rents when we have a reducing number of HMOs and an increasing number of people seeking access? Under the legislation, something like 60,000 new places will be needed. Rents are going to soar. What will happen to the quality of available property that people can afford within the 30 per cent rule? The quality will go down

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and down. Again, this is not an all-encompassing amendment. Many of us would be perfectly happy to work with the noble Lord and to share the experience that is around this Room.

On discretionary housing allowance, I would say that it is becoming the lucky bran tub. I shall not talk about loaves and fishes, but the lucky bran tub. My authority, Norwich, ran out half way through the year. The money is going to increase by something like threefold. I checked to see what the money was being spent on. Largely- not entirely but largely-it was being spent on families who had lost the home they had been seeking to pay for. They were going into emergency or temporary accommodation and needed additional help with their rent above and beyond what they were entitled to, given their income and the rent charged. That money is going to go up threefold and, as a result, instead of being helped for just a couple of months, families may now be helped for a little bit longer. Perhaps more families facing that situation may be helped, particularly as the recession bites. But none of the money will go to any of the groups listed here. That may change, but all they will have is a tiny amount because in effect only one-third of the total will be new money. That cannot even begin to have an impact on a quarter of these groups.

I hope that the Minister can set out in a letter, one that I am sure we would all wish to see, how he expects this money to be apportioned given the bids that are going to be made on it. I would be content if I could be persuaded that the discretionary housing allowance was genuinely generous enough to allow local authorities to make local choices, to help the groups most in need at a time when the pressure on this accommodation is going to double. If I can be given that reassurance, that will be fine. I am a local government person and I would welcome that autonomy.

As to talk about loaves and fishes, I cannot believe this money will be faintly appropriate. The Minister said the savings will be £200 million and that the additional money going in will be something like £20 million to £40 million for all fields of housing cuts. It does not even begin to connect.

I hope the Minister will write to us and tell us how he expects this money to be expended; how we can avoid unnecessary churning; and in what ways we can tighten the amendment to meet his willingness, perhaps, to extend the categories. It will not do to have the poorest, most vulnerable, most fragile people in our community bearing some of the most savage cuts in the Government's proposals. These should fall on broad shoulders. We should not have a council tax freeze at a time when people such as these face having to move out of accommodation into shared room rent or get into serious arrears. It is not right, it is not fair, and I am sure the Minister agrees with me. I hope he does. I hope, as a result, that he will come back to us. If not, we will press him with further amendments to ensure that if he cannot support an amendment that lists exemptions, he will ensure that there will be sufficient resource in the discretionary housing allowance for those groups most in need, most vulnerable, and who none of us with any claims of decency should see going to the wall. I beg leave to withdraw the amendment.



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Amendment 45 withdrawn.

Amendment 46 not moved.

3.45 pm

Amendment 47

Moved by Baroness Hollis of Heigham

47: Clause 11, page 5, line 29, at end insert-

"(6) Regulations shall provide that the Secretary of State for Work and Pensions will review not less than every two years the relationship between housing costs in the private rented sector and the level of the housing component of universal credit.

(7) Regulations shall provide that the Secretary of State for Work and Pensions must amend the calculation of housing costs where this is necessary to ensure that at least the 30th percentile of the list of private rented properties in each locality remains affordable to claimants, in light of the review under subsection (6)."

Baroness Hollis of Heigham: Noble Lords will be pleased to see that I shall sit down after this amendment. I apologise for trespassing on the Committee's time. I am delighted that the noble Lord, Lord Best, was able to add his name to the amendment.

As we know, housing benefit costs £21 billion a year, and the Minister, in his evidence to the Work and Pensions Committee, showed that between November 2008 and February 2010 the average rent paid to LHA claimants increased by 3 per cent, whereas in the non-LHA market rents fell by 5 per cent. The Minister therefore argued that LHA rates were inflationary because landlords increased rents to their level as HB claimants form 40 per cent of the market. Accordingly, if the Government reduced local housing allowance, landlords, he argued, would have to reduce their rents because LHA tenants were such a significant part of the market. Hence, LHA would be fixed in future according to the 30th rather than the 50th percentile of average rent levels and would rise only by CPI. This would bear down, he argued finally, on rent levels and on the LHA bill. I hope I have been fair to the Minister's arguments. If I have not, I am sure he will correct me.

If the Minister is right, there could be a valuable cut in LHA expenditure without pain to the tenant because the pressure would be bearing down on the landlord. If he is wrong, many of the tenants will find themselves unable to find or afford adequate accommodation in the private rented sector and arrears, evictions and homelessness will grow. Is the Minister right? I think he is wrong-but the truth is that we will not be fully sure until the changes have been in place for a couple of years and the outcome reviewed. The Minister is evidence-based-this is one of his many characteristics, and the Committee is delighted that he exhibits that towards us-and that is welcome. He has already agreed to one housing review, proposed by the noble Lord, Lord Best, earlier, which again is much welcomed: hence this amendment. We must find out, before too much damage is possibly done, whether cuts in local housing allowance cut private sector rents. I do not care about the time span of the CSR and that this may fall outside it; this is a matter for this

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Bill and I am sure that we want to have scrutiny-post-legislative scrutiny, if you like-of what is being done. I hope the Minister will give us that commitment today.

Why do I believe the Minister is probably wrong that cutting HB will force down rents to make them follow the path of HB, which is the essence of his argument? First, I think he is wrong in his analysis of what happened between 2008 and 2010. Secondly, for the future, if the private rented sector was frozen with a finite number of tenants for a finite number of properties, then his reading that the market will find equilibrium might well be correct, but it is not and it will not be.

What happened between 2008 and 2010? Yes, HB bills rose faster than rents, on average, but that was not because they were being pushed up by transparent local HA rates. Recent research from the Chartered Institute of Housing and the British Property Federation shows that it was mainly due to more people claiming in London and the south-east, where rents and HB are higher. In that period, LHA costs fell in two-thirds of the country, but in one-third they rose: in London and the south. The case load doubled from 400,000 to almost 1 million, and that growth was disproportionately in the south where rents are higher. In November 2008, the southern half of England provided 49.6 per cent of claimants and the north and the midlands provided 50.39 per cent. By March 2010, the share of the south-the high rent, higher HB area-had risen from 49.6 per cent to 52.27 per cent and that of the north and the Midlands had fallen proportionately. That is why the LHA bill rose. Had the case load numbers and composition stayed the same, the rents paid by LHA would have fallen by 1 per cent, not risen by 3 per cent. There is no inflationary loop back. The Minister's argument rests on that fallacy.

Why have more claims and claims for higher rents been made in London and the south-east? It is because of what is happening elsewhere in the housing market. Every year those who cannot enter owner-occupation, who increase the pressure on rents, and those who cannot enter social housing, who increase the pressure on HB, flow into the private rented sector. They are those in low-paid work, the disabled or the elderly. It is a sort of perfect storm. Owner-occupiers who cannot find the deposit are now lingering in the private rented sector for five or 10 years longer than they would have done a decade before. Council waiting lists have grown hugely as stock dwindles with sales while new build is simultaneously slashed, so social renters linger 10 or more years longer in the private rented sector as they wait and hope. Instead of the private rented sector being a transitional tenure, it is now often a long-stay tenure. Newcomers flow in, but existing tenants do not flow out. That is why rents rise.

Problems in matching supply and demand in the other two sectors-owner-occupiers and social housing-are experienced as huge pressure on the private rented sector. Increase in that demand is far exceeding the modest increase in supply. With six, 10, sometimes 15 applicants chasing every PRS letting, landlords do not have to let and they do not and will not let to people on LHA. They have a choice. They do not let, they do not want to let and they have said so loud and

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clear. In addition, PRS rents are rising fast as a result of this pressure. Savills says they rose by 6.6 per cent in the past year, and some forecast even higher rises next year, at a time when CPI, although rising, will rise by far less. Therefore each and every year the gap between what will be covered by the local housing allowance and the rents actually being charged will widen. It is now at the 30th percentile. In three to five years it will slip down, probably to the 20th percentile. In six or eight years or so, it will slip to only those at the 10th percentile, making 90 per cent of privately rented homes unaffordable. In 10 years, in much of the south-east there may be virtually no affordable private rented sector accommodation for those on HB. We have had examples from Winchester where I think there is probably none. In the next decade, we expect only 5 per cent of two-bedroom flats in Manchester will be affordable to tenants under private HB.

Looking backwards, between 1997 and 2007, rents increased by 70 per cent and CPI by 20 per cent. That is the gap. Because benefit was not operated by CPI, that gap was far narrower. In future, if that gap is to be replicated, people on the 30th percentile will be forced down and down until in various towns and cities virtually no private housing will be available. That is what I fear. I hope I am wrong but I doubt it. We need to know because the stakes for those on HB are far too high to leave it to the abstract economic theory of the markets. Forty per cent of those in the market may find themselves priced out because they have no leverage. For too many landlords, HB tenants are becoming the tenants of last choice.

Alex Fenton's Cambridge research shows that if tenants try to meet the resulting shortfall themselves, 60,000 families and their children will be in severe poverty and well below the poverty line. He thinks it is possible that 200,000 families will face evictions. He, too, may be wrong, but on behalf of vulnerable people we cannot afford not to know. We must keep this situation under review, so every two years we must restore the LHA level to the 30th percentile that the Government intend and not allow a downward drift to increase the cuts that fall on those least able to bear them.

I hope that the Minister is willing to engage in that tracking and research, and to ensure that every two years we restore the policy intention of this legislation. All Ministers have an obligation, which I am sure he welcomes and shares, to ensure that the purpose and intent of legislation is respected. If there should be any deviations or additional factors, they should be able to bring it back to its original intent. All we are asking is that there is a measure in place to ensure that the legislation proposed by the Government will persist and not find itself drifting down, to the cost of homeless people across the country. I beg to move.

Lord Best: My Lords, as we would all expect, that was a comprehensive exposition in support of the amendment. We will read Hansard and have an encyclopaedia of the issues, which will be enormously helpful.

If rents go up by more than the amount that people receive in benefit, will it lead to homelessness? Is that scenario likely and will it create serious problems in

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the future? Will rents go up by more than the amount available to pay them, leaving people with a serious problem? The Minister has said that it is hoped that rents will be kept down by the restraints on housing benefit and the restraint on housing costs that are helped by universal credit. Rents through these measures, which are so controversial, will be restrained, which should mean that increasing the support for tenants on the basis of the CPI does not hurt anyone too much because rents are relatively static. That may happen. In some parts of the country, so many people are dependent on housing benefit that, like it or not, landlords may have to tailor their rents to the level that is paid through universal credit and housing benefit for their tenants. Landlords may be pressured into keeping their rents down.

In other places, it seems improbable that this will happen. If rents do rise, they will get further and further away from what people have available to pay them. In London and the south-east, we have already seen rents going up by a lot. Noble Lords may ask whether it is possible that rents can keep on exponentially increasing in the way that they have, or whether they are bound to flatten out. An awful lot of people who would have been home purchasers-first-time buyers-are becoming and staying tenants.

4 pm

These people have a higher income. They could have bought were it not for the fact that they are required to pay a deposit of perhaps £35,000 or £40,000-far too much for them to accumulate. However, they have the money to pay in rent if they have to. It might have been a much better option for them to buy but they do not have the resources. These are an extra ingredient in the marketplace in London and the south-east, which mean that this extra group will be able to afford increased rents, which means that landlords will be able to turn away those who are dependent on benefits and accept this new expanding group. This means that it would be unwise to speculate that rents will be restrained by the housing benefit cuts and the measures that we have all been talking about. It seems quite probable that others will replace those tenants. Landlords can be choosy, particularly in London and the south-east. The impact on poorer households will therefore be as bad as many of us have feared.

I was extremely grateful to the Minister for agreeing to set up a substantial independent review of the impact of the housing benefit cuts on families, poverty and local authorities. The exercise will be extremely helpful. It has involved the Institute for Fiscal Studies, the University of Oxford, the University of Sheffield and Ipsos MORI in a comprehensive way. It will be an excellent piece of work, from which we will be able to discover the exact impact of these cuts. It would be very helpful to get a commitment from the Minister, however it is phrased, that if this review shows that, in at least some parts of the country, rents are moving upwards and getting out of line with the basis on which there is an increase in the amount given to tenants to help them pay their rent, that gap will be addressed. In this way, among others proposed in the amendment of the noble Baroness, Lady Hollis, payments to tenants would always be restored according to the

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relationship to rents being paid in the marketplace, rather than getting out of line. That would be an enormously helpful commitment in advance of receiving the results, which may show that it is unnecessary and that increasing rents in line with CPI is enough to keep payments to tenants in line with what they face in the real world.

Baroness Wilkins: Could the noble Lord remind the Committee when that review is likely to report?

Lord Best: The review is in three parts. We will get an interim report next spring, a more detailed report this time next year and a final report two years from now. All these reports will be helpful in building our knowledge and understanding. However, they will be of value only if the Minister will do something about the results that come in.

Lord McKenzie of Luton: My Lords, we support these amendments in the names of the noble Lord, Lord Best, and the noble Baroness, Lady Hollis, for the reasons that have been very clearly set out. Indeed, these are modest amendments; they do not carry a major price tag. Certainly, the commitment to a review of what is happening to housing costs in relation to uprating amounts is absolutely crucial. There is the concern that there will be a growing mismatch between levels of housing support and rent. If that is the case, inevitably arrears will grow, personal debt will increase and homelessness will rise. Our briefing on this issue suggests that as many as 1.4 million local housing allowance claimants could be affected, with an average reduction in entitlement of just under £300 a year.

As we have heard, a particular concern is that the use of CPI for uprating the local housing allowance, which is planned to be carried forward into the universal credit, will lead to ever-widening disparities between the level of rents and that of housing support allowance.

The debate is not intrinsically about whether CPI is a better measure of inflation than RPI, although there is an argument about that generally in relation to benefit uprating. On housing, the debate is about whether it reflects what is actually happening to rent levels in the private sector. Currently, levels of support are generally determined by what is happening in each broad rental market area. There are disputes or arguments at the moment about whether those areas are properly drawn; indeed, there were two earlier housing benefit rent restriction regimes-the local reference rent rules and the pre-January 1966 rules-but I understand that those are going to be subsumed into the general uprating under universal credit.

We have heard from my noble friend Lady Hollis that between 1997-98 and 2007-08 average rents increased by 70 per cent, while over the same period CPI increased by only 20 per cent. The point has already been made that the Government are looking to score significant savings from the proposed link with CPI, and there is a question about whether the cost of that will fall on landlords, as we have heard, or on tenants. Is not the evidence to date that it will fall on tenants? The evidence of downward pressure on rents that these changes generally to housing benefit would cause is simply not coming through.



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I reinforce the question posed by the noble Lord, Lord Best: if as a matter of fact it is demonstrated in due course that private sector rents are not responding to downward pressure as the Government anticipate, and if the Government can be convinced that there is a growing disparity between the basis of uprating and what is actually happening to rents, will they change course on this?

Part of the Government's argument, as I understand it, is that simply uprating by one factor adds to simplicity and sits easily alongside the uprating of other benefits. Of course, that does not take account of the fact that we are not dealing here with one single housing market. There is a whole range of housing markets in different parts of the country; even within different parts of the country, there are different pressures and considerations on what is driving rent changes.

I want to ask the Minister about another issue. As we have discussed, housing allowance levels are currently set on a monthly basis. Once the system of uprating by a single index is in place, what will happen to the valuation office capacity that is currently engaged in that task? If in due course it were agreed that we should return to some basis of evaluating local housing allowance support on the basis as computed at the moment, with valuation offices looking at what is happening in individual markets, will the capacity be there in future to do it if you have already moved down the path of eschewing that process and simply use a CPI uprating?

What would the relevance of the 30th percentile be in future for new claimants? Is it proposed that they would look at the original 30th percentile figure that was subsequently uprated, irrespective of any changes that may have taken place in the broad market area that generated those figures initially, and ignore what regeneration development there has been in those areas? Is it proposed that monthly percentile figures will still be produced? It is inevitable, if we go down the path of a single factor applied across the board to changes and uprating in local housing allowance support, that we are going to drive uncertainties, concerns and disparities in the market, particularly a growing gap between local housing allowance levels of support that people get and their actual costs. This is in the context of a whole raft of other measures which are applied before we deal with the uprating: the move from median to 30th percentile and the caps on overall levels of benefit and individual levels of rent depending on the size of property. Those have all been applied first, yet on top of them is the real risk that the CPI uprating will impose even greater restrictions than those individual, supposedly carefully crafted ones introduce to bear down on housing benefit levels.

The key question for the Minister is: in the event that the evidence shows that the level of support generated by CPI uprating or any other means is moving significantly away from the changes in cost that people are actually having to bear, will the Government move back from that approach? Will they adopt a changed stance?

Lord Freud: I should start by reminding your Lordships of the context of this: the rapid growth in housing expenditure over the last decade, in cash terms from

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£11 billion to £22 billion-up 50 per cent in real terms. Our efforts here are to try and get control of that marketplace. We need to do more than what this amendment proposes to limit the growth in benefit expenditure on housing and avoid claimants being trapped on benefits by occupying housing that they could never afford in work.

On the questions raised by the noble Baroness, Lady Hollis, effectively on whether housing benefit drives the market, the simple fact is that some 40 per cent of private sector tenants receive housing benefit. Effectively, we inject into that market some £8.8 billion each year. Clearly, the way that we do that inevitably has an impact on how that market behaves. I accept that it is a very complicated market and it is not a straightforward matter to influence. The noble Lord, Lord Best, essentially made that point on the complexity and the uncertainties involved in trying to get a market response.

In some areas where local rents are particularly expensive, we will cap the maximum that private sector tenants can be paid for the housing element of universal credit. That will effectively ensure that claimants encounter the same choices about affordability as are available to working families. All noble Lords are aware that there is a fundamental issue here in the supply of housing. We announced in July that 146 providers of affordable housing will deliver 80,000 new homes at affordable rent and also affordable home ownership with government funding of just under £1.8 billion. Shared ownership will be available where appropriate to local circumstances.

The affordable housing statistics released earlier this month on 5 October showed the highest numbers of additional affordable homes being delivered over the past year since the mid-1990s. Our efforts to get Britain building again continue with a £4.5 billion affordable homes programme set to exceed expectations and deliver up to 170,000 new homes over the next four years, compared to the 150,000 originally estimated. The Government are creating the conditions to get the house-building industry building again. We recognise the particular challenges that first-time buyers face at the moment.

Lord Foulkes of Cumnock: If the Government are doing all of this, why has the Minister not been able to persuade any Conservative Back-Benchers to come along to the Committee to support him, by their presence if not by their contributions? Is that maybe why the Government Chief Whip wanted the Committee tucked away up here, so that we would not expose the lack of enthusiasm for this issue among Conservative Back-Benchers?

4.15 pm

Lord Freud: That is rather hard on the Conservative Back-Benchers who have been attending regularly.

Lord Foulkes of Cumnock: Name them.

Lord Freud: If you want me to, I can name my noble friend Lord Skelmersdale, who has been regularly in his place. If the noble Lord would like me to, I can

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name my noble friend Lord Boswell, who has been regularly in his place. My noble friend Lord Newton apologised to me because he cannot be here. He said I might be pleased. I can assure the noble Lord that there is great enthusiasm for this Bill among Conservative Back-Benchers.

Lord Foulkes of Cumnock: As the Minister rightly said, when he was here the noble Lord, Lord Newton, who is a former Secretary of State for Social Services, was not always enthusiastic about what the Government are proposing. Of course he has his surrogate Members, the Liberal Democrats, coming along and walking the tightrope, but it would show some Conservative enthusiasm if Back-Benchers were here to listen to the Minister and perhaps to be persuaded by my noble friend Lady Hollis from time to time.

Lord Freud: Now we hear the nub of it. The noble Lord wishes that all Conservative Back-Benchers should have a good dose of the noble Baroness, Lady Hollis, to get them into the right frame of mind. This is good fun, but we have business to do, so let us get back to it, although I am now completely distracted from what I was going to say.

I was talking about the way we are supporting first-time buyers with First Buy, which will help 2,500 aspiring home owners by spring 2013. First Buy will maintain capacity in the house-building industry in the short term and support 5,000 to 10,000 net jobs in England in 2011-12 and 2012-13. Those are measures to help first-time buyers back into the market.

My core response to this amendment is that, bluntly, it is unnecessary. As I have said, we are committed to making savings from the CPI measure until 2014-15. After that, if local housing allowance rates are clearly out of step with rents, they can be reconsidered. I have made that clear in the past. It will be up to a future Government to decide how LHA rates will be set from the end of that spending review. I do not believe there is a substantial difference between the parties on this. I was interested to see that Liam Byrne for the Opposition during the Budget debate said that where,

This is a response to the crisis. It is not exactly the same point, but a parallel point, and the true difference between us is having set it without a formal adjustment to the process. I accept the point made by the noble Lord, Lord Best, that in the long run there is a difference between how rents move and how CPI moves, so clearly it will need to be looked at very closely then. Even more than that point, we have commissioned independent research to evaluate the impact of reform to housing benefit, as the noble Lord, Lord Best said. That is a very good and very fine review. I am extremely pleased to have it. I think it will be the most interesting piece of housing research we have ever seen in this country, and I am proud to have been able to find the funding for it. As he said, we will be getting the initial findings next spring and consequently they will be refined over the next year or so. Clearly we will take those findings very seriously. I am not going to make a formal commitment here about that, but we will take those findings very seriously.



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In response to the question of the noble Lord, Lord McKenzie, about the role of rent officers and the capacity in that area, we will still need rents in the local market to be tracked so there is likely still to be a role for rent officers in dealing with the residual cases that do not fit within the mainstream local housing allowance rules. So there is a dual reason to maintain capacity in that area.

Lord McKenzie of Luton: Will they publish rent levels on a monthly basis as they currently do?

Lord Freud: My Lords, I am not sure. We have not established the exact arrangements about how that will work at this stage. I will let the noble Lord know when we have them elaborated.

I hope the noble Baroness, Lady Hollis, will agree with the necessity of controlling the level of rents paid, both to limit rises in benefit expenditure and to avoid trapping claimants in the benefits system. I further hope that she will agree that the safeguards that I have outlined are sufficient. For these reasons I urge the noble Baroness to withdraw the amendment.

Baroness Hollis of Heigham: My Lords, I am grateful to the noble Lord, Lord Best, and my noble friend Lord McKenzie, as well as to the Minister, for their replies.

The noble Lord is betting the bank on landlords cutting or controlling rents in the future. We are seeing caps on housing benefit in total, as my noble friend said, and a reduction in financial support for rent to levels of 30 per cent rather than 50 per cent of private rent averages. This will be lifted only by CPI, which is well below everything that we know has been happening to rent levels. Leaving aside the caps at the top end, which is a central London problem, we find that both factors-the reduction to 30 per cent on the one hand and the uplifting only by CPI on the other-will bear heavily down on what tenants can afford to pay for the rent they are expected to face. Therefore the Minister is betting the bank on landlords cutting their rent accordingly. I am sure that in some places they will; I am sure that at the bottom end of the market, where anyone who is not on benefit does not want to live, they will have to cut to fit. We can be fairly sure that some of the grottiest, poorest and most sub-standard of housing may remain available to tenants as a result-but even that will become reduced in supply if, as we fear, the gap between what tenants are able to pay and what landlords can get on the open market widens. The Minister is betting the house on the fact that it will not widen. If he is so confident, he can afford to track it. If he is right, I will be genuinely pleased. I want tenants to have decent accommodation, as we all do, at an affordable price; we do not want to see hidden subsidies going to landlords unnecessarily. Why is he hesitant to track it? We want the information. He needs the information to see whether his policy is right. He must get that research loop back into his policy. He says it can be reconsidered after 2014-15; all we are asking is that it will be reconsidered after 2014-15. Will he take that on board? If he does not, how can he justify calling his policy evidence based if he does not have the evidence because he has failed to collect it in time for us to reconsider it, if necessary, in 2014-15?



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Lord Freud: It might help the noble Baroness if we clear up the meaning of the language here. When you reconsider something-if you can reconsider it-you need to look at the information that will allow you to reconsider it. Reconsideration implies that you change something. I do not think there is a difference between what we are talking about. I have said that we will look at this matter very closely at that period and, if necessary, we will be able to reconsider it. I am trying to say to the noble Baroness that we are doing what she wants. It may not be in the exact format that she wants, but I have essentially assured her of a process that satisfies her amendment.

Baroness Hollis of Heigham: I am grateful to the Minister. We are passing each other by on the word reconsideration. For me, reconsideration does not mean that you will change, but that you will reconsider the evidence. You can call it consider the evidence, you can call it reconsider the evidence, I do not mind. What I want is a guarantee, if I can put it that way, which I hope the Minister has effectively given us, that over the next couple of years we will reconsider the issue and therefore consider the evidence to make sure that the policy intent of the Government that we cap private rented sector housing allowance at the 30th percentile of rents is continued.

The noble Baroness, Lady Thomas of Winchester, has already shown her concerns about what is happening in Winchester. Many of us have the experience in the south of England that already the Minister's hopes are being disappointed. If his understanding-and my understanding is the same-is that the evidence will be looked at to see whether the policy objective that the private rented sector housing allowance can be kept pinned to the 30th percentile, I am well content. That is the assurance I am seeking, and also that the Minister will ensure we regularly review the evidence to keep it pinned to the 30th percentile rather than, as history suggests, letting it drift down and depart further from that figure with no mechanism to reconsider.

Will the Minister make it clear that we are indeed saying the same thing-that the Government will keep under review and, if necessary, reconsider the evidence behind their commitment at this stage to a 30th percentile private rented sector housing allowance?

Lord Freud: It is worth dealing with this issue now and making absolutely clear what is happening. We are having one of the best, if not the best, housing reviews taking us into the middle of 2013, which is your first two years. That will be available and then the next stage will be the end of the spending review, which is fortuitously roughly two years later, where I have said there is a point of consideration, reconsideration or what have you. I think that is exactly what the noble Baroness, Lady Hollis, is looking at.

Baroness Hollis of Heigham: Sorry, so the Minister is saying he will be reconsidering the evidence in two years' time?

Lord Freud: Yes, because by the middle of 2013 we will have some of the best evidence we have ever had and I will look at that very closely.



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Baroness Hollis of Heigham: I am grateful to the Minister for that elucidation and, with the committee's consent, withdraw the amendment.

Amendment 47 withdrawn.

Amendment 48 not moved.

4.29 pm

Sitting suspended.

4.40 pm

Clause 11 : Housing costs

Amendment 48A

Moved by Lord Whitty

48A: Clause 11, page 5, line 29, at end insert-

"( ) Inclusion of the housing cost element in the calculation of universal credit will not be implemented until after the Secretary of State has conducted a review of all aspects of state support to housing, housing benefit and council tax benefit and has reported to Parliament on the outcome of that review, and that report has been debated by both Houses of Parliament."

Lord Whitty: My Lords, I shall also speak to Amendment 48B. There are some other amendments in the name of my noble friend Lord Kennedy.

In some ways I am hesitant to return to a subject on which I commented in the last, very lengthy and complex group that we considered the other night, because there was an amendment tabled by my noble friend Lord Kennedy that dealt very much with the same subject. I shall attempt not to repeat all my arguments in our previous sitting, but I am afraid that I shall have to repeat some of them. Indeed, the exchange between the Minister and my noble friend Lady Hollis, immediately preceding the brief break that we had, seems to give greater weight to what I am saying and indicates that the Government are, or appear to be, at least two-thirds of the way down to what I am asking them to do in these amendments.

My centre of contention is that this is a monster of a Bill and a huge problem for the Government to deal with. We have seen the complexity of the impact of their proposed changes on the housing costs element on the different groups and their differential effects. My argument the other night was that there is a difference between the housing cost element and every other part of the welfare system that we are trying to take into the universal credit system. All the other parts relate to the circumstances of the individual or the household. Housing costs-housing benefit as is-relate to that but also to the particular housing market, by type of tenure and geographical location in which the particular household finds itself.

That is a different basis. We can see, as another of the exchanges between my noble friend Lady Hollis and the Minister indicate, drastic differences in different parts of the country and in different types of tenure on how costs are moving and the relevance of the housing benefit level that is now being proposed, compared with the reality of the rents or housing costs structure. The Government are proposing huge other changes in the Localism Bill and elsewhere in relation

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to tenure, housing revenue and the whole management of social housing. The Minister briefly alluded to their targets for more affordable homes, which I applaud. I applaud the Prime Minister's announcement in Manchester the other week about increasing the number of homes, although he did not give any great details about what leverage he had to reach those targets. The Chancellor announced that he would extend the right to buy but without any indication as to what he would do with the proceeds and whether that would increase or decrease the supply of affordable housing as a result.

Housing market issues are addressed both by the Government in CLG and by reference to the banking system, which seriously affects the top end of the market. If people cannot get credit for mortgages it has a downward cascading effect on the rest of the forms of tenure. That is a huge problem for the Government. I am not pretending that the previous Government got it right; they certainly did not. But it is worse and the Government recognise that there is a serious problem. How you then apply the household subsidy to a rapidly changing housing market and bring it at the same time into a universal benefit is an incredibly difficult problem.

Reference to the concession that the Minister made to the noble Lord, Lord Best, some time ago relating to the review indicates the size of the problem. The Minister has described that review as the best since Roman times in terms of assessment of what the housing needs of the population are. If that is the case, surely he should be prepared to accept my amendment, or something like it, which says simply that we need to decouple the housing costs element from the rest of this Bill, or at least give the Government the opportunity to do so and allow for a major review on the totality of housing policy before we finalise the provisions on the housing cost element.

That is all the amendments are asking for. The Minister indicated that the review will take us to 2013 before we will really be able to assess the position and drive something logically from that which will apply to the benefits side of the equation. If that is the case, he needs full scope to take a different course on that part of the welfare system from the other parts. He may say that under the commencement provisions at the back of this Bill he has a bit of flexibility anyway. But I am also asking to write into the legislation that we conduct that review of the totality of the scope of the housing policy and take it into account before finalising those provisions.

4.45 pm

My noble friend Lord Touhig asked the Minister's colleague a Question this morning on the risk to this whole project. It was interesting to learn that the Treasury did not have a risk register, which probably explains quite a lot. However, it was also clear that the main concern in the House was about the IT implementation of the Bill. I agree with those anxieties. My noble friend Lord Knight will have something to say about them a little later, as he did this morning. However, before we get to the implementation there is a risk to this project in that we do not have a coherent approach to housing policy in

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order to write the specification for the IT implementation of this system. If the whole of universal credit provision requires us to get that right, it endangers the whole project.

I am arguing here that the Minister should accept that the housing side is so complex, and has such multiple and differential effects-on the markets, the credit system and the welfare side-that before the Government take a coherent view on that, it would be wrong to go into quite as much detail on the housing costs element until we have been through the review. I have not yet seen the full terms of reference but I hope the Minister is right and that this will be a very thorough review and one of the best that the Government have ever undertaken into housing. I look forward to it and will congratulate the Government if that is the case. However, they must follow the logic of that. If that is the case, and it is a fundamental review of the kind that the Minister claims, it has profound implications for the Bill, how we deal with it in this House and how the Government implement it thereafter.

Therefore, I strongly suggest that the noble Lord accepts at least the principle of these amendments, even if he is not prepared to accept the exact wording. I do so because most, if not all, of us in this Room believe that the housing cost element should eventually feature in the universal credit. However, it will be a very difficult and fraught path to get there. On the one hand, it could upset the housing market if his assumptions about the level of private rented sector rents are wrong, or indeed if they are right in certain respects. On the other hand, it could differentially affect many of the very vulnerable groups that we have been discussing. If the Minister gets any of that wrong, he discredits the whole project. Therefore, the Government have to take what is suggested here very seriously. Let us move housing aside on to a slightly different track with the same ultimate goal; have the review that the Minister is talking about; come back and consider it; and then finalise the way in which the housing cost element will move into universal credit. I beg to move.

Baroness Donaghy: My Lords, in supporting the two amendments of the noble Lord, Lord Whitty, my point is much narrower than the issues that he raised. I shall concentrate on the administration of the housing cost element and urge the Government to retain the skills and knowledge that exist in local government. I speak as a past president of NALGO, one of the forerunners of UNISON. I was also a representative of UNISON on the TUC general council for the first seven years of its formation. However, this is not trade union special pleading, since it has the support of the Local Government Association and various other organisations.

UNISON has 20,000 members working in housing benefit services. It is important to emphasise that those services are provided by housing associations and private contractors across the UK as well as local government itself. The staff have the necessary skills and local knowledge to provide an excellent service. There is no reason why the housing cost element could not continue to be administered at this level. The validating exercise involves many documents, including

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tenancy agreements, which, if posted to central venues and misplaced, could cause havoc in the lives of individual claimants.

Despite the Minister's assurances at Question Time this morning, and as the noble Lord, Lord Whitty, said, some of us do not believe that the claimed level of computer literacy exists to make the proposals in the Bill work. There will still be a need for face-to-face assistance, and who better to deliver this than the staff currently providing the service? Those of us who are hard-of-hearing are very grateful when we have a meeting in this room, where the loop is working very well. We come to dread going in certain committee rooms where it does not work and we cannot hear. How much harder it is for those trying to make phone calls to public services, especially when you have to choose from five different pathways and, if you miss one of those, you have to start all over again. We often need face-to-face support that those with normal hearing perhaps do not.

If local authorities retained responsibility for the housing cost component of universal credit, I feel sure that they would work closely with the DWP to deliver the best possible service. This view is shared by the Institute of Revenues, Rating and Valuation, CoSLA, the Scottish Government as well as the LGA. The District Councils' Network of the LGA found in a recent survey that councils had face-to-face contact in 25 to 80 per cent of claims. This helps to reduce errors and speed up claims for vulnerable people. A single overpayment or underpayment can generate real administrative and personal difficulties for individuals.

I mentioned earlier external contracts. Possibly 16 per cent of local authorities have external contracts to deliver housing benefit, some of which are for between four and eight years. Sometimes, they are administered as part of a larger strategic outsourcing contract, such as with British Telecom, which can be for up to 20 years.

Finally, I am extremely concerned about the welfare of the 20,000 staff at present providing this service. The uncertainty and loss of morale cannot be good. If the changes proposed lead to job losses, they face the double bind of losing their jobs because of welfare reform and having to face claiming benefits under the new system. That is not an enviable position. I ask the Minister to consider my proposals.

Lord Knight of Weymouth: I support what my noble friend has just said. I set out at some length at Second Reading why consideration should be given to local delivery of the housing benefit element. I remind the Committee of the concern that I raised then about the information that claimants would be required to bring in to demonstrate who they were, their financial circumstances and so on. These are very important, precious documents. It would seem a sensible arrangement for them to be taken into a local office, much as you can take in documentation to the Post Office and get it checked for a passport application. Such a system could be in place in local council offices for that sort of documentation, and then feed into the IT system that we will, in time, discuss in this Committee.



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There is also the potential for council tax benefit to be integrated. An assessment for council tax benefit could be made at the same time as that for the housing element of universal credit. That assessment could then be passed back through universal credit processing for it to be included in the payment. Given that I made these comments at Second Reading, I wonder whether the Minister has had a chance to reflect on them. If so, perhaps he could enlighten us.

Lord McKenzie of Luton: My Lords, I should like to comment on some of the amendments. We touched on the issue raised by the amendments of my noble friend Lord Whitty at the end of our previous session. The fundamental point that he is making is right: there are major issues of public policy around housing. They interlock; they are integrated; there are consequences certainly for how support for housing is provided for in universal credit or any other benefit system. I agree particularly with his point that housing costs elements are not only a consequence of what happens in any policy area review but they also impact on its ramifications, because they have a potential impact on the market.

Notwithstanding that argument, I say to my noble friend that it would be quite difficult to unpick housing benefit, local housing allowances or whatever it is from the universal credit, although I have a question for the Minister on that. If you let the current system continue alongside universal credit, you would in any event need rules as to how they interact. I suppose that would be made easier if the capital rules for housing benefit pretty much align with what is proposed for universal credit-as I think they do. I think that the taper rules for housing benefit would also currently align with what is proposed for universal credit, so some adjustment would have to be made along the way.

However, my noble friend makes a fundamental point. If, after this review, when the dust has settled on it and the analysis has been undertaken, it is acknowledged that the current proposals for dealing with housing support were to change-in particular, if it were accepted that we move away from a single factor of uprating those allowances year by year and perhaps revert to something like the current system, where you look on a regional or other basis at actual rents-would the system cope with that? Does that fundamentally challenge universal credit and could it be encompassed? That is, by pressing the button on universal credit as planned, are we passing the point of no return if we wanted to re-evaluate how we deal with housing support? My noble friend seems to have a valid argument in the points that he raises.

My noble friend Lady Donaghy spoke particularly to the amendments that our noble friend Lord Kennedy tabled. Again, I have a good deal of sympathy with the thrust of these amendments, which really touch upon the practicalities of universal credit. I know that a lot of those are issues quite properly to be worked out along the way when we have made further progress, but we are only two years away from the start of universal credit: 2013 is a near time and I am sure that the Minister is feeling the heat. I missed Questions today but I thought that the Treasury had a risk

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register and I am surprised that it does not-I am sure that it will after this. It would be helpful to have some understanding from the Minister of some of the broad practicalities in how all this is going to work, particularly on the prospects of picking up these concepts of local delivery to which my noble friend spoke.

We know and understand the ambition for significant access to the system to be online and we would support that approach, but obviously it will not cover everyone. Those who access online will, presumably, necessarily all do it remotely from home. There may be some for whom face-to-face engagement prior to that is necessary and, presumably, notwithstanding the start in 2013, the existing systems will have to be maintained until migration to universal credit is complete in 2017. As I say, a start date of 2013 is now less than two years away. Powerful arguments were made for the expertise that resides in local authorities for dealing with housing benefit-their face-to-face contact and knowledge of council tax-quite apart from the ramifications of some of the contractual issues which would have to be unpicked if that approach is not adopted.

5 pm

It is not only an issue for local authorities. There are many employees in HMRC and DWP, as well as in the 379 local authorities, who will be directly affected by the proposed changes. Accepting that detail is to come, perhaps the Minister can this afternoon give us at least an outline of how the system will work on a practical basis. It will be the case that not all claimants will have access to online facilities and not all will be able to move to self-service models of operation without assistance, guidance and support. What type of support is envisaged and by whom does he see it being provided? Is it envisaged that it will be entirely paperless? As my noble friend Lord Knight said, there are issues about security, identity and the sources of information that have to be provided one way or another.

Another point flows from this. At the moment, when they are dealing with housing benefit or council tax benefit claims, local authorities do not look narrowly at just those claims. They liaise appropriately with social services and housing. It is increasingly joined-up working, not only within local authorities but between local authorities and, not least, the DWP. We also know that, despite some of its IT challenges, HMRC does joined-up work, and it should be an integral part of channelling people to the options programme of CMEC. In universal credit, we are joining up the payment, but what is going to happen to all these different levels of co-operation that exist to support people across different policy strands, not just the benefit strand? How is that going to be provided for and encompassed in the new world of universal credit?

Baroness Hollis of Heigham: My Lords, there is a distinction between local assessment and local payment. We discussed some of these issues on a previous amendment. Will the Minister confirm that you could have local assessment using existing local authority staff on a face-to-face basis so that they can deal with issues, such as concealed tenancies, which can only be known face to face? Given the ATLAS arrangements, that does not preclude the information being fed through to a universal credit payment in due course.



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Lord Freud:There are a number of amendments in this group, but before I start perhaps I should take this opportunity to tell the Committee that I said that I would make arrangements to have a full presentation on the IT side of universal credit and we have managed, at last, to get a date, which is 3 November. I will e-mail everyone with the precise time. As is always the way, it is a question of finding the room and finding the date and that is the reason it has taken a little time. I will go through the system, show the system, get some officials in and take everybody through it. I know that the cost of that will be that I will have a whole load of Peers designing the system. In that last debate, I could hear how enthusiastic a number of Peers are to help me. I enjoy hearing all the questions and issues raised, not least by the two people who used to sit in my chair in the department: the noble Lord, Lord McKenzie, and the noble Baroness, Lady Hollis. These are complicated issues of delivery. Will noble Lords forgive me if I do not go through them? If I started, I would spend hours going through these delivery issues. On 3 November, we will have a chance to go through them. We are trying to deal with the legislative stuff here. I will pick up the specifics. I will not go through some of the real detail of the delivery here.

Let me move on to housing support, which is clearly a critical part of universal credit because it ensures that claimants receive a single payment to cover a range of needs rather than the current confusing patchwork of benefits and tax credits. Bluntly, taking housing out of that would leave a huge hole in the concept of the universal credit. The support must be affordable to the taxpayer. We have probably had enough discussions on the reforms to housing benefit.

Clearly, paying universal credit through a single agency will reduce administration costs and simplify the experience for claimants.

Lord Knight of Weymouth: I am sorry to interrupt the Minister, but it is a disease of politicians to assert things in that way-to make a statement and say, "Clearly, it's more efficient". I do not know that it is always clearly more efficient to centralise. There are times when that can create inefficiencies because, as we know, some claimants have very complex personal circumstances, and it is very difficult to understand those without more local knowledge and without meeting people and talking them through. Could the Minister give us a bit of evidence for his assertion?

Lord Freud: My Lords, I think that I should probably explain my assertion rather than give evidence for it. I used the word "payment" very carefully. There are real issues about when and how you collect the information and who you collect it from. I was trying to avoid some of this because it is complicated, but one of the most important things about universal credit, which we have discovered as we do the feedback, is that going on to universal credit is an opportunity to change attitudes. That is one of the findings that surprised us most. People think, "This is what I used to do-now it is new, and I have to change my behaviours". It is an opportunity.

The question that we are looking at now-and this is just an example of the point that the noble Lord raises-is how we deliver that transformation best.

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What is the face-to-face element, and where should it be? What are the intermediaries that we can use? With regard to documents, we can use ID assurance through the post office and through the local Jobcentre Plus. We can use the local authorities. How we combine those tentacles out into the community and into our claimant base is clearly something that we are working extraordinarily hard on.

We have a payment method, which we will put it together and simplify, and then regularise how we maintain knowledge of people, both on a database and on face-to-face contact. We need to know at what point you need the direct face-to-face contact and what point you go on to purely electronic means. You do not have to have a computer nowadays-you can have phone and apps and various things. As we move forward there is a real complexity, and if I start on this subject I will make noble Lords very fed up, but I do not want noble Lords to think that I am blind to this area.

Lord Knight of Weymouth: I have to say that the Minister was just getting interesting.

Lord Freud: Let me continue now with Amendments 119 and 120, which would postpone the inclusion of support for housing costs in universal credit and pension credit until right at the end of the process in October 2017, four years after the introduction. Amendment 48B would effectively provide for the housing costs element to be implemented at a later date than the other parts of universal credit.

We are committed to ensuring a smooth transition from housing benefit, guided by principles of protecting claimants and ensuring business efficiency. Amendment 119 would mean that any claimants moving on to universal credit in the first few years after it is introduced would then need to go through a second migration process when their housing support transferred in October 2017. Furthermore, to avoid significant complexity we would have to amend the housing benefit legislation to align housing benefit with universal credit; for example, by aligning the treatment of income. I cannot accept the noble Lord's amendment. As we do not believe that it is desirable to delay the incorporation of housing support into universal credit, we certainly would not want to introduce such a delay for pension credit. Our plans will ensure continuity of support for pensioners.

Amendment 53B would specify that housing benefit, currently delivered by local authorities, would be abolished from October 2017. We have no intention of specifying in primary legislation the dates on which particular benefits will be abolished. We are currently developing our strategy for migrating claimants to universal credit. This involves more than 18 million existing awards of benefits and tax credits. We need to ensure that we have the flexibility to implement these changes properly, with due regard to staff and claimants alike. Housing benefit will only be abolished once all claimants have successfully been migrated to universal credit or pension credit.

Amendments 55A, 55B, 71A and 71B relate to the role of local authorities. We have already agreed that although universal credit will be delivered by the

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Department for Work and Pensions, it will draw on the expertise of colleagues in local authorities as well as HMRC. We will build on the best of what we do currently to deliver the new service, taking the opportunity to modernise and improve, to deliver better efficiency for the taxpayer and better service for claimants.

On the question of the noble Lord, Lord Whitty, about HMT's risk register, as was discussed earlier today in Questions in the Chamber, there is no specific HMT risk register which tracks projects. HMT works closely with colleagues in the Cabinet Office's Major Projects Authority to monitor the progress of all major projects. Clearly, universal credit is on the Government's major projects portfolio, which is essentially a compilation of the high-risk and high-value projects, covering 200 major projects with a total value in excess of £300 billion. The Major Projects Authority has been involved with universal credit right from the start of the process in 2010. As well as providing challenge through assurance reviews, it is involved in various levels of governance and is indeed represented on the programme board.

As we develop the detailed design, we will continue to work collaboratively with local authorities to develop their role, particularly in relation to local and face-to-face delivery. Although, as I said earlier, many claimants will handle their universal credit claim online, we will continue to provide a face-to-face service. We are looking at these issues as part of the end-to-end delivery service rather than in isolation. We are also working with local authorities in Scotland and CoSLA is represented on our senior stakeholder group-in response to the question of the noble Baroness, Lady Donaghy.

Baroness Hollis of Heigham: I am not absolutely clear what the Minister means by the involvement here of local authority staff. Is he saying that he expects that those tenants who need face-to-face help will continue to go to local authority housing benefit departments rather than to Jobcentre Plus?

5.15 pm

Lord Freud: My Lords, in response to the question from the noble Baroness, we are developing how we would integrate these processes. We are spending a lot of time with local authorities and have projects running to make sure that we get this integration right. There is a full process going on.

Baroness Hollis of Heigham: Integration of what with what, precisely?

Lord Freud:We are integrating the housing benefit process into the universal credit. Clearly, local authorities are and have been a key part of that process. We want to ensure that we build on whatever they have done rather than lose it. We take seriously the points that the noble Baroness made in her very good speech on this matter last week, and we are determined to get them right.

Amendment 71A would impose an obligation on DWP to transfer any staff from local authorities under the TUPE rules. It is too early at this stage of the

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programme to detail the resource requirements for universal credit and the single fraud investigation service. As we work through the detail, we will continue to work closely with local authorities to consider the impact on existing staff. Similarly, Amendment 71B would require DWP to compensate local authorities for any costs incurred owing to the transfer of support for housing costs to DWP. We are working with DCLG, the devolved Administrations and the local authority associations to bracket the full impact of these changes, but we have every intention of complying with the spirit of the new burdens doctrine set out by the Cabinet Office earlier this year, which states that any new burdens on local authorities must be fully funded by the relevant department. We will certainly not seek to impose any undue burdens on local taxpayers.

Finally, Amendment 103A would require us to consult local authorities and other interested parties on the removal of prosecution powers from authorities administering housing benefit or council tax benefit. We are already consulting fully on these measures. We have recently conducted a consultation exercise seeking local authorities' views which will inform the design of the new single fraud investigation service. The consultation paper outlined a number of options which would result in different implementation and running costs. Once an option has been chosen and design work begins, we will be in a position to calculate the costs and other impacts.

The noble Lord, Lord McKenzie, questioned me about the support for those who will not be able to access the online offer. Clearly, we will be developing a variety of ways into the system for people who have different capabilities. I am myself particularly worried about those who may have learning disabilities and are not used to using computers. We need to ensure that people in that category, who may have registered representatives, are addressed. We are addressing those issues. It is an important point which I fully accept.

We will continue to consult as these plans develop further. We will discuss and agree the best way to implement these changes. I hope that with this explanation, although I acknowledge that I have not described the whole of the universal credit, as it develops-wait until November 3-the noble Lord will withdraw his amendment.

Lord McKenzie of Luton: Can the Minister help me on one point? His response was very helpful, and we look forward to 3 November for more detail. As part of the programme, is there a communications programme to staff and local authorities? I know that you cannot inform them of every little twist and turn that you are thinking about, but two years out there are bound to be levels of concern about where this is all going to lead. We know that that is true within local authorities. If there is a process for reassurance, that might be useful.

Lord Freud: Yes, my Lords. I accept the importance of communication in this process. This is a large change-in my view it is a larger cultural change than an IT change-across many areas. We understand and acknowledge that communication right the way through from users back to local authorities is vital. As we lock down area after area, getting the communications

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right will be one of the important challenges. If we can get the context right, the chances of getting the cultural change that we are looking for will be much improved.

Lord Whitty: My Lords, I thank the Minister for his reply to the amendments, but I still do not understand why he is not prepared to accept the flexibility that they propose. The central problem is that Clause 140 allows the Minister to bring various parts of the universal credit system into play at different times. The only addition these two changes suggest is that there should be a review of housing before we do so or take a decision on it. He has conceded that we have a review of housing and that that ends in 2013. However, 2013 is, of course, the date on which we are bringing in the universal credit, so any conclusions from that housing review cannot be brought into play before that.

Lord Freud: My Lords, I did not address absolutely smack on that particular point from the noble Lord. The review that we have is of the impact of our LHA, shared accommodation and other changes. It is not a kind of total, all-encompassing review. I did not mean to oversell it in its breadth; I was selling it in its depth in terms of an econometric analysis of what happens in the market when you make changes. That is what I was selling as the best piece of work since Boadicea, whose impact on housing in London was even more negative than some noble Lords claim ours is. There is not a read across from that review to what we shall be doing in universal credit.

Lord Whitty: In which case, the Minister did oversell it, at least to me. I am glad he has backed off from that because it clarifies the situation. However, it makes the situation worse because I do not believe he will resolve these problems on housing until further analyses and further policy decisions have been taken on the housing market. However, he rejects that.

It was not clear whether he was leaving open at least a possibility for one of the other points in these amendments: having, as my noble friend Lady Hollis said, the assessment dealt with at a local level even though the payment may be centralised. That would seem a sensible provision. However, if you remove almost entirely the local assessment, the face-to-face and the help with IT, it will be another potential flaw in the process.

I thank the Minister for the proposed IT seminar. I was not entirely clear whether it will be a private briefing for noble Lords or a side step in the consideration of the Bill. Many organisations are, of course, extremely interested in how we are going to set up the IT system, and I do not know whether it is an open meeting or whether, at least, its proceedings could be provided to the wider world. Speaking only for myself, I may not be sufficiently IT literate to understand everything the Minister will say on that occasion but others might. It would be useful if those who have an interest in this field can also, either at the meeting or after the meeting, participate in those discussions. Clarification of that would be helpful. For the moment, I withdraw my amendment.



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Amendment 48A withdrawn.

Amendment 48B not moved.

Amendment 48C

Tabled by Lord German

48C: Clause 11, page 5, line 29, at end insert-

"( ) In relation to a dwelling of which the landlord is a local housing authority or a registered provider of social housing, regulations under this section shall not permit the housing cost element of the universal credit to be less than the actual amount of the liability in a case where a household includes a disabled child."

Lord German: Can we identify where the very annoying continuous F# is coming from in this Room and distracting me? I wonder whether it is possible to identify where it is and stop it.

The Deputy Chairman of Committees (Lord Haskel): It comes from the circulation of air. I have been in here before when it has happened. I think the engineer knows how to fix it.

Amendment 48C not moved.

Amendment 48D not moved.

Clause 11 agreed.

Amendment 49

Moved by Lord Best

49: After Clause 11, insert the following new Clause-

"Payment of housing costs

(1) This section applies to payments of the housing cost element of the universal credit.

(2) Payment of the housing cost element of the universal credit must be made to a person's landlord where that person has requested or consented to such payment in agreement with their landlord.

(3) Regulations made by the Secretary of State may prescribe the circumstances in which subsection (2) does not apply.

(4) Regulations made by the Secretary of State shall prescribe the person who is to be treated as the landlord for the purposes of this section and shall make provision as to the discharge of liability consequent upon the making of any payments to the landlord."

Lord Best: I suspect that this is the last amendment we are going to have time for, so we are on the home stretch. The good news for the Minister is that this amendment does not cost any money; in fact, it is going to save a great deal. It is about the direct payment of housing costs support to the tenant instead of, as is the current case, payment of these benefits to the landlord. The Government are keen for tenants who receive housing benefit, local housing allowance in the private rented sector or, in future, the housing costs element in universal credit to be given the rent money directly and then to take responsibility for passing it on to their landlord. This would increase tenants' understanding of the need for budgeting and financial discipline in the home and help them cope with rent payments if and when they get a job. However, it seems that those affected by this proposition-tenants,

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landlords, and, indeed, those who advise and support tenants and landlords-are united in opposing the concept.

A recent survey by the research consultancy Policis found that 93 per cent of tenants in the social rented sector wanted housing benefit to be paid direct to their landlord. It seems that those on benefit prefer the option of knowing that their rent has been paid, allowing them to budget for other expenditure in the knowledge that their home is secure. Citizens Advice, the Money Advice Trust, Shelter, Crisis and Homeless Link all oppose the idea of tenants being denied the right to choose for their rent to be paid directly to their landlord. These organisations are concerned to ensure that tenants do not fall into arrears and face the threat of eviction. The Tenants and Residents Organisations of England-TAROE-strongly support giving tenants the right to chose.


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