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It is also common ground that a reformed welfare system must make work in comparison to dependency benefits pay and be seen to be paid, and the current treatment of non-dependants can work against employment incentives for both the claimant and non-dependant. As I said, there are various factors that we have to juggle between decisions on non-dependants-the "touch wood" factor, taking in a lodger, and so on. These factors mean that the issue of non-dependants is complex.

I accept that the amendment is a probing one, but it would not work. However, we are considering it in detail, and it is an important area. It really goes to the heart of the simplicity agenda that we have, and I hope that as we flesh out the detail noble Lords will have something to which the expression "very intelligent" remains applicable. On that basis, I ask the noble Baroness to withdraw her amendment.

Baroness Hollis of Heigham: I am happy to withdraw my amendment. I absolutely understand that this is a work in progress, but we now have the draft regulations, which we did not have in Committee, which is why we are trying to probe to see where this goes. The problem could be that, were it not for the earlier amendment being passed, a couple in a two-bedroom place with an adult son could be regarded as underoccupied if the adult son was not counted as eligible for the room, whereupon their housing benefit would be cut-but, because he was in the House, he would be expected to cover not just their housing benefit but the cut as well. It is that Catch-22 situation that I am seeking to avoid.

It is not straightforward, and I understand that. I am grateful for the Minister's response. I look forward to an appropriate, acceptable and welcome solution to these dilemmas. I beg leave to withdraw the amendment.

Amendment 15 withdrawn.

Amendment 16 not moved.

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Amendment 17

Moved by Baroness Hollis of Heigham

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

"(4A) Regulations shall provide for-

(a) the frequency with which reviews of the relationship between increases in the rental market and the CPI will be conducted;

(b) the circumstances in which increases in the rental market and CPI will be deemed to have diverged;

(c) the circumstances in which there will be considered to be a critical lack of affordable housing;

(d) the circumstances in which this will lead to a change in the method used to uprate the housing component of universal credit."

Baroness Hollis of Heigham: I have a series of amendments on housing. This amendment calls for periodic reviews of the interconnection between CPI and rent levels. This is an issue that has concerned the whole House at different stages, including on the CSR Statement as well as in Committee.

We know now that the proposed deficit reduction programme, according to the Chief Secretary, will extend for a further two years at least beyond the general election. This amendment now takes on the added urgency that perhaps did not exist at the time when we discussed it in Committee. Local housing allowance, which I will call housing benefit, in the private rented sector is based on the 50th percentile of private rents, which should mean that half of all private rents are affordable on HB and half are not. It is a median. The HB, in other words, covers the average rent. We also know that the Government are reducing that 50th percentile to the 30th percentile, which means that 70 per cent of properties would be unaffordable but 30 per cent should still be so. We have argued that and resisted it, but the Government have insisted on their proposals. That is bad enough and will make it much harder to find a private rented home. But, in addition, HB to cover your rents up to the 30th percentile will rise only by CPI, not by the actual increase in private sector rents. Yet according to Savills rents are rising at the moment by more than 7 per cent a year, and CPI is only half of that-not this year but we expect it to be. Rents are rising on average at double the rate of CPI, mainly because of additional demand for private flats from young people for whom originally the flat would have been a transit tenure but who now stay there while they seek to save their deposit for a home of their own.

The Minister used to argue that capping HB would drive down rents. That is not happening, nor will it, because no longer do landlords have to let to HB tenants. Just as there are eight people after every job, there are eight tenants after most lets. HB tenants will get only what no one else will take: the substandard, the squalid and the downright unsafe. Any complaints and you are evicted after six months. Tenants will be forced into poorer and poorer accommodation. Worse, as I say, rents are rising at double the rate of CPI, so whereas now your HB may theoretically cover 30 per cent of available rents, in three years' time it may cover only 20 per cent, and in five years only 15 per cent. In more expensive towns such as Winchester, it is estimated that there will be nothing available to rent for anyone on HB within the next few years.

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This amendment is very simple. It requires that the Government's original policy intent-that HB in the private sector will allow the tenant the choice of the bottom 30 per cent of properties-continues to be respected and that the widening gap between the CPI uplift in HB and the actual rise in private rents does not invalidate the Government's intentions. In other words, this amendment simply asks the Government to ensure that they do what they say they want to do-no more, no less-and that we keep clear the policy intent, and that it is delivered.

In the past, the Minister has decorously brushed this aside by saying that it is outside the CSR period, but given the Chief Secretary's remarks, it is not any more. He also helpfully said in Committee on 20 October that,

It would be very helpful to know how this would be done, given the vagueness of the draft regulations. The Government should confirm whether reviewing the operating method will occur periodically or, if not, what will trigger it. This amendment seeks to get greater clarity in the regulations in order to protect the Government's own policy intent: that 30 per cent or so of private lettings should be affordable and available to those on local housing allowance. I beg to move.

Baroness Meacher: My Lords, I support Amendment 17, to which I added my name. As always, the noble Baroness, Lady Hollis, has comprehensively covered the issues and I will therefore take only a few moments of your Lordships' time to express my personal concerns about the issue.

The Government have a policy to reduce over time the percentage of GDP paid out in benefits to those on low incomes and those out of work. Perhaps the main mechanisms by which this will be achieved, though by no means the only ones, are the range of housing allowance controls to which the noble Baroness referred and the linking of housing allowance to the CPI, rather than to the rate of increase of rents themselves. The problem I have with the CPI link in particular, along with all the other controls, is that it is beyond the control of government how this plays out; hence the importance of these monitoring mechanisms that the noble Baroness has spelt out.

For example, if the euro collapses-it seems ever more likely that it may-and we have several years of recession or, indeed, deep depression with falling prices, do the Government have any idea how rents will respond in that situation? Because of the pressures of a growing population with more and more single-person households, as well as the limited stock of properties, particularly in London and the south-east, it is possible that rents may remain static, or even rise in the south-east, while other prices are falling. The Government assume that the downward pressure on housing allowances will ensure that in fact rents fall as well, but I am not at all confident about that. There is a huge private rented sector out there and as fewer young people can afford to buy, more and more of them will indeed move into that rented sector.

A very different scenario will be that once the years of fiscal tightening are over inflation could return with a vengeance, leaving a soaring gap between the RPI

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and the CPI-the prices claimants will have to pay in the shops on the one hand, and the CPI which will determine their housing allowance levels on the other. Of course, all these uncertainties will be there alongside a benefits cap, which may or may not be inflation-proof, and the need for many vulnerable people to adjust to a move from higher ESA to lower-level JSA. The Minister knows that I fear many vulnerable people will be included within that group, going down the slope towards the cheaper JSA. There is also the loss of disability benefits for children, the loss of tax credits and so forth, and the move to monthly payments if we cannot persuade the Minister that this will be the last thing that people are going to cope with. For all these reasons, I agree with the noble Baroness, Lady Hollis, that the House needs some assurance that there will be systematic and regular monitoring of the consequences of linking rents to CPI and on how the situation will be assessed and in what circumstances a change of policy would be regarded as appropriate.

I would also be grateful if the Minister could inform the House on a particular aspect of this issue. Shelter and the Chartered Institute of Housing estimate that the link between local housing allowances and the CPI will, by 2030, result in 60 per cent of local authority areas being unaffordable for LHA claimants. Undoubtedly, these will be the areas with jobs. Can the Minister say whether the Government accept this estimate and, if not, what the Government's estimate is? Whether or not he accepts the estimate, has the DWP undertaken an impact assessment of the housing allowances/CPI link on employment in this country? What particular impact on employment will this have?

If households have no option but to move to areas with very few employment opportunities, how much higher will unemployment be year on year than would otherwise be the case and what will be the costs of that higher unemployment for the taxpayer? These sorts of issues need to be incorporated within the ongoing monitoring and assessments of the impact of these policies, year by year. Within the Minister's response to this amendment, I would be most grateful if he could include some reference to the employment impact.

6.15 pm

Lord Freud: Noble Lords will be aware that we propose to limit increasing the local housing allowance in line with the CPI index from April 2013. The aim here is to ensure that we continue to exert downward pressure on rents while looking at rent levels in local markets. The limit will apply only in areas where local market rent increases, at the 30th percentile, exceed the annual rate of CPI inflation. We have said that we are committed to making savings from this measure up to 2014-15. If it then becomes apparent that local allowance rates and rents are out of step, they can be reconsidered.

To prepare for this change, the Minister for Pensions set out in the uprating Statement the arrangements for fixing rates. The first uprating will be in April 2013. We have taken this step to ensure that CPI rating can commence from April 2013, but that nobody will see their ongoing award fall at that point as a result of LHA rates being uprated. As the annual rates will be set well in advance, we will be able to provide clarity

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and certainty to claimants and landlords. We will continue to monitor the path of market rents until 2015 and the Secretary of State will be able to review the LHA rate, or uprate it by some other method, should the need arise.

As the noble Baroness, Lady Meacher, pointed out, the future is uncertain. Clearly, you can draw any scenario you like; the point is that we need to watch it and we will watch it very closely. In particular, we may need to increase LHA rates if growth in rents and the CPI are so out of sync that there is a critical lack of affordable housing. To pick up on the noble Baroness's other point on extrapolating out to 2013, clearly we all recognise that over any kind of longer-term run rents tends to move with average earnings, not with average prices. Any extrapolation out that long will have a big gap, but we are not talking about that here. We are talking about a measure which is locked in for that two-year period at a time of great difficulty when we are trying to bear down on prices. Therefore, I do not think it is relevant for me to hypothesise about employment levels. That is not what is happening here.

On the point about data and monitoring and what Parliament can expect from us, we will provide to Parliament on an annual basis from late 2012 the relevant CPI data and the data on the 30th percentile of market rents. In addition, noble Lords should be aware that the Valuation Office Agency currently makes available quarterly data on market rents by local authority.

I should point to the major piece of independent external research that is already underway to evaluate the impact of the reforms to housing benefit announced at the June Budget and the spending review. Indeed, I need to thank the noble Lord, Lord Best, for the way that he shaped that research effort. The research will be comprehensive and will be presented to both Houses and the public alongside a ministerial Statement. The department is currently considering how this research could be extended-subject, of course, to funding-to allow it to look at the impacts of changes to local housing allowance uprating over a longer period.

I hope that I have reassured noble Lords that we are committed to monitoring and evaluating this change really thoroughly. On that basis, I urge the noble Baroness to withdraw her amendment.

Baroness Hollis of Heigham: I am grateful to the noble Baroness, Lady Meacher, for her support and her additional probing and questions. I am more than satisfied with the Minister's reply, apart from one word. I wonder whether I could invite him to change that one word. He said that if the two tests, rent levels and CPI, are out of step, then they "can be reconsidered". I want "will be reconsidered". I invite the Minister to strengthen his position on that point. Everything else was lovely.

Lord Freud: On the basis that the noble Baroness is going to be incredibly helpful to me in all the consequent amendments in the Bill, I will change the word from "can" to "will".

Baroness Hollis of Heigham: I am very grateful and with great pleasure withdraw the amendment, knowing that our policy intent and the Government's policy intent will now be met. Thank you.

Amendment 17 withdrawn.

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Amendment 17A

Moved by Lord McKenzie of Luton

17A: Clause 11, page 5, line 23, at end insert-

"(4A) Regulations shall not permit any reduction of housing benefit or amounts included for accommodation in an award of universal credit in respect of under occupation, deemed or actual where-

(a) the landlord is local authority or registered provider of social housing, and

(b) any such landlord is not able to offer suitable alternative accommodation which would not cause a person to under occupy.

(4B) Regulations may make provision for determining when accommodation is suitable for the purposes of these provisions."

Baroness Anelay of St Johns: My Lords, first, may I ask a question of the Opposition at this point? There has been no claim that this amendment is consequential, and it clearly is not consequential. I say so in a spirit of wishing to elucidate information and explanation from the Opposition, and it is not necessarily overtly hostile, because the Opposition are looking rather puzzled. The Opposition have not at any time said that this is consequential. It is the view of the Government, on advice, that something that refers to regulations is so clearly not consequential upon the earlier loss.

I wonder if the noble Lord could say, for the benefit of the House and before the Minister is able to take a decision, why he considers it to be consequential.

Lord McKenzie of Luton: My Lords, I do not believe I considered it to be consequential, but I believe that we debated it as part of that first group. We had a wide group, of which this was part. I was not anxious to revisit that debate. If the noble Baroness insists that we do, perhaps we could set aside another couple of hours to do that.

Baroness Anelay of St Johns: My Lords, I shall respond in the same helpful measure. I am grateful to the noble Lord. The Chair put this as moved formally; that was the improper thing. I hasten to add that I know that the Chair was not trying to be improper.

Of course, I have to put on record that this is a separate matter. If the Opposition wish to press this to a Division, that is their absolute right, and I recognise that. However, the Government cannot accept Amendment 17A because it is not consequential, and the Minister clearly has not accepted it. I hope that that is an explanation which is a little clearer than mud.

Baroness Hollis of Heigham: My Lords, I am sorry to press this, but I understood that when the noble Lord, Lord Best, moved his original amendment, he accepted the additional amendments in the group as amendments to his amendment. He did this to ensure that his original intent regarding the one spare bedroom was modified by the extent to which there was available accommodation. If there was not, his standard would apply, but if there was, we would expect the tenant in due course to move. That was the debate.

Baroness Anelay of St Johns: May I very rudely interrupt the noble Baroness, Lady Hollis? I am reminded, of course, by those who know the rules well, that if we are to debate this amendment-which we are, albeit

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very briefly-it is right that the noble Lord, Lord McKenzie, should move it. I will, of course, be able in procedural terms to reply to the noble Baroness, Lady Hollis, and explain the position. However, perhaps the noble Lord, Lord McKenzie, for the sake of the formalities, might quickly like to move the amendment, and then we can deal with the process.

Lord McKenzie of Luton: If it has not been moved already, then I beg to move.

Baroness Hollis of Heigham: My Lords, my case then stands, in other words. I had understood that when the noble Lord, Lord McKenzie, spoke immediately after the noble Lord, Lord Best, he moved the additional amendments, which the noble Lord, Lord Best, had previously indicated he would accept as part of the position.

Baroness Anelay of St Johns: My Lords, I know that this is becoming an aficionado's debate, and obviously we have to make sure that we understand what is going on.

The noble Lord, Lord Best, made claims about what he considered to be consequential, and I know that he did so in good faith. However, it is not for the noble Lord, Lord Best, to tell the Government what the Government believe is consequential. As a matter of fact, Amendment 17A is not consequential. The noble Baroness, Lady Hollis, might find that I am about to be helpful, so she might wish to hesitate for just one moment. At least, the noble Lord, Lord Bassam of Brighton, the Opposition Chief Whip, might find that I am about to be a little more helpful.

Clearly this is not a consequential amendment. The noble Lord, Lord Best, may want to accept it as such, but it is not procedurally. The Government's view, if I can make it clear, is that the amendment is not consequential. We do not accept it as being consequential, and will not do so when these matters are debated in another place.

However, the Government have also seen the result earlier on. It is not the Government's intention to try to unpick some of the debate that occurred earlier. During that debate, at no time did the Minister accept that Amendment 17A was consequential. The position is clearly that when the matter was debated earlier on, other noble Lords felt that if the matter were put to a vote, they might wish to vote along the same basis, but that did not happen.

I am sure it will be to the confusion of noble Lords opposite, but the position, quite simply, is that the Government will not call against Amendment 17A when it is put. I hope that is helpful. The important thing is on the record; I make it clear that the Government will not accept this in another place. I hope the noble Lord, Lord Bassam, finds that useful.

Lord Bassam of Brighton: My Lords, I was waiting for those words, and that is why I had not made a procedural intervention. Having now heard what the noble Baroness has said, I will be content, for the orderly process of business, if the Government accept this. Of course, that is on the understanding that what

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happens in another place is what happens in another place. No doubt these things will be revisited upon us, as they usually are.

Baroness Anelay of St Johns: My Lords, for the avoidance of doubt, as I say, the Government do not accept the amendment. I will certainly ask my colleagues behind me-including the Minister, who must be wondering what on earth this is all about-that when the Question is put, no person on the coalition Benches calls against it.

Lord McKenzie of Luton: In which case, I think that all I need to do is to say, I beg to move.

Amendment 17A agreed.

Amendment 18 not moved.

Amendment 19

Moved by Baroness Hollis of Heigham

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

"(6) Regulations shall provide that where the award for housing costs is restricted to the shared accommodation rate, this shall not apply for a period of 52 weeks for any claimant aged between 25 years and 35 years, who is not an existing claimant of housing benefit."

Baroness Hollis of Heigham: I would like to continue the argument with the Chief Whip, but we will move on. Perhaps we will have this discussion outside on the difference between consequential, and the mover of an amendment accepting an amendment to the amendment. That is where the confusion may arise. The noble Lord, Lord Best, certainly did do so.

We discussed shared accommodation rent in Committee, and I have to say that one's worries remain. At the moment, if you are under 25, you are eligible for Housing Benefit for a room in a shared house. If you are over 25, you are eligible for Housing Benefit for a one-bedroom flat. The Government are proposing that from next month, if you are aged up to 35 rather than 25, after 13 weeks you will get housing benefit only for a room in a shared house, a house in multiple occupation. Some 62,500 people will be affected, losing on average over £40 a week-in London, over £100 a week.

6.30 pm

The amendment is a modest one, a breathing-space amendment. It does not seek to maintain the status quo, though I wish that we could do so. Who is this breathing space for? Say that you are 33. You moved a couple of years ago to a large city and still do not know too many people. You are living in a one-bedroom flat and are in work as a secretary. You have not built up many savings but are not claiming HB. Because your small company closes, you lose your job, but the amendment would stop you from losing your home as well. Instead, you would receive housing benefit for your one-bedroom flat for a breathing space of 12 months while you look for another job.

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Without the amendment, the person I am describing would be forced-in London, for example-to lose her one-bedroom flat and go into a house of multiple occupation because of the cost of £100 a week that she could not cover herself, yet 50 per cent of people on JSA like her return to work within six months, 75 per cent within nine months and 90 per cent within the year. The amendment would allow her to keep her flat with housing benefit for that breathing space of one year. If after that she had not returned to work, she would fall down to the shared-room rent and have to find somewhere else to live.

Why the argument for a breathing space? There are two reasons. The first is the upheaval factor. She would avoid a move out and then possibly, if she found work six months later, another move into a one-bedroom flat, each time spending perhaps thousands of pounds on curtains, carpets, a removal van, agency fees, deposits and the like.

It is not just about cost, even though that will be wiped out of her savings-it is about stress. Having lost her job, she is desperate to get another one and should not have to worry about whether or not she is going to have a home. In any case, she needs to stay in the local area. As we know, very few jobs go through Jobcentre Plus; most go through knowing people who know of vacancies as they occur.

If she loses her home, instead of focusing on searching for a job, she will be focusing on the search for a home. She has to; that comes first. Otherwise the choice is potentially a night hostel and, ultimately, a park bench. She will be stressed and pressured, and the strain for any of us in that situation without resources would be almost unbearable. She would be changing address, putting stuff in store, sorting out utilities, finding cash for a deposit and agency fees-all the clutter of an unwanted house move, at just the time when we want her to be focusing on the search for a job. Let her concentrate on getting the job; it is what she wants. If she gets one, she will soon be off housing benefit altogether and paying taxes on her salary, saving the state a long-term HB bill. It is in her and our interest to give her that breathing space of a year. I have calculated that within a year the amendment would save the Government more than they think they will gain from cuts to the group in her situation, because people like her will be off benefit and back to work sooner.

So the first reason for a breathing space is for her to focus on a job search, which is what will actually cut the benefit bill. The second reason is the type of accommodation that she would have to move to. If she is lucky, she may have friends with whom she can share or sofa-surf, having put all her furniture in store. If not, she will have to move to an HMO. The ones that you can afford on benefit are at the bottom end of the market because landlords prefer students or people in work. That, combined with the effect of the 30th of a percentile on benefit payable, means cracked WCs, trailing wires, missing light bulbs, flimsy doors, stained carpets, indifferent landlords and dirty common parts in the kitchen and hall-and if she complains, she will be evicted.

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If she is fairly lucky, she will find that she can share with some other like-minded women, but few women are in HMOs because they are neither safe nor salubrious. She will instead have a room in a shared house with strangers, sharing the kitchen and bathroom, at night walking down the hall to the bathroom in her dressing gown, hoping that she will not be accosted or assaulted. She will hear every sound through partition walls, protected only by a flimsy plywood door to her bedroom.

With whom will she be sharing? Most landlords can make HMOs work only with four tenants or more, usually unknown to each other. With luck, they may simply be younger men of student age, noisy, boisterous, boozy, chaotic, undomesticated, helping themselves to whatever is in the fridge and holding late-night parties with loud music. However, students in that situation would be able to afford something better, so instead she faces the much higher likelihood of sharing with other strangers-older men who have nowhere else to live.

It is mainly older men who live in HMOs. Why is that? I speak as someone who, as local authority leader and housing chair, tried to regulate them. Those men are in HMOs because they have been thrown out of the family home for violence; because they are ex-offenders, addicts or alcoholics; because they have been evicted from their previous flat for antisocial behaviour; because they have mental health problems; because they have substantial learning difficulties; because they have come off the streets from sleeping rough; or because they are dealing, and their so-called friends crowd into the kitchen to buy and consume. They knock on her door by mistake, perhaps shout at her through it, and she is terrified. Most men in that position could defend themselves; she cannot.

I fear that HMOs at the bottom of the housing market are warehouses for the marginal, the deviant and the drifter. We are requiring this woman, having lost her job through no fault of her own, to join them. The journey back to work will take far longer and be far harder for her as a result of what we have done. No woman in this House would want to be in this situation and no man would want it for his daughter, and if it is not good enough for us it is not good enough for her.

If I can show the Minister, as I am happy to, that the amendment would be at least cost-neutral and would probably give additional savings-I have worked the permutations on different possibilities-will he please take it away and think about it again? I am happy to share my financial figures with him now, later or in my wind-up. If I can show him that he will not make any losses on the amendment but it will either be cost-neutral or even make some surplus, will he offer to take it away and think about it?

Baroness Meacher: My Lords, I support Amendment 19. I have particular concerns. I fully endorse the point made by the noble Baroness, Lady Hollis, that when people lose their job it is unacceptable for them immediately to face not only the shock of being unemployed and the dramatic fall in their incomes but the prospect of having to move their home. Psychologists always say that it is important to avoid changing more than one of our three mainstays of security in any one year: employment,

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our main relationship and our home. The risks of mental health problems rise significantly if we do so, as the noble Baroness illustrated very well.

There is therefore a strong case for allowing newly unemployed people time to adjust before they have to think of moving home. Of course the hope would be that they would find work within that year and never have to move at all. I want to raise again a particular problem that to some degree would be assisted by the amendment. I raised this issue in my most helpful meeting with the Minister but have reason to believe that his assurances would not work as he thinks they would. The issue is that of people with severe mental health problems who may be absolutely unable to move into shared accommodation, either because they themselves could not handle having someone else around or because the situation would be untenable if not downright dangerous for anyone else trying to live with them. The Minister assured me that discretionary housing payments should deal with this problem. Perhaps in theory this might be the case, but apparently in practice it does not in fact work. Does the Minister regard it as right for sick people to be penalised when for therapeutic reasons they cannot move into a living space with someone else?

I have a couple of examples to illustrate the point. A woman in her early 30s, living alone in private rented accommodation, receives ESA because of her mental health condition. She already has rent arrears as her housing benefit does not cover her rent. She applied for a discretionary housing payment but this has been refused. She has now been told that her housing benefit will be cut further, of course, in January 2012, when she is only entitled to the shared accommodation rate. She finds it difficult to cope with other people, and could not cope with a shared flat, even if she could find one. The adviser who is dealing with her fears that she could become homeless.

The other example is of a woman in her early thirties with HIV and related health difficulties, including depression. She is regarded as being unlikely to receive a discretionary housing payment until she is 35. I do not know why, but that is what I am told. She comes from a traumatic background, needs regular access to her many medications, and to the bathroom. She is not regarded as someone who could cope with shared accommodation: again, a likely homeless person.

If these claimants finish up on the streets, they will no doubt end up on one of our hospital wards at a cost of £261 per day, £95,000 per year to the taxpayer. I realise that this is a cost to the Department of Health, and not to the DWP, but I know the Minister is broad-minded on such matters and will not want to cause a massive increase in Department of Health costs. I am serious about it. There might be a saving to the DWP, but a much bigger cost in the Department of Health. However, the noble Baroness, Lady Hollis, does not accept at all that there would even be a cost saving in the DWP. There would therefore be a double whammy. We already see people moving automatically from benefits, to losing benefits, then on to the streets, and then into hospital. That is the way the system works, and this measure will simply make matters worse.

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Apart from the inappropriateness of shared accommodation for some, though not at all every mentally ill person, there is also the practicality of finding such accommodation for this particular group. Someone with a mental health problem is going to be the last person many people want to share with. We know that the stigma involved is considerable. People are frightened, and they assume that people are dangerous when in fact they are not at all. But also, in reality, some people have difficult personal assumptions which would make them quite difficult to live with.

The result is that these people will not find shared accommodation readily, even if they could cope with it, and many absolutely could not. I know many people on our wards whom we could not discharge into shared accommodation. They would simply sit around on the wards, and it would be a problem.

I have focused on a particular claimant group, but an important one, in view of the numbers of these people. I hope the Minister will be sympathetic to the amendment, for all the reasons the noble Baroness, Lady Hollis, pointed out, but also because it would ameliorate the problem of this particular group of people with mental health problems who, with any luck, might over a year settle down rather further and then might be able to be accommodated within the system.

Baroness Lister of Burtersett: My Lords, I support the amendment tabled by my noble friend Lady Hollis of Heigham. She has painted a vivid and powerful picture of what this means for the people affected. I have sat through and participated in a couple of debates already about this, partly on the regulations, in Grand Committee. The more I have listened and read the evidence, the more uncomfortable I feel about us allowing this measure to go ahead.

When I was younger, I flat-shared. I answered the ads in Time Out, and it is a very different thing. I am sure that many noble Lords may have been in that position, and think there is nothing wrong in sharing accommodation. But doing it from choice is very different from being pushed into it. As my noble friend has spelt out, we are talking about less salubrious accommodation.

I am concerned about various groups who are particularly vulnerable here, as we have already heard. When the Social Security Advisory Committee considered this, it talked in particular about the way women will be affected. Women are not disproportionately affected as a group, but those who will be affected could be particularly adversely so.

There are two groups in particular. Pregnant single women, the advisory committee said, will be restricted to the shared accommodation rate until they give birth. They face one of three undesirable situations. They can move home twice, at a time when they may be financially, emotionally and physically ill-equipped to do so, into shared accommodation, and then back to self-contained accommodation when the baby is born; they can decide to move into shared accommodation and remain there after the birth of their child; or they can try to make up the shortfall in their rent.

6.45 pm

The second group is women fleeing domestic violence. The prospect of having to share with male strangers is particularly daunting for them. Another group we

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discussed in Committee was those with shared parenting, and we considered how inappropriate it is for their children to be in the kind of accommodation that they have to take in this situation. The Minister did not really address those concerns.

Finally, I referred in Committee to a letter which had quite an impact on me. It was one that the noble Baroness, Lady Browning, mentioned having received from the mother of a young man on the autistic spectrum, describing the difficulties he faced in shared accommodation. Think about how inappropriate shared accommodation might be for someone with this condition, who may find it very difficult to live with other people or with strangers, who might find it very difficult to live with him too. A lack of understanding of that kind of behaviour could create real tensions. I can see so many problems.

The Minister responded by talking about the discretionary housing payments. The issue is not just about the amount of money, but also the important point that someone in this situation-and, I suspect people with mental health problems-need security and certainty. Discretionary housing payments do not give that, because you do not know whether you will be able to get the money. That causes more anxiety and could lead to forms of behaviour that could have negative consequences.

The noble Lord also made the point that there are already exemptions for severely disabled people, but this person did not fall into the exempt category. There is a spectrum of behaviour within which people will not be exempted but could face real problems with the extension of shared accommodation.

The amendment of the noble Baroness is a way of trying to mitigate those problems, and I endorse what she has said. I hope the Minister will take it away and think about whether, through the amendment or another way, he can address the wide range of concerns that have been expressed three times now-in discussing the regulations, in Grand Committee, and now.

Baroness Hayter of Kentish Town: My Lords, as my noble friend Lady Hollis made clear, this amendment addresses the cases of those who, not having been housing benefit claimants, become in need of this, perhaps through the loss of a job, a change in domestic circumstances, illness or some other unanticipated event. It is aimed at the potential impact on vulnerable young adults: single people between 25 and 35, who rent in the private sector and from January will only be eligible for the single room rate, losing about £40 a week. Crisis-which we all know, particularly at Christmas, of course-an organisation that knows a thing or two about homelessness, believes that most of the 50,000 or more people affected are likely to lose their homes.

The amendment does not say that these people would be excused the shared room rate up to the age of 35, but it gives them a window of a year in which to find a new home or a job, to get well, or in some way to change their circumstances so that they are no longer dependent on housing benefit. It would extend the current 13-week breathing space to 52.

This is not just a matter of the individuals concerned sorting out their lives but of allowing the market to respond to these new rules. Research by the University

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of York on the impact of extending the shared-room accommodation rate found that there is insufficient shared accommodation available at the moment. Indeed, this would risk making such accommodation even harder to find for those aged under 25 as the supply of relevant accommodation takes time to build up. Furthermore, the York study found that sharing can sometimes be difficult or even dangerous, as we have already heard, and can have a serious negative impact on the health and well-being of vulnerable people.

As we have already heard, there are exemptions to the shared accommodation policy, including those for severely disabled people, care leavers aged under 22, people who have spent more than three months in a homelessness hostel and received resettlement support and those aged over 25 who are considered a risk to others. It does not include those who might themselves be at risk. In Committee the Minister reminded us of the other exemptions, such as those for certain ex-offenders who pose a risk to the public and certain former residents of specialist homeless hostels, which might include those leaving a refuge following domestic violence.

However, we also heard in Committee of a number of situations in which shared accommodation not covered by those exemptions would pose a real problem for people. My noble friend Lady Sherlock raised the question of single pregnant women, who may find such circumstances particularly difficult. The noble Baroness, Lady Campbell of Surbiton, raised the issue of those with obsessive compulsive disorder, who may also find the prospect particularly difficult. My noble friend Lord McAvoy, who is not in his position at the moment and is, in his own words, not a social liberal, talked about the situation of those with a mental illness and how they might gradually be forced out of successively worse forms of shared accommodation.

Many of the people caught by this proposed new ruling will be fathers of young children soon after a split, when it is particularly crucial for their relationship with the children to be maintained. If it is not kept close in that first year of separation it is very hard to re-establish it later. That relationship depends not just on shared hamburgers in McDonald's but on cooking, eating and even washing up together. For this, a place of one's own, where young children can feel at home-not a house shared with strangers-will be crucial. The amendment relates to that first 12 months, within which we hope finances, jobs or better accommodation can be sorted out. If it is not sorted out in that 12 months, at least it will be much less threatening for those children visiting their now non-resident parent to get used to a different way of living.

The amendment does not reverse the intention of the policy, which the Minister told us was to ensure that claimants make similar choices to those not on benefits. The flaw in his argument is that the circumstances of many of those on benefits are not the same as those who can support themselves. The benefits system is designed exactly to protect people when their circumstances change. The amendment provides a little extra support of this kind. It would give people sufficient time either to address the circumstances-whether job loss, illness or a change in family arrangements-that meant they had to claim benefit, or, at a later time, to

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find the shared accommodation that best meets their needs. It is a thoughtful amendment, which the Opposition are happy to support.

Lord Freud: My Lords, Amendment 19 from the noble Baronesses, Lady Hollis and Lady Meacher, deals with a subject that we have debated at considerable length-the shared accommodation rate. In case there is any doubt, let me be clear: the shared accommodation rate is what we pay people to share accommodation, not to share rooms, as some people think. We do not expect people to share one room or a bedroom, but to share accommodation.

Baroness Hollis of Heigham: My Lords, I do not think anyone disputes that, but at the bottom end of the market it will be a room in a shared house, which means sharing a kitchen and bathroom, as we have discussed.

Lord Freud: My Lords, it is rather interesting to look at the actual rates. If you take two people, each with their own shared accommodation rate of housing benefit, that covers or exceeds the two-bedroom rate in 60 per cent of localities. We are not talking about a dramatic cut in much of the country. Indeed, if three or four people choose to share a house, taking their own shared accommodation rates, the amount of money that they get would cover the rate for three or four-bedroom properties in 90 per cent of localities. We are not talking about a hugely draconian cut in that context.

If we look at the amendment itself, it is not altogether obvious what rate of housing costs the noble Baronesses are proposing should be paid during the 52-week period of exemption. Since the amendment applies to new claims only, perhaps it seeks to ensure that new claimants have their full contractual rent met for the first 52 weeks, rather than being paid the local housing allowance. If it is the latter, we covered those points in Committee. We debated whether the current 13-week exemption from rent restrictions for claimants who could afford their rent when they first took on that commitment should be extended to 52 weeks.

I need to make clear that rent can be met in full for up to 13 weeks for those who could afford their rent when they first took on the tenancy and have not been in receipt of housing benefit in the past year. This means that those claimants who experience a short spell of unemployment are not forced to move, and it gives others time to consider their housing options. Around 40 per cent of JSA claimants aged between 25 and 49 have been claiming for less than three months, and around 60 per cent for less than six months. For completeness, I should add that there is a 12-month protection for people who have recently been bereaved.

As I said at the time, most claims for housing benefit are for short periods. The 13-week exemption protects a person's ability to pay their rent during that time. Half of jobseeker's allowance claimants aged between 18 and 24 have been claiming for less than 13 weeks and less than 5 per cent have been claiming for more than 52 weeks. We already know that more than a third of those who claim housing benefit choose shared accommodation. These are people who could be in either separate-bedroom accommodation or shared accommodation and choose the shared accommodation

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rate. Of the people who are not on HB, 40 per cent of 25 to 34 year-olds share. I am excluding students from this. This is not a form of housing that is unusual or imposed on people; it is an absolutely normal form of housing.

I accept that there is real concern about the impact of the shared accommodation rate and particularly about the availability of accommodation. I said in Committee that the market will not remain static and that I believe it will respond in time to the increased demand for this type of accommodation. The feedback that I had from officials following their recent meeting with a Methodist housing association suggests that this is already happening. The association is already converting some of its property into shared accommodation. I am also reassured by meetings that I have had with stakeholders that a number of support organisations are helping to match tenants to shared accommodation.

7 pm

Following wider discussions with stakeholders and within the coalition, we agreed to introduce two further exemptions for the new age group. These exemptions will help those moving on from specialist homeless hostels to try to reduce the likelihood of them returning to a life of rough sleeping. We also want to ensure that these changes do not pose a risk to the public, which is why we provide an exemption for the small number of ex-offenders most likely to pose a risk.

The most vulnerable, about whom several noble Lords have expressed concern, will be exempt because they are entitled to a severe disability premium. For others, however, it would be difficult to draw up exemptions and include all those we thought could not share without opening the exemption so widely as to be untargeted and costly. We estimate that 18 per cent of those affected have a disability premium, but a discretionary housing payment can be considered by the local authority if it considers that an individual's circumstances warrant assistance. We are looking at how this exemption will apply in universal credit and we will come back on that.

The noble Baronesses, Lady Lister and Lady Hayter, raised the issue of the non-resident parent. Making double provision for two homes would be an unreasonable use of taxpayers' money. Around 10,000 such parents in shared accommodation have some contact with their children. That contact is not always overnight, so that figure would be smaller. It would be very difficult to police any kind of defined exemption here. The noble Baroness, Lady Hayter, lives in a different world from me if she thinks that she can get the children to do the washing up.

The noble Baroness's amendment would provide protection to those who might arguably be in a better position to meet any shortfall, particularly if they had been in work. It would also seem unfair to those aged 25. The amendment would halve the savings we need to generate from this measure, which would then need to be found elsewhere. There really is only one option, which is to apply the shared accommodation rate within universal credit as intended. Given the short duration of most claims, I do not believe that the amendment is necessary.

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We are committed to looking at the impacts of these changes and have commissioned an independent review and monitoring of extending the shared accommodation rate. This extensive evaluation will allow us to assess the long-term impacts on the under-35s and the availability of shared accommodation. As with all new policies, we shall continue to listen to any feedback that we receive on how this is working. I will not take this away for further consideration in this formal context, but I will of course be happy to sit down with her and discuss how her figures work outside that formal context. I hope that, in view of what I have said, the noble Baroness will be able to withdraw her amendment.

Baroness Hollis of Heigham: I thank noble Lords for taking part. There are very real concerns, not just for women who are going into an HMO where there may be people who appear to them threatening, but also for those who appear to be the threatening ones, for whom it is also difficult. Both sides find this unacceptable. I am also grateful to my noble friends Lady Lister and Lady Hayter who helped to spell this out.

To some extent, the Minister missed our point. None of us has any problem whatever with people who choose to share. It is fine when you choose to share with people you know or when you have gone through an ad in the local paper and gone in to see them. It is fine if it is a salubrious flat and together you can pool your resources. Some may be in work, some may not, but you can manage the rent. That is fine. That is not what we are arguing about. We are arguing about someone who has lost their job and is in a one-bedroom flat for which they are currently able to pay. After 13 weeks, their HB expires and they are only entitled to LHA at a shared room rent. They are forced, against their will, to move into accommodation with strangers at the very same time as we are expecting them and needing them-and they want-to prioritise their search for a job. It is simply silly to undermine their work ethic and their work efforts. Instead, we are diverting and deflecting them into the search for a home which is safe, salubrious and affordable. This is silly and stupid, which is not a charge I would normally address to the Minister, because he is neither of those things.

On cost, I put it to the Minister that it would be reasonable to assume that a woman who had lost her job as, say, a secretary in a firm that had closed would get back to work within six months if her housing position was unaffected. If her housing situation was affected and she had to go in search of new accommodation, possibly ending up in another area, it might take her 12 months. That is not an unreasonable supposition; six months if we accept my amendment, 12 months in the existing situation. The cost of the extra three months of HB is £1,300, based on the assumption of an extra £100 a week. If, however, she did not spend a further six months on benefit, because she got back into work within six months as opposed to a year, she would save the DWP £3,900. Subtract those two, and the additional savings to the DWP, by supporting this amendment, for that one individual person, is £2,500, and that is before you get money from taxes and

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national insurance. Multiply that by, say, 15,000 people out of the group of 62,000 and the Government would save an additional £40 million. That is where the savings lie.

You can challenge my behavioural assumptions-that you go back to work within six months if you do not have to find another home and that it takes you 12 months if you do-but, from what I know in my city about how long it takes people to find work as the situation worsens, I do not think they are unreasonable. If the assumption is right, and 15,000 of that client group come into that category, the Government will save an additional £40 million, not halve the savings as the Minister suggested. That is nonsense on any behavioural assumptions. He is assuming that what he is doing will make no difference to people's propensity or ability to come back into work. That is simply untrue, particularly as the economic situation gets worse, and he must know it. He can make savings from the amendment if he chooses to work it through further.

My final point is about safety. A member of my family was in a room in such a situation. There was thumping at his door and he opened it. This person in my family-who is six feet tall and strong-faced, as he opened the door, somebody who was naked with a knife in his hand. Do not tell me it cannot happen, because I know it has and it does. I therefore suggest, on grounds of decency, safety and cost effectiveness, that the Minister consider this amendment further, even if he is not willing to do so today. I beg leave to withdraw the amendment.

Amendment 19 withdrawn.

Amendment 20

Moved by Baroness Hollis of Heigham

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

"(6) Within one year of these regulations coming into force, an independent research review of their impact shall be laid before Parliament, and such a review to include the effects of such measures on the reduced incomes of social housing tenants and their families, the security of the rent roll of their social landlords, the depletion of tenants' savings, levels of arrears, levels of eviction, any increased homelessness and use of temporary accommodation, the reduced prospects of pensioners for rehousing, and the likely availability of housing stock to meet the new underoccupancy standards, and related matters."

Baroness Hollis of Heigham: My Lords, I will be very brief. The amendment indicates our very real concerns about the effect of all these cuts to housing benefit. We fear that if there is any reverse in our decision today on underoccupancy, housing associations will face mounting arrears, and spend more time and employ more staff chasing deficits in rent. As a result, there will be even less chance for those housing associations to build the new housing stock we badly need. I know the Minister thinks my fears are exaggerated. I hope he is right. The House has alleviated most of my concerns, but we cannot properly calculate the behavioural effect of all these changes on tenants. The Minister is evidence based-something we all welcome and respect-and he wants UC to work, as we do. I therefore hope

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that by the time the Bill has gone through its full passage in both Houses he will, if it is appropriate, find the resources to ensure that we have the research to undertake an independent review of its effects on tenants in social housing. Frankly, if we do not have that protection, I fear the worst. I beg to move.

Lord Best: I support the amendment. We already have up and running, thanks to the good work of the Minister, a really first-class piece of research looking at the impact of the housing benefit changes on families, poverty and a whole range of issues. I strongly congratulate him on taking that suggestion seriously and bringing forward a significant piece of research. It engaged a consortium of the top people at Oxford University, Sheffield Hallam University, Ipsos MORI polling and the IFS. I wondered whether that team might have its work somewhat extended to embrace the research suggested by the noble Baroness. It would not involve quite as much work because it would examine the 150,000 or so households that will now be affected by the underoccupancy arrangements. There is much important research to take place.

Lord Freud: My Lords, I acknowledge and commend the contributions of the noble Baroness and the noble Lord to the debate on policy. Both of them, particularly the noble Lord, Lord Best, played an important role setting up the independent research that the department has already commissioned around the local housing allowance. More recently, as noble Lords are aware, we have announced research looking at direct payments in the social rented sector. However, I must complain bitterly at the improvement to the negotiating position of the consortium that the noble Lord mentioned. When we carry out research, we always have open competition and no one is favoured. We choose the best researchers.

I place real value on independent research. We need robust evaluation on the impact of welfare reform on housing provision. I know that we are taking some steps in housing benefit reform where we need to monitor the risks. I know that there are risks, and we have all discussed them. That is why proper research, considered properly and taken very seriously, is right at the heart of the protections that we are looking at in this area.

I fully support the intention behind this powerful amendment. I want to go on record as saying that. I can tell noble Lords that the department is currently in the process of planning its research programme for 2012-13 onwards, subject, I have to add, to available funding-and I hope that noble Lords do not take that away from me in other ways. I intend to cover the size criteria and underoccupancy in housing benefit. We are considering separately how to evaluate universal credit. Noble Lords will be aware of the constant-piloting clause that we approved in Committee, which provides for a radically new way of looking at this important benefits system.

All research commissioned by the department is published. I am sure that noble Lords will accept that it is not necessary to provide for this research in the Bill. I know that this is a probing amendment and we will look to providing this research at the right time. With those reassurances, I hope that the amendment can be withdrawn.

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Baroness Hollis of Heigham: I am grateful to the Minister and to our noble colleague-I was going to say our noble friend-the noble Lord, Lord Best. If I may say so, the Minister enhances an already high reputation by his openness to the information that will come from research. We should give him credit for that and I am very grateful. I beg leave to withdraw the amendment.

Amendment 20 withdrawn.

7.15 pm

Amendment 21

Moved by Lord Best

21: 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 costs 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: My Lords, the amendment relates to the payment of help with housing costs-at present in housing benefit and later as the housing cost element of universal credit. The Minister has announced that in future the payment for rent must go directly to the tenant, not, as is possible at present, to the landlord. The amendment preserves the current option for the tenant to choose that the rent should be paid straight to the landlord where the tenant thinks that that will help with their budgeting and housekeeping.

When I introduced a similar amendment in Committee, I pointed out that private landlords were already often very reluctant to take on tenants in receipt of housing benefit or local housing allowance. However, where the benefit is paid straight to the landlord, thereby minimising the chances of arrears, the reluctance of landlords can be much reduced. There is backing for the amendment from the private sector-the Residential Landlords Association, the British Property Federation and others. There is also backing from social landlords. This morning at the LGA, I addressed a conference on housing finance and was surprised at how strongly local authorities expressed their view that the direct payment of rent to tenants would lead to arrears and difficulties for councils in handling housing accounts. The amendment is also strongly supported by those who represent tenants-residents in the rented sector. Associations of residents in social Housing-TARAs-Shelter, Crisis and others are right behind the amendment, not least because surveys have shown that a high proportion of tenants would wish for their rent money to go to the landlord.

The Government have agreed that this choice will be available to those of pension age. This amendment would extend that possibility to make this kind of

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sensible choice available to all tenants. The housing associations organised a pilot of their own in which they experimented to see how things worked out when rent was paid directly to the tenant. They found that arrears increased from 3 per cent to 7 per cent. If that was applicable generally, the cost to the housing association sector would be some £320 million a year in additional arrears. Local authorities have a similar stock of social housing which would double the figure to some £640 million a year. Housing associations also discovered that their administrative costs were very much higher when the rent did not come straight to the landlord in the form of housing benefit or-in future-the housing element of universal credit. The extra costs on administration for that are estimated at £100 million.

If housing associations face those kinds of costs, the hazard is that lenders will not be so keen to lend to them. The Council of Mortgage Lenders is in favour of the amendment, as are the individual lenders, because they worry that housing associations will get into difficulties if they do not get the rent that they need. The Minister has set up some important pilot schemes to test ways of assisting tenants to handle the money provided for rent, and new arrangements for low-cost banking may be developed in the months and years ahead. However, the Minister undertook to look further at the option of giving more vulnerable tenants the right to choose to have their rent paid to the landlord. I know that he has been considering how a fast-track arrangement might be implemented to switch the payment of rent from tenant to landlord when arrears are mounting.

These changes would be useful but they do not address the fundamental problem. Surely the best approach is to continue to give tenants the right to choose to have their help with housing costs paid directly to their landlord, and not to give them the temptations which are bound to be placed in their path if sums, perhaps in the region of £500 or £700 a month, were paid to them, and possibly used to satisfy the requirements of loan sharks and less salubrious lenders and creditors, rather than paid to their landlord. Can we not preserve the existing right of tenants to choose to be assisted in their budgeting? I beg to move.

Baroness Howe of Idlicote: My Lords, having listened to that explanation from my noble friend Lord Best, I have been completely converted to this approach. I certainly appreciate that the Minister is trying to educate people better to take care of their own finances, but the choice already exists for the individual tenant to decide whether to pay for themselves or to opt in to a system which is, from what we have heard, more satisfactory and reassuring to the landlord-whether a local authority or whoever. As all of us in this House are beginning to get a little older and, sometimes, a little forgetful, perhaps that is a helpful thought for later, when we get even more forgetful about things such as paying our rent.

All I am saying is that this sounds the better way to do things. I am all for running courses to help people to cope better with their finances, but from the point of view of not wasting money, this is clearly a way forward.

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Baroness Hollis of Heigham: My Lords, I would prefer housing benefit to be part of UC and to be paid to the tenant, because I think that that strengthens UC and makes it easier for one simple calculation to be made for the family. However, I support the amendment because, until the Government have rock-solid arrangements in place to ensure that the rent element in UC is immediately paid to the landlord, both tenant and landlord will, as the noble Lord, Lord Best, said, suffer.

Why would the tenant suffer? He may have to pay transaction costs. If it is looped through his bank account and there are any outstanding overdrafts, debts, or whatever, his UC, including the housing element, will be top-sliced. That is when there is no temptation to spend it on other things. I checked with my housing association. Even with direct debits from tenants in work, those direct debits go astray-deliberately or otherwise-and intensive work has to be done in housing management to reconstruct them again. Tenants can risk losing their home if rent payments are not made automatically to their landlord. For some tenants, that will be a real struggle. If tenants wish to have their rent paid directly to their landlord, but that choice is being denied them, they will suffer.

Why will the landlord suffer? Arrears will undoubtedly arise. I have doubled the amount in my housing association accounts because of potential arrears that I suspect will follow from this change, as have other housing associations. We will then also have to increase staff resources to try to collect those arrears. Private landlords, already reluctant to take DWP tenants, will certainly refuse. One reason for extending direct payments in the first place was to make it a more attractive option for landlords in the private sector, who have been notoriously reluctant since the 1950s to make accommodation available. They used to say, "No Irish, no blacks, no DSS, no dogs". Versions of that scrutiny, that winnowing out, I fear regrettably still apply.

Ultimately, landlords may need to face evicting tenants. As many of those who cannot manage their money will be vulnerable, they may or may not be regarded as intentionally homeless. If they have children, they are a real problem for all parties, including social services.

Furthermore, housing associations, including mine, are seeking to raise money from private sources, from banks-even, we hope, from pension funds, which is under negotiation at the moment-for building programmes. Our asset is the security of our rent roll. If tenants instead have money paid to them which is not rock-solidly paid immediately to the housing association or the local authority, that rock-solid asset base will no longer be as valued. We estimate that the proposal will cost us something like 50 base points extra on all the loans we raise. We become a worse risk and, as a result, fewer homes will be built. An amendment putting the decision in the hands of not the DWP or landlords but in the hands of tenants is surely the right way forward.

Baroness Lister of Burtersett: My Lords, I shall speak briefly in support of the amendment moved by the noble Lord, Lord Best, from a slightly different perspective, and repeat what I said in Grand Committee.

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In Grand Committee, I congratulated the Government on their research, Perceptions on Welfare Reform and Universal Credit, which sounded out various stakeholders about what they thought about some of the reforms. One thing that came from that from people who will be affected was that although they welcomed the one-stop shop approach of universal credit-to the extent that it is a one-stop shop-there were real fears about putting all the eggs in one basket. If all the money goes together in one lump sum, if anything goes wrong, people are left insecure-high and dry. If some of the rent payment is going to the landlord, where the tenant wishes it, that is mitigated. That is why that choice should remain

Not expressed in this research but by a number of outside organisations is the worry about what happens to the money in the family. I know that the Minister argues that budgeting accounts will sort this out. I hope that they will, but I think that he knows that I am still slightly sceptical about the magical powers of the budgetary accounts. There are fears that the money may not be paid into the account of the person responsible for paying the rent and that they may not then have control over how the money is spent by their partner. That is a slightly different perspective from that of the noble Lord, Lord Best, who understandably and powerfully is relaying some of the concerns about housing providers, but we have to think about the extra burden that this might be placing on some families.

Lord Cormack: My Lords, the noble Lord, Lord Best, has made a powerful case. He made it very gently but forcefully. I was also struck by what the noble Baroness, Lady Howe of Idlicote, said. As one who held MPs' surgeries for about 40 years and saw people come in who were often in considerable distress, I know that it is not just the feckless who get into financial trouble. Many decent people get into financial trouble. The ability to say that this money should go direct to the landlord could be of enormous help to someone who suddenly has a sick child and feels that they must spend the money on that child. If the money has gone to the landlord, the landlord is secure and the tenant is secure. That must surely be wholly desirable.

Those of us who have been constituency Members of Parliament know how difficult it is to persuade private landlords to consider tenants in this general category. We need an abundant supply of privately rented accommodation. Anything that may detract from that is to be regretted.

I admire my noble friend, because he is thoroughly the master of his brief and because his underlying aim, which is to create a more responsible society, is one to which we can, surely, all subscribe, but there are exceptions and times when it is right to give a choice.

Another point, which the noble Baroness, Lady Howe of Idlicote, made, struck a chord with me. There are many elderly people in receipt of benefit who get confused. I am not talking about people who suffer from dementia, but we all know-the noble Lord, Lord McAvoy, knows from his constituency experience-that elderly people sometimes get confused. They think, very genuinely, that they have paid something when they have not. It would be a great blessing to give those people that choice.

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I would urge my noble friend the Minister to give very careful thought to this. I hope that the House will not divide on it tonight, but I hope that he will be able to give some thought perhaps even to putting down an appropriate amendment at Third Reading.

Baroness Hayter of Kentish Town: My Lords, dinner beckons. Nevertheless, there are seven good reasons for accepting this amendment.

First, it is cost free. The facility to pay rent directly to landlords is there for certain beneficiaries, so it would simply be a case of using this for others.

Secondly, it helps to give financial responsibility and decision-making to claimants, as it would allow them to choose to have the rent paid in this way.

Thirdly, it is what the rest of us do with our mortgages or rent: it goes straight out of our bank accounts, normally the day after payday-in my case, usually the same day-so that we cannot get our hands on it in the mean time. The difference is, of course, that many of these claimants do not have bank accounts, or a joint bank account if they are a couple, and therefore do not have the ability to make such arrangements for direct payments. Furthermore, if they have a basic bank account, such accounts cannot go into the red, and so if there is not money to pay the rent, it simply will not be paid, even with a direct debit mandate, leading to the build-up of arrears.

Fourthly, this amendment is strongly supported, as has been said, by housing associations and by local authorities. Both know that arrears will build up more quickly without this amendment. For housing associations, the interest on borrowing will increase as their assured-rent income will decrease. To give the example of one housing association, 85 per cent of Riverside tenants choose to have their rent paid directly, as many of its tenants do not have bank accounts, and many more fear the bank charges if they go overdrawn. This is an important way for low-income households to manage their finances. If this existing facility is withdrawn, pilot studies show that, as has already been mentioned, rent arrears are likely to rise sharply, putting tenancies at risk. In addition, funders have indicated that they are likely to regard lending to housing associations as higher risk and thus to increase the cost of funding. In the long term, it will mean that social housing providers will simply be able to do less. Income streams to local authorities will similarly be threatened if direct payments, which exist now without any problems, are ended. CoSLA, the association for local authorities in Scotland, estimates that this will cost about £50 million a year in Scotland alone.

Fifthly, many vulnerable families will be at risk. To quote again from CoSLA:

"COSLA is deeply concerned that Housing Benefit paid direct to claimants without sufficient safeguards will result in an increase of rent arrears and evictions, sending households spiralling into debt and facing homelessness".

We know the families for which the risk of not paying the rent directly will be the greatest: those with debts, where the pressure to pay these off-whether to the gasman or to the loan shark-will be pressing; those with a family member with a drink, drug or gambling habit, where temptation to use the rent money will be

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high; and those with immediate demands, as the noble Lord, Lord Cormack, has said, for money to feed their children and yet who want to ensure that the roof over those children's heads, albeit not today's problem, is equally vital, so want to have that rent assured. While we know some vulnerable groups will have their rent paid directly, we can see no reason to wait until borderline cases get into problems, struggle and get into rent arrears, before we allow them to have the rent paid directly. Why risk that for no good reason?

Sixthly, it will make sure that we do not dissuade private landlords from coming into this sector.

Seventhly, the strongest argument: the noble Lord, Lord Best, who chairs the Local Government Association and has forgotten more about housing associations than most of us will ever learn, tells us it is the right thing to do. We concur.

Lord Freud: My Lords, my intention is to reassure the noble Lord, Lord Best, so that he withdraws his amendment. I start by trying to convince the noble Baroness, Lady Howe, and my noble friend Lord Cormack of the reason why we are doing this. It is not an arbitrary thing. We are not doing it because we want to annoy housing associations or local authorities. We are doing it for a very simple reason. If you are a tenant in social housing whose housing benefit goes straight through to the landlord and you take a job, all your arrangements for paying for your housing have to change. It is a major change in your arrangements and a real block on you taking the job. It is a major thing for you to organise, and you have to learn, when you take that first job and your housing benefit goes down within universal credit-because that is the change-that the money no longer goes through automatically to the landlord.

We have to break that link. It has to be the same arrangement whether you are working or not working. We deliberately excluded pension-age people from this because we are not expecting them to work. We do not need to worry about the people who find it difficult to work. It is working-age people who we want to go into work.

Baroness Meacher: I listen to the Minister's passion-"We have to do this, we have to do this"-and I find myself thinking that that would be fine if we were in normal circumstances and the benefits were not changing but were pretty much going on as they always have, and people were not going to be facing major drops in their benefit levels or having to adjust to having to move because of all sorts of rules about underoccupancy or because of the tying of benefits to the consumer prices index and so on. There are so many ways in which people on benefits are going to be losing-that is the context-and this is not the time to be determined to bring all these people into line with people in work. Can we not wait until things are stable and then maybe introduce the rather nice idea of bringing these two groups together?

Lord Freud: The answer to that is very simple: the universal credit will, each year, inject an extra £4 billion into the pockets of the poorest people. That is what the universal credit does. It will start coming in in

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2013-17, when hopefully the laws of the business cycle will still be working and we can expect an upturn at some stage. As we move into that situation, the concern will be what happens to the universal credit. This measure is for universal credit. It does not stand outside it.

Baroness Meacher: I apologise for interrupting again, but £4 billion is surely a tiny amount relative to the losses in projected benefits. This huge budget would normally go up very extensively each year, would it not? I do not have all the numbers in my head, but £4 billion in a tiny fraction of the actual real losses in benefit that people are going to face.

Lord Freud: Absolutely not; £4 billion is a very substantial figure. Over the course of this SR, we are looking at a loss of £18 billion spread over the four-year period. The noble Baroness can do the sums. The most important thing about universal credit is that the money goes into the pockets of the lowest two quintiles very efficiently. I contend that the noble Baroness's argument is not a real argument.

Baroness Hayter of Kentish Town: My Lords, if I understand the Minister correctly, he is saying that this is all part of getting people off benefits and into work, which we absolutely support. However, this will also cover those people who are never going to work-those in the support group-as well as people with young children who are not in work for some time. Therefore, we are not talking only about people who are on the cusp; even those people will lose the right to have their rent paid directly.

Lord Freud: No, my Lords. We have made it absolutely clear that we expect those who are vulnerable to continue to have payments made directly to the landlord. Indeed, in the private rented sector, where this process has already been in place and has worked rather well, 80 per cent of people pay their landlord directly, and 20 per cent are regarded as vulnerable and have a payment made directly to the landlord. That is how it works there. At the moment in the social rented sector, 95 per cent have direct payments and 5 per cent pay the landlord themselves. Therefore, there is a real disparity there.

I want to provide some reassurance for noble Lords who think that this is a draconian measure. I need to explain to the noble Baroness, Lady Howe, and the noble Lord, Lord Cormack, that we are doing this for a real reason. It is not arbitrary; it is intended to make sure that there are no artificial barriers for people who would stay in the comfort zone of not working. We need to make it easier for them to make that transition, and that is one thing that we are doing. This will empower people and allow them to manage their finances.

I shall now come to the reassurance factors, which I hope will have noble Lords nodding happily on the Benches. I am determined that, while we introduce this system, the housing sector will remain financially stable. I talk regularly to banks and to rating agencies in particular about what we need to do to make that happen. I am absolutely convinced that we can have our welfare cake-the transformative cake-and financial stability for the housing sector. I shall do nothing that

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undermines the security of the housing sector in this area. I absolutely understand that this country needs more housing, and it would be madness for us to undermine that ambition.

I completely understand the two imperatives here. We are working closely with local authorities and housing associations in running half a dozen demonstration projects, which are designed to find out exactly how to make direct support payments for housing costs so that they work with universal credit. I have been incredibly pleased that the industry has shown real enthusiasm for taking part in these demonstration projects, with no fewer than 70 different groups looking to join in. During the selection process, we have been delighted at how much choice we have had, and we are finding out what is going to work to get the two things that we need. These demonstration projects will allow us to identify those who are likely to struggle financially. The projects are testing not whether we should introduce direct payments but how to support landlords and tenants ahead of the scheme being introduced. The important part is to get the safeguards operating properly. We need to see when people are not able to handle the system and switch payments to the landlords, and then find out how to recoup the money over the period when landlords do not have it so that their security of income is locked into the system. That is what we are trying to find out here.

The noble Lord, Lord Best, mentioned the London & Quadrant research, and we are aiming to apply that to the demonstration projects. It shows the importance of communications. Clearly, we want to improve the outcome and throw out the doubling of arrears.

7.45 pm

I have talked before about how to support people-a matter raised by the noble Baronesses, Lady Lister and Lady Hollis. We need to get proper banking products into the system. At least one thing that we need is a simple direct debit system. The money should flow in and out on the same day so that the example given by the noble Baroness, Lady Hayter, works. We do not want a gap there, and we must be able to manage that. The point is that if we can manage it with a banking product, as the noble Baroness, Lady Hayter, suggested, then people can float off from benefit dependency into the world of work without-

Baroness Drake: I speak as someone who is rather preoccupied with financial inclusion. The Minister is describing a process, but if there is a product-a bank account-that works for low-income or unemployed people and the account is in debt, how does one know that the bank will pay the direct debit? Can he be confident that it will pay if there is a deficit in that account?

Lord Freud: That is exactly what we need to ensure and that is exactly what we are discussing with the banking groups. Specific banking support is exactly the issue that we need to get right.

Lord Cormack: My noble friend is trying to be helpful and I appreciate that very much. Is he saying that this amount of money that is earmarked for

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paying the rent will be used for paying the rent and for nothing else, and that, unless he is assured that he has the product that will deliver that, he will not move in this direction?

Lord Freud: I am saying that we are working really hard with the banks and the banking community to make sure that we have an escrow arrangement of that nature, and we are doing this at several levels. We can have a general agreement, which I shall discuss with the banks as a whole, to provide a generalised protection. However, I am quite interested in getting particular banking products that will provide a simple bank account and elaborating on what could be a new level of support for some of the poorest people in our community. We have a one-off chance with universal credit to ramp up support for the poorer people in our community, and we are putting a lot of energy into achieving that. I have talked about this before. It is one of the hidden gains that we can get out of the introduction of this new system. Rather than people living on drips of money from here and there, we can really start to help them, supporting them in managing their finances and getting true independence. This is a core part of what we are going to be doing with universal credit, and part of that relates to housing. Housing will be a major part of people's total income stream. We are not doing this for fun or to annoy anyone; this is absolutely part of what we are trying to do with universal credit.

I need to deal with one other point-the issue of safeguards raised by the noble Baroness, Lady Lister. We are concerned about the safety and welfare of claimants and, where we have a concern, we need to put direct payments in place. There are vulnerable groups who are not able to manage the potential freedoms, and for them we will make sure that we go on with existing arrangements for direct payments.

We have commissioned a consortium led by Professor Paul Hickman-I am sorry, but this is a bit of an announcement late at night-from the Centre for Regional Economic and Social Research at Sheffield Hallam University to evaluate the effects of direct payments to claimants in the six demonstration project areas, which I shall announce soon. The other key team members are Dr Kesia Reeve, Peter Kemp of the Oxford Institute of Social Policy, and Stephen Finlay from Ipsos MORI, names that I know that the noble Lord, Lord Best, approves of. That will give us a cumulative understanding of the impacts of direct payments and inform the detail of delivery under universal credit.

Research published by the Joseph Rowntree Foundation in 2007, Paying Housing Benefit to Claimants, on both private and social tenants' experiences of and their hypothetical attitude toward the management of their own housing benefit confirms that a significant proportion of social tenants have the potential to manage their own housing benefit payments. We will also have an advisory group for the demonstration projects and a wide range of local government, money advice, voluntary sector and other external stakeholders who will be invited to join that group.

We had a slight exchange about what "choice" means and we have been teasing each other about the imbalance of power when you have choice. It concerns

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us that while there is theoretical choice today, only 5 per cent of people take it. As it stands, tenant choice does not go far enough, which is why I am concerned about it. I hope that the noble Lord, Lord Best, will accept that we are making incredible efforts here to be transformative and not to undermine the housing sector, and on that basis will feel that there is enough going on for him to withdraw this amendment.

Lord Best: My Lords, I am very grateful to all of those who have joined this debate. I am sure that we all feel much reassured by the passion that the Minister brings to this subject and by the genuine efforts that he is making to see that the behavioural change that he wants is triggered and that the disadvantages of going down this route are mitigated. The excellent research that he is announcing tonight-and I thank him very much for it-might show that it is not possible for only 20 per cent of the tenants within the social sector to be regarded as vulnerable and to have their rent paid directly and that there is a rather larger number.

However, I think the Minister is keeping an open mind as to what proportion of the sector will get their rent paid directly, and I greatly welcome him saying how much he is concerned not to undermine the social housing sector, the production of new homes, the sector's lending and the security of income within that sector. If those discussions with bankers fail and the products do not materialise, we must place our faith in the Minister and hope that he will recognise that the difficulties still exist and that rent direct to the landlord is going to be necessary for a larger proportion of people. On that basis, I am happy to withdraw my amendment.

Amendment 21 withdrawn.

Consideration on Report adjourned until not before 8.54 pm.

National Well-being

Question for Short Debate

7.54 pm

Asked By Baroness Tyler of Enfield

Baroness Tyler of Enfield: My Lords, I would like to thank noble Lords who have found time in this very busy period to speak in this debate and I hope that it has not been too much to the detriment of their own well-being.

Why would I want to talk about well-being today and why do I think that it is important? We all know intuitively what well-being is but there is as yet no standard definition. There is general agreement from the growing body of social science research that a combination of physical, social, environmental and

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psychological factors influence well-being. Good mental and emotional health is a crucial element of well-being, but by no means the whole story. A good deal of work has already been undertaken to measure well-being and happiness at community and individual levels. This has demonstrated positive factors, such as good relationships, being employed and being financially secure, along with negative factors such as poor relationships, family bereavement, poor health and unemployment.

Back in 2008 the Government Office for Science's Foresight report on mental capital and well-being referred to mental well-being as,

I think that sums it up very nicely.

Many thinkers, commentators and social scientists are giving the issue of well-being an increasing amount of attention and the idea has started to creep into the mainstream of public policy and political thinking. All three parties are starting to talk about well-being and quality of life, albeit in their own ways and using their own language. I would go so far as to say that it has prompted quite a deep philosophical debate about the central purpose of public policy and indeed government itself. I sense a greater recognition that economic growth is a means to an end rather than an end in itself and that good government is ultimately about improving the lives and well-being of our fellow citizens. But it is undoubtedly a very tough time to be having these sorts of ideas and of course sceptics are bound to view it as a distraction from our very pressing economic concerns.

In November 2010 the Prime Minister announced:

"From April next year we will start measuring our progress as a country not just by how our economy is growing, but by how our lives are improving, not just by our standard of living, but by our quality of life. We'll continue to measure GDP as we've always done, but it is high time we admitted that, taken on its own, GDP is an incomplete way of measuring a country's progress".

He added-and I give him all due credit for doing this:

"To those who say that all this sounds like a distraction from the serious business of government, I would say that finding out what will really improve lives end acting on it is actually the serious business of government".

The practical outcome is that the Office for National Statistics has been tasked with consulting on the development of new well-being measures that cover the quality of life of people in the UK, environmental and sustainability issues, as well the economic performance of the country.

Well-being clearly depends not just on the circumstances of people's lives but on how they interpret and respond to those circumstances. Recent welcome policy initiatives, such as the promotion of emotional resilience among children in schools and the expansion of psychological therapies focus, on which I am sure we will hear more from the noble Lord, Lord Layard, all rightly recognise this. On the bright side, the very recent ONS statistics, which came out in December, found that around three-quarters of adults in the UK rated their own life satisfaction as seven or more out of

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10. These findings also found that having a partner and being in good health were positively associated with life satisfaction. Some people considered these results surprisingly positive, given all the doom and gloom around, and it sparked the inevitable quips about the usefulness of what has been dubbed the "happiness index" from various quarters. Next year we will have much richer data when the ONS has the results from the full 200,000 households that are currently being surveyed.

I believe that a single national measure of well-being should help generate a national debate about what really matters to people. "If you treasure it, measure it" is a good adage. It will be relevant to government, of course, but also to employers, the media, the producers of consumer goods and many others involved in our national life. Others are calling for a wider set of indicators that local communities can use to measure their population's well-being against other communities. Given the general thrust towards localism, this has much to commend it, and I would be very interested to hear from the Minister what he thinks on this.

There is much evidence, to which I have alluded, about what is important to well-being. It includes income, loss of income, unemployment, being able to do interesting and stretching work, the number of hours worked, commuting, consumption decisions, debt, being able to walk around the local neighbourhood, being able to participate in community activities, volunteering and trust in local institutions. It is a very long list. I do not have time to go through it in any detail here. Evidence shows a clear relationship between levels of well-being and inequality when different countries are compared. Well-being tends to be lower in countries with higher inequality of income and wealth. It is important to understand that. Equally, in terms of what drives well-being, evidence from surveys and research is quite consistent about what matters most in people's lives. Individuals across nations and social classes put more value on non-monetary assets than on their financial situation. Indeed, quite often in surveys the biggest factors by far that influence people's happiness are their family relationships and their relationship with their partner.

Turning to the workplace, Dame Carol Black's review of the health of the working-age population in 2008 identified business as a key partner in promoting or otherwise adult health and well-being across Britain. According to that review, the annual economic costs of sickness absence and worklessness associated with ill health and well-being were over a staggering £100 billion, which is greater than the annual budget of the NHS.

Where does all this lead me? I would like to draw three conclusions. First, well-being should be a key political priority, as it encompasses the things that are most important for our society as a whole and to us as individuals. While prioritising well-being includes ensuring that we have a stable and thriving economy, it crucially also takes a much broader view of success than can be measured in just economic terms.

Secondly, we should warmly welcome the fact that the UK Government are now measuring people's subjective well-being in a substantial and meaningful

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way. I think it is important that we keep a cross-party consensus going on the importance of this. Thirdly, we need to move rapidly from measurement to action. Measurement on its own achieves very little, so it is essential that we reshape the processes of policy development, implementation and evaluation to take well-being into account as soon as we can. There are some encouraging signs here, with the Cabinet Secretary, Sir Gus O'Donnell, already ensuring that guidance for policy-makers is being updated so that well-being is taken into account. That includes the Treasury Green Book, which will be well known to some, and the setting up of the Social Impacts Task Force within government. Taken together, I very much hope that these measures will finally lead to that holy grail of truly joined-up policy-making in Whitehall. I know from many years' experience in Whitehall how very difficult that is.

I welcome this focus on practical action. Nowhere is this more important than in family policy and the services available to support families and children, including help with parenting. We heard recently from the 2011 UNICEF child well-being report that British parents often feel stressed and lack the time or, indeed, the confidence to build a strong nurturing relationship with their children and family. Sometimes that gap is filled by a focus on material things and consumer goods. The message from children themselves was clear. Their well-being centred firmly on being able to spend time with a happy family whose interactions with them were consistent and secure, having good friends and having plenty of things to do outside the home.

That is why I think that personal, social and health education, focusing on the importance of relationships, is so critical and should form part of the core national curriculum and include a strong focus on emotional well-being. It is no co-incidence that schools that have pioneered this sort of approach, where well-being and building positive relationships run through the whole school ethos and curriculum and where counselling is available for those who need it, say that there is a clear link to improved academic performance. It is also why I would like to see counselling and other types of emotional support available in all schools in England, as it is currently in Wales and Northern Ireland.

I can think of no better way of concluding my opening remarks than to quote the oft-quoted words of Bobby Kennedy in a speech more than 40 years ago. I know noble Lords will have heard them before, but I will say them again. He said that GDP,

8.04 pm

Baroness Sharp of Guildford: My Lords, I thank my noble friend Lady Tyler for raising a very interesting and important question. I attended the seminar held about six weeks ago in Portcullis House at which Sir Gus O'Donnell spoke about the work that the Office for National Statistics is doing on measuring well-being. I am interested in this topic because, as an economist,

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I have always been aware of the shortcomings of GDP measurement and of how much more there is to life than just the goods and services on which monetary value can be placed. Yet there is the difficulty of developing any proxy that tries to measure these other things in life. I remember the early days of cost-benefit analysis, when we had the Roskill report on the third London airport and the lengthy deliberation over what value one would place on a Norman church. The value that was put on it in the study was the value that the parochial church council had placed on it for insurance value, but the council admitted that that was the value that it felt it could afford to put on the church rather than any real valuation.

There are very real difficulties here, and there is the conundrum that many of us have pondered over for a very long time. I was an assistant lecturer at the LSE with the noble Lord, Lord Layard, in the 1960s when the Roskill report was being deliberated over. I remember even then, at the time when GDP was going forward on a fairly regular basis, there was the conundrum of why it was that if we were all getting so much richer, we were not feeling happier. This is a fundamental question that the noble Lord, Lord Layard, has been asking for some time.

I wanted to speak in this debate because I want to share with the House my experiences over the past six months when I have been leading an inquiry looking at the role of further education colleges within their communities. It fits into the scenario of the Government giving further education colleges greater flexibility over decisions about how they should spend their budgets. I was sponsored in this inquiry by the National Institute for Adult and Community Education, the AoC and the 157 Group of colleges. My remit was to look at the role that further education colleges do and can play within their communities and the added public value that their leadership can bring to those communities. It led me to do a lot of reading, a lot of visiting, a lot of talking and a lot of thinking about this subject.

My visits were perhaps disproportionately to very good colleges classed as outstanding by Ofsted. What hit me more than anything else was how brilliantly some of our colleges are reaching out to their communities and working with them in all kinds of different ways, not only in spreading the message of learning and skills but giving to those communities the self-confidence and the self-esteem that give them a much greater sense of community and, from that sense of community, a greater sense of well-being.

I would like to give three illustrations of the sorts of activities that I experienced. I visited a community hub in Bolton where the college worked alongside the local authority, using an old primary school in an area that was acknowledged to be disadvantaged. It had been going for some 20 years, and it provided the community with anything and everything from cookery classes and knitting groups through to adult literacy and numeracy. It also ran a youth group that had attached to it a boxing club and a cycle club. It served old and young alike. Graduates from the community hub had gone on to other college courses-access courses, A-levels and degrees in social work-and a

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lot of them had come back, stayed within the community and worked as community leaders and at the hub itself helping to bring others in. They were the activists and community leaders there; they instilled a sense of community and pride within the neighbourhood. It was this hub that organised street parties for the royal wedding. The cycle club had a sponsored ride from Land's End to John O'Groats, raising money for a local charity. The boxing club was winning trophies all across the north-west, and they were extremely proud of it. The hub was very much the centre of the community, organising it and giving it a considerable sense of pride.

Another college that I visited did a great deal of youth work. It linked up with local youth clubs, the local police and youth offending teams. It provided for those young people facilities where they could meet, sports activities such as football and basketball, in addition to things like motorcycle maintenance classes. It brought in young people to use the college facilities so that they might get used to the idea of coming into college. Having seen the facilities and the classes that were being run, they might be induced to sign up for some of them. They turned from being NEETs-those not in employment, education or training-into being in training and very often going on to further qualifications. Again, it was an obvious linking up.

At another college, the principal discovered that the local PCT was having great difficulty in meeting its young people's well-being and health targets. He said, "Well, why don't you come and work from within the college?". This was set up and the PCT within two weeks had hit the yearly targets which it had failed to meet for the previous two or three years. It now provides within the college a well-being centre for young people. It is a win-win situation, because the PCT has hit its targets; teenage pregnancies are noticeably down within the community; and college attendance rates are noticeably up. In addition to that, the nurse function within the college is now paid for by the PCT, which provides the staff for the well-being centre.

I found all this extremely encouraging. It seemed to me that there were three elements in this success. One was leadership, another was partnership, and the third was vision. The college leadership provided the catalyst for those partnerships to be formed, and the partnerships led to greater involvement in the community. Social energy is unleashed. As a result of this activity, I found myself reading over the summer the work of the Royal College of Arts on social productivity. It seemed to me that this activity displayed precisely what the college was describing. By involving people in these activities, you could unleash social activity which gave people the confidence and self-esteem which led to well-being. I coined the term-and this is the title that I gave to my report-"dynamic nucleus": colleges could be like the centre of a Catherine wheel, as a catalyst, sparking off through partnership all kinds of other activities. These activities can add considerably to social well-being.

8.14 pm

The Lord Bishop of Chester: My Lords, I think that the time permits me to speak briefly in the gap. I was not sure that I could be here in time for the debate, so I did not put my name down.

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Well-being is a very fluid and flexible word, as we have heard. It is quite closely correlated with happiness. Surveys of people in employment in different professions show the clergy as among the happiest groups of workers in our country, which I do not believe has any correlation with GDP.

Certain things such as well-being or happiness arise best if you do not try to achieve them directly. Some things in life are a bit like the soap in the bath: if you try to grab hold of them, they slip out of the hand. It is a little like the character of love: you cannot force someone to love you, whoever they are. I cannot get one of my clergy by the scruff of the neck and say, "You will love me, won't you?" They may well squeak back, "Yes, Bishop", but I know that they will not really mean it. Love has to arise out of the truth, the reality and the richness of a relationship, but you cannot force it. Often in the long dynamics of a happy marriage, it is as the partners in a couple realise that they have to let the other person be who they are and not try to change them into what they would like them to be that the happiness in a marriage often develops better. In the average marriage, each partner tries to change the other one into what they would like them to be. This causes trouble for about 20 years; then they give up and are happy.

While the Government of course have a place and a role to play, part of the wisdom of government is to realise the limited place that it has. If I were to look to the future and to well-being, it would be to allow our children to be children. The surveys of the well-being and happiness of children in our society are a major worry. I correlate that partly with the fact that we start children at school so young compared with many other countries. We almost try to force children on life's journey too soon. The same is true generally of the place for what I call the intermediate institutions between government and the individual. We tend to see an oscillation in our society between the power and reach of government and perfectly proper emphasis on the freedom and rights of the individual. Both are key aspects of the dynamics of society, but they very easily squeeze the intermediate social or human institutions, which are largely those which promote well-being and happiness. We have gone through a period of almost trying to grasp after well-being too much.

In our increasingly diverse society, key to promoting well-being is to recognise that diversity, to allow a genuine tolerance, even of things that we do not particularly like ourselves, and almost to get into the way of thinking, "That is the way in which a mature, diverse, pluriform democracy will have to work". To some extent, that means the Government employing a self-denying ordinance.

Perhaps I may end by quoting a verse from the Bible-many on these Benches are very loath to do so in your Lordships' House. One of my favourite verses is simply:

"But seek ye first the kingdom of God ... and all these things shall be added unto you".

Happiness and well-being are in a sense the other things that are added unto us, but it is only if we divert our attention to truth, beauty and justice and all those

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other values that real well-being and happiness will emerge, as a by-product in one sense but as a real fruit of that perspective.

8.18 pm

Lord Layard: My Lords, I congratulate the noble Baroness, Lady Tyler, on proposing and securing this debate. I strongly agreed with everything that she said.

I do not think that there is any issue more topical or more urgent than this. Even before the economic crisis began, people world wide were beginning to question whether economic growth really should be the key touchstone of the policies of their Governments. "Surely", people were saying, "human well-being must be the ultimate goal".

Among governmental organisations, the greatest credit goes to the OECD for being daring enough to highlight this issue in 2004 when it began the first of its great conferences on defining progress. When it comes to individual countries, Britain is seen world wide as being the country, other than Bhutan, which has done more to promote well-being as a government objective, to think about it and to move towards measuring it. It is fair to say that many people around the world are looking at Britain to see what lessons can be learnt from how we are handling these issues here.

Of course, this started under the previous Government. We had well-being divisions set up in many departments, including health, employment, education and environment, and in 2009 the Office for National Statistics began its work on how to measure our national well-being. That said, of all the political leaders in the advanced world, our present Prime Minister has been outstanding in championing the idea that well-being should be a central, if not the central, objective of government. He said it in 2006, when he first became leader of the Conservative Party and talked about general and national well-being, and he said it even more emphatically when the measurement exercise was launched last November. He was absolutely right-I am not sure whether the right reverend Prelate would agree-that if you ask what is the purpose of government, it is difficult to see any other purpose for government than to create the conditions in which people can lead happy lives. How they find happiness is a subtle matter, but the Government create many of the conditions in which people lead their lives and surely that should be the basic guiding principle. I agree with Thomas Jefferson, who said that the care of human life and happiness is the first legitimate objective of government. I challenge anyone to come up with any other legitimate objective of government.

Perhaps I may comment first on the issue of measurement and then on the policy implications of the well-being objective and the Government's performance in that respect. As the noble Baroness said, if you do the wrong thing, you search for your keys where the light is rather than where they really are. You only do the right thing if you measure the right thing.

It used to be supposed that it was impossible to measure the quality of life as people experience it in themselves, but in the past 30 years there has been an

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explosion of research on happiness which has shown that it is as measurable as any other internal state. We measure people's political attitudes and do not think that is highly controversial; we measure whether they are unemployed, which depends on their state of mind in the way that it is measured in our official statistics; and how to measure depression used to be a subject of controversy but it no longer is. I am quite sure that in due course we will have a settled way of measuring well-being.

We currently have a number of ways and it is absolutely clear that although none of them is perfect-no measurement of anything is perfect-the measurements we already have provide valuable and meaningful information. For example, how people reply to questions about their happiness is closely related to the objective measurements you can make of electrical activity in the relevant parts of the brain, as well as being well related to the observations made by relatives, friends and observers; and the answers that people give to these questions are explicable in terms of many of the factors such as those mentioned by the noble Baroness.

This is not the place to discuss the exact questions the ONS is trialling-I declare an interest in that I have been involved in advising it about what questions to ask-but the Office for National Statistics, under its able chief statistician, has approached this issue in a most professional way. It has been testing many alternative approaches suggested by different people in addition to the four main questions it is already asking on a routine basis. By next summer they will have been answered, over a 12-month period, by 200,000 people

It will be an important moment when those results are published because it will give us, for the first time, an account of the state of the nation in terms of what I maintain matters most-how people actually experience and evaluate their lives. I am not sure whether it would be too grand to say that this will be a moment of comparable importance to the Domesday Book, or the first census, or certainly the great Rowntree surveys of wealth and poverty. It will show us, for the first time, who in our population is in misery and who is not. Many of the results will open our eyes, as did the Domesday Book, the census and the Rowntree surveys. It will be a very important moment in how we view our country.

It is also very important that the Government have insisted that the sample is big enough to provide valid and reliable results for each local authority area. One can imagine the debates in each council when they get their results and look at the distribution-where it is good, where it is bad and how it compares with other areas. It will be a wake-up call and I would be astonished if it does not lead spontaneously to a revision of the priorities of local government and of course-it is happening already to some extent-of central government.

Once you have got the measurements the next question is: why are things like this; what can be done about it? Of course, explaining the distribution of well-being-what are the causes of misery and happiness-should be, when we take into account the indirect causes as well as the direct causes, the main task of social science. We should think about the top priorities in social science.

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We already know a great deal about what are the really important factors and the noble Baroness has already said much of it. I would say that, first, comes health-and mental health above all-and next comes human relationships, family, work, community, and money also matters to everyone. However, there are two important qualifications to that on which I would like to spend a little time.

First, in a country as rich as ours, relative income matters to people more than absolute income, and as our country becomes absolutely richer we cannot all become relatively richer compared to other people in our community; if some go up, others have to go down. This helps to explain why, as the noble Baroness said, there has been no increase in measured happiness despite the huge increases in absolute income experienced over the past 60 years.

It follows from this that although we need to deal with our immediate problem of unemployment and unused human resources, we need growth in the sense that we need short-run growth to get back to a state of full employment. We should not confuse that with long-run growth, which is much less important. We are going to have to revise our priorities away from the presumption before that almost anything could be sacrificed for the sake of greater long-term growth towards one where we put more priority on human relationships relative to long-run growth. We have put excessive priority on long-run growth and we have allowed it to erode our relationships in the family, work and so on. We have allowed the banks to argue that we need a highly risky economic structure on the grounds that it might produce more and higher long-term growth and we should not continue to accept those kinds of arguments. They are probably not even true in terms of long-term growth, and they are certainly wrong in terms of our values. Economic stability is far more important than long-term growth. The other caveat about money is that an additional pound increases the happiness of a poor person more than a rich person. Roughly speaking, the value of money to a person is inversely proportional to their income.

Finally, let me say a word about how the current actions of the Government stack up against the well-being objective. The Government face many constraints. They have made many important initiatives to promote well-being; in particular I would like to mention the one that the noble Baroness referred to: their commitment to complete the national rollout of improved access to psychological therapy. But if we look at the big picture, it is difficult to claim that the Government have prioritised well-being. Across income groups, the incidence of the overall cuts-including the expenditure cuts as well as the tax benefit changes-is affecting the poor more than the rich. This is inconsistent with what I said about the value of money to different parties. Across types of activity, the cuts are affecting our systems of human support for the young, the old and the unemployed more than they are affecting our capacity to produce long-term growth.

In fact, the Government have recently been hinting that they want to switch expenditure from current expenditure, which provides support for the social sector, towards higher infrastructure spending. As a

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founder member of the movement called Action for Happiness, I constantly hear stories about the devastating effect of this in terms of human well-being.

Baroness Verma: Can the noble Lord come to an end?

Lord Layard: I have tried to present a balanced scorecard. When the Government talk about the importance of well-being, I think it is totally sincere. It is a concern shared by all parties, but when it comes to the Government's performance in delivering well-being, I am afraid that there is room for improvement.

8.30 pm

Lord Wallace of Saltaire: My Lords, I very much welcome this debate. I share with the few who have spoken my enthusiasm for the topic and my view of its importance. I therefore much regret the very small number of people speaking from all Benches. I can remember five years ago or more, in my own party's federal policy committee, being told that to have a working party on well-being and happiness was a woolly liberal topic that would arouse the scorn of the media. I read a book on happiness by one of my LSE colleagues at the time, which many thought was a woolly liberal book, written by an economist who only dared to do so because he was about to retire. The quality-of-life paper which my party debated at its last September conference was excellent. It drew on much more research than I had until then known was available. It was probably the first serious political party document that took this debate on board. I am very sorry that the Labour Party is so absent here, because it is absolutely the sort of topic that it ought to be taking on board. It is part of what our colleague, the noble Lord, Lord Glasman, is talking about when he talks about Blue Labour; the importance of community; the importance of social networks; and the importance of the non-economic factors, which old Labour ignored so dreadfully when it was knocking down the old housing communities and putting up those great and soulless estates.

The noble Baroness, Lady Tyler, says that this issue is starting to creep into the mainstream of public policy, and we must all accept that the word "creep" is important here. It has some way to go. It is also of course at the heart of the yet loosely defined concept of "big society" in the Conservative Party. I wish there were more Conservatives also taking part in this debate. There is a large cross-party, all-party debate to be had on this subject. It is still, sadly, only beginning.

I am answering this debate because, as the Cabinet Office spokesman in the Lords, I am responsible for the Office of Civil Society and answer for the Office for National Statistics-although I stress, it is an independent body to which I am answerable, but have no influence over. I think that is a very important part of this debate, because if we are talking about getting more reliable measures-measures that everyone in the debate will trust and be able to argue over-we need something like an independent Office for National Statistics to be able to hold the ground on that. I very much welcome the work that it is doing and the encouragement that the Prime Minister is giving to that.

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The Stiglitz report, one of the key documents on this-after the book on happiness by the noble Lord, Lord Layard, some years before-says in its executive summary:

"What we measure affects what we do ... Choices between promoting GDP and protecting the environment may be false choices, once environmental degradation is appropriately included in our measurement of economic performance ... if our metrics of performance are flawed, so too may be the inferences that we draw".

The problem, as we all know, once one gets involved in this debate, is finding objective measures of well-being and of having to depend partly on subjective measures of well-being. The ONS is experimenting with different forms of subjective work. The international dimension of this-the OECD has already been mentioned-in the work of the Canadians, Australians and others, helps to feed in to a more informed debate. Sadly so far, on the whole, it is limited to the experts, think tanks and social science faculties, but I hope it will spill out into a national debate. As I say that, I can immediately see myself, or perhaps the noble Lord, Lord Layard, in front of Jeremy Paxman as he sneers, "Surely you don't believe that well-being has any relevance", let alone imagine what the Daily Mail will say about this. It is going to take a lot of time to build respect for a very important shift in the national debate. It starts from recognition that GDP as a measure of social progress is limited. It does not distinguish between economic activity associated with positive and negative social progress, such as the cost of long commutes, crime, divorce, dealing with natural disasters and so forth. It does not include those important functions performed in the household and voluntary sectors. What we are looking for is a means of measuring social capital and social added value as well as economic capital and economic added value.

I note also in the literature, which I have read with great interest over the last few days, that there is the question of how one measures the quality of life as well as the quantity that one consumes. The Stiglitz report was extremely valuable as a way station in this. I very much welcome the way in which our Prime Minister has taken up the debate, started under the last Government and a number of international organisations, and has done his best to take it forward. I thoroughly enjoyed his excellent speech last November, in which he said,

And he recognises that,

He continues that,

That is what the Government are engaged in. That is what the coalition parties are entirely signed up to. We very much hope that the noble Lord, Lord Layard, will in time persuade the Labour Party to sign up to it as well-perhaps, even, to understand the purpose of what is now under way.

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As has already been mentioned, the ONS is designing the best measures that it can and is undertaking a large-scale survey, the results of which will be published next July. I hope that will take us on to the next stage in a widening public debate. This will look at a range of areas, including social interaction, relationships, family, community, volunteering, the whole concept of fairness-relative incomes have been mentioned-and a sense of having control over one's own life. That is a very important set of questions. These are factors that can clearly be influenced and shaped by public policy. To make a slightly partisan point, my dislike for socialism was nurtured by being a candidate in Manchester and working on those huge rebuilt council estates. I fought a constituency in 1974 where 98 per cent of the population lived in council accommodation, mostly flats. I had some real argument with the city planners, who thought that they knew best what was needed for the people who lived in those houses. It was a concept of passive citizenship, in which people had things done for them but had no control over their own lives. That is part of what we have to reverse, and part of what Labour in particular has to reverse, in some of the old Labour thinking that is still there.

We are making progress. Some of these data do not entirely relate to what government can do, but there are very wide implications for public policy across the board. The much greater importance that we need to give to the whole question of mental health is part of this. I thought that the public health White Paper took us one small step in the right direction in that. We all know that depression is the opposite of well-being, and looking at well-being takes us into that whole area.

I myself am very much struck by the importance of the built environment. It is the opposite of the central Manchester council estates in Saltaire, which is a wonderful community. We are forced to live next to each other, because it is all terraced housing. We have green space-there is a park. There is an institute at the centre of the village, and we all as a result know each other and interact with each other. It has a real sense of social capital. Even from just spending the weekends there, I know many more people in Saltaire than I do in my neighbourhood in London. I hope that I do not sound too much like Prince Charles in wanting to build that sort of community, but there are some real questions about the lack of wisdom of building those new estates on the edge of towns with two car spaces outside every house where you absolutely do not interact with your neighbours. You do not have a local high street or a community pub, and as a result you grow up without interacting with your neighbours. So neighbourhood, community and a sense of self-control are all part of this.

That takes us on to the localism agenda, which the coalition agenda is developing. We still have quite a long way to go. Being in control of your own lives also means having more self-government; it means encouraging active citizenship. Many of us also think that it means more urban parish councils and more local, local government. That is something that we have to work on to reverse the alienation of so much of our population from our current style of politics, with the passive

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observance of Prime Minister's Question Time as a form of distant entertainment that in no sense involves you.

So this has very large implications for consumer culture and the extent to which marketing and advertising encourage people to substitute buying things for actually thinking what they really want. There is the question of how far government policy should attempt to alter the way in which marketing and advertising go. There is the whole question of social trust and social capital. So we have a very long way to go.

I welcome the little remnant of us who have taken on this debate, all calling for a wider national debate, which shifts the national debate on to a new ground. It is a huge challenge to the conventional wisdom and a challenge to all political parties. It is also a challenge to the economics profession, which I hope the noble Lord, Lord Layard, continues to push. I hope for further debate in this Chamber as part of the wider debate, and I suggest to the noble Lord, Lord Layard, that he persuades Labour Peers to give the subject a full Thursday afternoon debate, or as full as possible, because this is a challenge to us all.

8.45 pm

Sitting suspended.

Welfare Reform Bill

Report (2nd Day) (Continued)

8.54 pm

Clause 12 : Other particular needs or circumstances

Amendment 21A

Moved by Baroness Meacher

21A: Clause 12, page 5, line 38, at end insert-

"(d) the fact that the claimant is a severely disabled person and no one is in receipt of a carers allowance or a carers premium for looking after them."

Baroness Meacher: My Lords, Amendment 21A seeks to provide for an addition within universal credit that is similar to the severe disability premium. The addition would be paid to those living alone, although it would not be restricted to that group. It would not be paid to a claimant with a carer who receives either the carer's allowance or the carer's premium. The point of the amendment is to provide for severely disabled people who do not have a carer, and for those who have a carer but who cannot qualify for carer's allowance because, for example, the carer is a student or a child. To achieve this result on a cost-neutral basis would require the level of benefit for the support group to fall slightly. The amendment, however, would ensure a fairer outcome than the Bill achieves.

The severe disability premium, which the Bill abolishes, aims to meet the extra costs experienced by disabled people living alone and is currently worth £53.65 per week for a single person. It helps people who are on a low income, whether in or out of work, who have a severe level of disability and who have no one living with them who can help them. It is well recognised that people in this position face much higher costs than other disabled people with a comparable disability.

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I recognise that the Government plan to abolish the severe disability premium, but that plan is not designed to save money. The Government will instead transfer the money to fund an enhancement of the support group benefits. I understand, having just had a brief conversation with the Minister, that the increase will be something in the order of £44. However, the loss of the SDP will also apply to people who live alone and who move into the support group after these changes occur, so this very disadvantaged group will in fact lose out-although by something in the order of £8 a week, as I understand it. The support group people will lose the £53.65 per week, minus the uplift to support group benefits in the order of £44.

The reason why the transfer of funds from the severe disability premium to the support group might not be fair and efficient is that the costs of disability do not correlate well with the level of impairment, which is what will determine whether a person qualifies for the support group. The recent Demos/Scope report, Counting the Cost, based on a survey of 845 disabled people, found little correlation between the costs of disability for an individual and their level of impairment. It is quite difficult for someone such as me, who is not disabled, to understand quite how that works in practice but maybe others in the Chamber can illuminate that for us.

The relevant point here is that the severe disability premium targets help where it is most needed-on the additional costs that people have to pay because of their disability. Because this amendment will ensure that the SDP-equivalent benefit is payable only to those who receive either the middle or the highest rate of the care component of DLA, only those with frequent care needs throughout the day will qualify. It should be said that these care needs have to be for personal care rather than for the more mundane sort of activities such as shopping or housework.

The groups who would benefit from this amendment include those who become eligible for the support group after the introduction of universal credit but who live on their own and do not have a carer. These groups will include new cancer sufferers, for example, and those with a new and severe impairment. Without this amendment that group will lose the £53.65, as I have said, although they will recoup a fair proportion of that through the higher support group payment. Another group that would benefit from the amendment are those who are entitled to the middle rate of the care component of DLA but who are in the work-related group, or perhaps even found fit for work.

Going to work costs money, of course, particularly for disabled people who might not be able to use public transport alone, for example. Under the current system, a severely visually impaired person living on their own and earning £100 a week will have a disposable income of £188 per week, after housing costs have been paid, plus their disability allowance. Under universal credit the same person will, as I understand it, be little better off than someone without an impairment. That must apply to those who do not actually make the support group assessment. If you are assessed as not having a sufficient impairment to justify the support group benefit, obviously you are in a very different situation.

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Young carers will also benefit. Severe disability premium has played an essential role in supporting young carers. If a lone parent is severely disabled and their child acts as a carer, the child cannot claim carer's allowance but the family can benefit from the extra financial help offered by the SDP payment. As I suggested at the beginning, this amendment is not designed to increase costs but rather to ensure that the money is not transferred from very needy groups to others whose impairments might be more severe but whose financial needs might be less. The issue is that these are different assessments, and come out with different results.

The Government strongly support the careful targeting of precious taxpayers' money. This amendment seeks to support the Government's objective, and to improve the fulfilment of that objective more effectively than the Bill currently does. I should say that this is a probing amendment, but I hope the Minister will understand the problem that I am raising and will consider a way forward. I beg to move.

9 pm

Baroness Grey-Thompson: My Lords, I rise to support the amendment of the noble Baroness, Lady Meacher, and to look specifically at the removal of the severe disability premium and the effect that it will have on young carers who are looking after a lone parent who is disabled or two parents who are both disabled.

The severe disability premium is really important in supporting young carers. Children who are still in full-time education cannot claim carer's allowance, but many play an invaluable role in supporting disabled parents. However, if there is no other adult in the household, and no one claiming carer's allowance, the family can benefit from the extra financial help offered by the SDP.

The abolition of the SDP will cost families with a young carer up to £55.30 per week, which is £2,876 per year. This cost could be equivalent to 20 per cent of household income after housing costs. The Department for Work and Pensions estimates that around 25,000 lone parents are in receipt of severe disability premium. That is 25,000 families with a disabled adult, in receipt of the mid or high-rate care component of DLA, but with no adult either in the household or receiving carer's allowance to look after them, and with children in the household.

Many of these children are likely to be doing a substantial amount of caring for the parent, but this measure could force them to have to take on additional caring and household responsibilities because the family just cannot afford to pay for help. This is likely to put additional pressures on their children to make up for this loss of additional care. This is happening at a time when support services for young carers are being cut back, according to a recent survey by Action for Children. The charity surveyed 23 of its young carer projects between May and June this year. Findings reveal that almost half of services questioned reported a rise in the number of children on waiting lists and had seen an increase in the needs of young carers.

The Children's Society, which works with young carers, gave the following example of the pressure that some of these children face and why they should not be pushed into even tighter financial circumstances.

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Kelly's mum, Jenny, became ill about 10 years ago when she was only eight years old. An aggressive illness hospitalised Jenny, and has since entirely paralysed her down one side. After staying with relatives for several months while her mum was in hospital, Kelly was able to move back in to live with her mum from the age of nine. Since then she has cared for her mum non-stop. She makes meals and does the washing and cleaning. She said early on that she could only make simple dinners such as scrambled eggs on toast, but she has learnt quickly, and she has had to. She does not do it alone; she has a rota of professional carers who come to help out day to day, but they cannot do everything, and they do not stay overnight.

About three years ago, the year before Kelly was due to sit her GCSEs, Jenny became extremely ill for a while. Kelly had to get up around four times a night to help her out. Naturally, she was exhausted, dragging herself to bed as soon as she got in from school. Jenny currently receives the severe disability premium, meaning that she and Kelly are just one of 25,000 families with a disabled single parent. They will presumably be covered by transitional protection, unless Jenny's reassessment for ESA from IB is viewed as a change of circumstances. It would be useful if the Minister would be able to clarify that. However, families who find themselves in a similar position after the measure is brought in are likely to be left £55 a week worse off as a result of losing this premium.

Lord McKenzie of Luton: My Lords, we should be grateful to the noble Baronesses, Lady Meacher and Lady Grey-Thompson, for introducing this important issue on which we have all received representations. Quite a lot of numbers have been bandied around with particular reference to benefits, and I will be interested in the Minister's response. As I understand it, in the current system the severe disability premium is paid to people, whether in or out of work, who receive at least middle-rate care, live on their own and do not have a carer. It is payable only as a means-tested benefit so it supports those with a severe disability who have a low income and face many extra costs as a result of living alone.

Alongside that is the disability element of the working tax credit, so under the present system someone who is entitled to DLA or has recently been receiving a long-term sickness benefit would be entitled to the disability element of working tax credit if they worked for at least 16 hours a week. That is where we start from. As we have heard, though, the proposed support for adults in the universal credit depends upon the gateway of the WCA. This is what will drive the new arrangements. The briefing that we have had says that only those with a level of impairment sufficient to be found not fit for work will receive any extra help. I am not totally clear whether in that context "not fit for work" means someone who would only be going to the support group or someone who was going to the WRAG as well. I think the Minister is shaking his head, or rather he is nodding to say that only those in the support group would receive that.

That creates the difficulties that have been spoken about. The changes would mean that someone who could self-propel a wheelchair 50 metres or was registered

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blind but could undertake a journey unaccompanied could be found fit for work or, presumably, for work-related activity. Of course no one would want to claim that such individuals could not be encouraged to work if they wanted to, but that does not mean that they do not face considerable disadvantage and cost compared with someone with no impairment. So if they are out of work but found fit for work they face the same conditionality as everyone else, but if they are in work, because the gateway for extra support within the universal credit is the WCA, someone who is found fit for work will receive no extra support in work. The juxtaposition of the present and the future is concerning.

I am sure that the Minister will have seen the briefing that we have had. It says that the following are some of the ways in which different groups will be affected. Those who are terminally ill or who develop a severe level of impairment and live on their own could be disadvantaged to a significant degree-by something like £50 a week. Someone who is entitled to a middle rate of the care component but found fit for work-for example, someone who is severely visually impaired-will in many cases be found fit for work. However, if they are living on their own and doing some work, they are likely to have considerable extra costs that are not met by the DLA or by PIP when it comes along. Currently, most would be entitled to at least the middle rate of the DLA care component and therefore the SDP.

Under the current system, a severely visually impaired person in the work-related activity group and living on their own earning £100 a week will be left with a disposable income of £188 a week plus their DLA, after housing costs are paid. Under the universal credit, the same person will be left with a disposable income of less than £100 a week plus whatever PIP is payable after housing costs. There are plenty of other examples and we have heard some of them today from the noble Baronesses. These sorts of disparities are quite disturbing. The Minister might say that these are quite specific and narrow examples of the full spectrum of people who are affected by this, but a serious issue has been raised here and we need to understand fully how people are being protected in comparison with the current system under the new world of the universal credit.

Lord Freud: My Lords, this amendment seeks to put an additional element into the amount of universal credit that is payable for those who are severely disabled and who have no one receiving either carer's allowance or a carer's premium for looking after them. In essence it seeks to recreate the current severe disability premium within universal credit. As such it would involve a significant increase in cost compared with the Government's plans. That increase stands at £400 million, unless there were other readjustments. However, let us just take it at face value. At face value, it is unaffordable.

On Monday the House approved the Government's plans to simplify the disability-related additions. Instead of the seven different components within the current system of benefits and tax credits for adults, and two further rates in child tax credits for disabled children, universal credit will just have two rates for both adults and children. By restructuring the rates in this way, we are not looking to make any savings. We are redistributing

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around £800 million of current spend without returning any savings at all to the Exchequer. The full amount will be reinvested by increasing the higher rate for more severely disabled people. In our policy briefing note we made it clear that there would be some phasing. I know that I owe the noble Lord, Lord McKenzie, a letter on that matter.

Once resources became fully available, we expected to be able to provide a higher rate, at around £77 a week. This is significantly higher than the current £32.35 payable as the support component within ESA: £44.65, to give the noble Baroness, Lady Meacher, the exact figure she was seeking. It will provide a much more meaningful amount to severely disabled people than the current patchwork of premiums, which gives some people more than others and makes it difficult for people to understand and obtain their full entitlement. I should make it clear that one of the features of the universal credit as a whole is that we are expecting a substantial amount of the gains to the poorer people to come from much better take-up. The simplicity of a system with automatic provision of everything that people are entitled to will mean that more people in this category are likely to be recipients and get what they deserve.

Baroness Meacher: It would be helpful if the Minister could explain whether there is any provision in the new system for child carers, where the mother might not be in the support group. You have to be very disabled, as I understand it, to be in the support group. Yet a mother might need her child to do an awful lot in the home: shopping and cooking and all the rest of it. Is there any provision for her?

Lord Freud: My Lords, I will come to that. What we are dealing with here is rather interesting, as we move from one system to the universal credit. We are dealing with the current system as it exists on paper, we are dealing with where we want to go in the universal credit, and then we are dealing with something in the middle, which is how things actually work on the ground. This is one of the areas in which things are working on the ground as they are not really meant to. It is simply not the role of the severe disability premium to provide money for young carers. Clearly young carers could be affected if they are providing support for a disabled parent who receives the severe disability premium. Under the current system, the youngster gets it because there is no adult in the house looking after them and they are not allowed to receive the carer's premium. It is one of those things that has unintentionally fallen through the cracks. It was simply not intended as a support for young carers; it was designed to support severely disabled people who live alone.

9.15 pm

As I said in Committee, the needs of young carers cannot be dealt with effectively through the social security system. The noble Baroness, Lady Grey-Thompson, gave us a very moving example. One could not help but be touched by that story. The Government's carers' strategy, published last year, made it clear that support for young carers should focus on achieving

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their educational and employment potential, and that they should have the same opportunities as other young people, without assuming that they should always be a carer. In achieving this aim, the primary responsibility for supporting young carers must lie with local authorities and social services, not with the social security system. That is the right place for it to be.

The other point that I need to make, going back to the main thrust, is that it is right to target additional support for severely disabled people in universal credit on cases where the work capability assessment has established that there is limited capability for work and work-related activity-that is, on severely disabled people who have the least opportunity to work. Noble Lords are concerned that some disabled people who currently get additional premiums will in future get the lower addition in universal credit, equivalent to the work-related activity component in ESA. That is why we are providing transitional protection for those claimants with existing premiums whose overall universal credit entitlement would be less than under the old system as a direct result of moving to universal credit, provided their circumstances stay the same. In response to the question from the noble Baroness, Lady Grey-Thompson, on defining transitional protection, we are still working on pinning that down with precision. We are also looking at the interaction between ESA migration and the move to universal credit.

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