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17 Oct 2002 : Column 477—continued

Mr. Forth: On a point of order, Mr. Speaker.

Mr. Speaker: Order. I will take points of order after the statement.

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Housing Benefit

1.15 pm

The Secretary of State for Work and Pensions (Mr. Andrew Smith): With permission, Mr. Speaker, I would like to make a statement on the reform of housing benefit.

I am today publishing a prospectus, XBuilding Choice and Responsibility: a radical agenda for Housing Benefit ", which sets out our proposals. The system that we have inherited is complicated, costly to administer, vulnerable to fraud and difficult for tenants to understand. For too many people, it means endless form filling and delays in payment. It is often a factor that prevents people from making the move from welfare into work.

Currently, we expect local authorities to reassess 4 million individual claims every year, whether they have changed or not. Nearly 2 million pensioners whose circumstances rarely change are expected to fill in a 40-page form every year just to renew their housing benefit. Local councils are compelled to deal with a bewildering array of overlapping rules for tenants in the private rented sector. That cannot be right. We need a system that puts real choice and responsibility in tenants' hands—one that supports work and cuts the risk of fraud. The Work and Pensions Committee and the Audit Commission have highlighted the need for change, as have many outside observers. It is time to get on with this reform.

It is clear that we need to break fundamentally with the past and bring in a fairer, simpler system, so we propose to introduce standard local housing allowances for private rentals, initially in 10 pathfinder areas. The allowance will be flat rate and based on area and family size. The amount paid will, as now, be income related. It will be paid directly to the tenant, except where vulnerable tenants are unable to manage their own affairs or where substantial arrears have built up. No one will be worse off when those pathfinder schemes start next year. In fact, tenants who find a suitable home with a rent less than the standard allowance will be able to keep the difference. That puts the decision and responsibility in their hands.

The reforms will build on the steps that we have already taken to improve administration and to begin the process of restructuring rents in the social rented sector. It is our intention to roll out reforms nationally and to develop ways of bringing in the social housing sector. That will be carefully informed by our assessment of the initial pathfinder areas, where we will work closely with local authorities, landlords, tenants associations and advice agencies.

Consultation will be led by the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Croydon, North (Malcolm Wicks), for whose work on these proposals I am very grateful. The reformed system will offer greater simplicity and certainty for tenants and landlords, extend tenant choice and responsibility, dramatically cut delays and support our wider aims of improving public services, tackling poverty and extending opportunity.

As they are simpler, standard local allowances will speed up the claims process, which will reduce the uncertainties that people face as their circumstances

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change and will make trying a job a more attractive option. Furthermore, later this month, throughout the country we will start to introduce a rapid reclaim facility for when a job does not work out. We will also remove the need to make a new claim when someone gets a job. Housing benefit will simply run on until the in-work rate is calculated.

We are taking other steps to improve the service for everyone. Jobcentre Plus clients will be able to make claims over the telephone, and from next autumn pensioners will no longer have to fill out a new housing benefit form every year.

We are committed to working in partnership with councils to improve performance through clearer standards and increased accountability. We are already seeing progress. In March, we set out clear standards for housing benefit performance. We will build on that by providing #200 million for training and modernisation over the next three years to help councils that are committed to improvement. We shall also challenge poor performance and stand ready to intervene where local authorities fail to deliver an acceptable service.

It is also crucial that we crack down on fraud. This package of reforms will do just that. First, it will simplify the housing benefit system in order to free resources for the fight against fraud. Secondly, the perverse incentive for corrupt landlords to collude with tenants to set high rents will be removed. Thirdly, we are providing #60 million to support the tighter checking of claims, stopping fraud getting into the system in the first place.

The Government are committed to taking action against rogue landlords who abuse the system. As soon as parliamentary time allows, my right hon. Friend the Deputy Prime Minister intends to legislate to tackle the minority of rogue landlords and boost our drive against poor conditions. It is also important that tenants understand their obligations to behave in a neighbourly way.

As we made clear following the introduction of the private Member's Bill promoted by my right hon. Friend the Member for Birkenhead (Mr. Field), the Government are considering housing benefit sanctions as part of our wider strategy to tackle nuisance neighbours through stricter tenancy agreements and improved antisocial behaviour orders. By making tenants responsible for payment of their rent, the reforms that I am announcing today reinforce the link between rights and responsibilities.

In conclusion, reform of housing benefit is essential. The proposals combine simplicity and streamlined procedures with greater individual choice. They offer a better deal for tenants, landlords and local authorities. We must now work together to make them a success.

Mr. David Willetts (Havant): Housing benefit does indeed need to be reformed. Successive Governments have promised to do it but none has really succeeded. The dilemma is whether to pay benefit for actual rent or make a standard payment of a rent allowance. Sixty years ago, Beveridge devoted an entire chapter of his great report to precisely that dilemma and revealingly entitled it XThe problem of rent". He concluded that it would be better to make a standard payment, provided that rents in different areas had already moved close together. I think that he was right, and that is clearly the basis on which the Secretary of State is proceeding.

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Let me ask the Secretary of State about the scale of his proposals. This Government have all too often proposed welfare reform, only to fail to deliver. About 4 million people are claiming housing benefit. How many claimants does he expect to receive housing benefit in the new way, after he has implemented the pathfinders? Is he committing himself now to proceeding straightforwardly to a complete national scheme after the pathfinders have been implemented, or is there to be a small number of pilots, after which the evidence will be scrutinised before a decision is made on what to do next? We need to know whether the gap between hype and reality that has so frequently dogged the Government's commitment to welfare reform is going to be in evidence yet again on housing benefit.

I should like also to ask the Secretary of State about the detail of the pathfinders. Will he assure the House that they will cover different parts of England? As he well knows, what might work in low-rent areas of the north may not necessarily work in parts of the south-east, where rents are much higher. Is there a danger of going back to the old days of two different housing benefit regimes—one for social housing tenants and another for private tenancies? His proposals currently appear to cover only private tenancies. Will he try to drive down rents in the private sector while those in the social housing sector continue to increase? How will he fix rents for existing tenants, especially if he says that none of them is to lose?

Perhaps most important of all, what about the serious problem of people trapped in dependency because of the incredibly high rates of combined withdrawal of housing benefit and income support that they now face? Will the right hon. Gentleman look at those very high tapers—sometimes over 90 per cent.—which trap thousands of people in benefits, or will the tapers be off-limits?

The Secretary of State went on to speak about the linking of housing benefit to behaviour. Hon. Members on both sides of the House must salute the imagination of the right hon. Member for Birkenhead (Mr. Field), the author of that idea. We approached it in a constructive spirit when his private Member's Bill went into Committee—perhaps the Liberal Democrats did not, but my hon. Friends certainly did—and we will approach it in a constructive spirit again. But that was the proposal from the right hon. Member for Birkenhead. What has happened to the original proposal that was made by the Prime Minister, which linked child benefit to behaviour? Is that still on the agenda, or has it been dropped? Has the Secretary of State for Work and Pensions come to the House in order to drop an idea proposed by the Prime Minister, and instead to support an idea proposed by the former Minister for Welfare Reform, who was removed from his post? Has the Secretary of State decided that the right hon. Member for Birkenhead is right and the Prime Minister is wrong? We would like him to make that clear.

While we debate these ideas for the future, there is an immediate crisis in our housing benefit system in many parts of the country, especially in London, where it is close to collapse. Does the Secretary of State accept that there are people who are homeless on the streets, having been evicted from their houses by councils whose own failure to pay housing benefit is the source of the

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problem? We welcome practical proposals, including those made by him today, to tackle that problem, but the Secretary of State did not refer to one of the reasons why housing benefit administration is close to collapse. Ministers have produced more than 400 housing benefit circulars since the Government took office in 1997 and local authorities simply cannot keep up with them.

May I take this opportunity to urge the Secretary of State to consider our straightforward and practical proposal simply to change the regulations once or twice a year, so that local authorities do not face a stream of changes? We have also suggested that the Benefits Agency should, in the last resort, take over responsibility for housing benefit from local authorities that are clearly not up to the job. I hope that the Secretary of State will also consider those practical proposals to tackle an immediate crisis.

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