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17 Oct 2002 : Column 487—continued

Mr. Andrew Turner (Isle of Wight): I was struck by the explanation that the Minister gave to the Liberal Democrats, which was that an individual cannot be an intelligent purchaser unless he or she knows how much they have to spend. When the right hon. Gentleman is selecting the pathfinders, will he make particular efforts to cover an area where rents are variable geographically or seasonally? Will he take account of the need to cover effectively those whose incomes vary substantially during the year, such as seasonal workers or those who do not receive all the money that they should through the Child Support Agency?

Mr. Smith: I thank the hon. Gentleman for welcoming my comment. It is not the first time that we have made common cause against the Liberal Democrats.

We will address the variable geography and incomes to which the hon. Gentleman refers. Rent reference areas try to take account of that and we will work on the basis of existing areas. I agree that there are big issues to consider for the future and that we will have to learn from the pathfinders. I will try to address his concern when we select the pathfinders.

Glenda Jackson (Hampstead and Highgate): The problem with housing benefit in my constituency, which is an area of high and rising rents and a diminishing number of properties, is not the speed in processing claims—my borough of Camden has two charter marks for excellence in that—but the gap between the level of rent set by the local rent officer and the rent set by the private landlord. What formula will be used to define a standard rent allowance? Many of my constituents who suffer most grievously are single people. How will they be helped?

Mr. Smith: I echo my hon. Friend's comments about the performance of her local authority. As well as castigating those that do poorly, it is important to praise those that make a difficult system work effectively.

The reference rent will be set on the basis of the present system, disregarding outliers and taking an intermediate level between the highest and lowest rents in the area. By putting the money in the hands of the

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tenants and, as I said, by removing the perverse incentive for corrupt landlords to collude with tenants in raising rents, it is likely that the reform will exercise some downward pressure on rents. That will help, although I do not want to overemphasise the effect.

Hywel Williams (Caernarfon): The statement says that the allowance will be flat rate, based on area and family size. However, we need to address the particular housing costs experienced by people with disabilities, given that those are unrelated to area and family size. That was the subject of an Adjournment debate secured by my hon. Friend the Member for Ceredigion (Mr. Thomas), which was given a sympathetic hearing by the Minister.

Mr. Smith: It is very important that the needs of disabled people are properly addressed. The reform will not alter the premiums and the support that they get from the disability living allowance. I shall keep an eye on the operation of pathfinders to ensure that disabled people's needs are properly reflected. There is no need whatever why disabled people should be denied the same choice and opportunity that is available to others. Indeed, they should enjoy it to the full.

Jeremy Corbyn (Islington, North): Can the Secretary of State assure my constituents, who live in a high-housing cost, high-demand area, that they will continue to get a reasonable supply of private rented accommodation under the system? Many of us are concerned about that. In addition, will he intervene on local authorities that have proved themselves completely incompetent to deliver housing benefit? Islington council, which is run by the Liberal Democrats, has bizarrely signed a continuation contract with a company called ITNET, which over the past five years has proven itself incapable of delivering housing benefit safely and securely to anyone in my borough, so causing immense hardship.

Mr. Smith: Many landlords are also put off by the complexities and delays in the present system. The reform should help those who want to make their properties available.

We stand ready, however, to intervene. The directions that we have issued have had an effect and are in addition to the measures that we are taking on the help teams and in addition to the extra investment. In the final analysis, if the people who run an authority are incompetent, we can take it off them and get someone else to run it.

Andrew Selous (South-West Bedfordshire): Will the Secretary of State assure the House that his Department will examine the practice of some local housing authorities that stop the payment of housing benefit while they investigate tenants? That presumes guilt before the investigation is concluded and greatly worries many tenants.

I thank the right hon. Gentleman for his support for the Bill promoted by the right hon. Member for Birkenhead (Mr. Field) and remind the House that every Conservative and Labour Member supported its proposals in Committee.

Mr. Smith: I thank the hon. Gentleman for his remarks and for welcoming the reforms. I shall certainly

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look into the instances that he describes. We take the advice of the benefit fraud inspectorate on these matters and I shall make it my business to get a report from the inspectorate on the issue.

Andrew Bennett (Denton and Reddish): I welcome the Secretary of State's announcement in so far as it reforms bureaucracy, but I should like to ask him about the underlying principle. Over the past 20 years, less and less subsidy has gone into building low-cost housing and more and more has gone into the housing benefit system, resulting in bureaucracy and the poverty trap. A large amount of it has gone to unscrupulous landlords. Is it not about time that we put money back into low-cost house building as that would do a great deal to reduce the chronic hardship being suffered by so many people in this country who cannot get decent accommodation?

Mr. Smith: It is not an either/or as I am sure my hon. Friend would agree. We need to increase supply and establish a fair and efficient system for supporting those who cannot afford their rent. The proposals are dedicated specifically to my hon. Friend's second point, and as I said, I think that they will encourage more landlords.

My right hon. Friend the Deputy Prime Minister has announced substantial increases in social housing investment to address the first point that my hon. Friend raised.

Mr. Adrian Sanders (Torbay): Will the proposals reflect differentials in seaside resorts where tenancies are often for six months and where accommodation is at a premium during the summer months, but plentiful during the winter months? How will choice be increased? Will the proposals do anything to help landlords to find tenants who abscond owing rent that they are never able to recover and housing benefit, which those landlords then have to repay to local authorities?

Mr. Smith: On the second point, when arrears build up—eight weeks of arrears is normally the yardstick—we would reinstate direct payments, so there is that measure of safeguard for landlords. Variability of rents in seaside or other areas should be reflected in the way in which the reference rent is calculated. At the moment the proposals do not alter that, but in pathfinder areas those whose present rent is below the reference rent level and in that sense are penalised for living in a cheaper area will get the allowance up to the full reference level and will be better off as a consequence.

Mr. David Lepper (Brighton, Pavilion): May I echo the comments of my hon. Friend the. Member for Regent's Park and Kensington, North (Ms Buck) and ask my right hon. Friend to say something about how he sees the new measures helping in particular young people under 25 in a high-housing cost area such as mine in Brighton and Hove? Under the current system, many young people are being priced out of the town in which they were born and brought up.

Mr. Smith: It is important that we address the wider questions of housing supply. The Government have

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already amended the single room assessment basis for housing benefit, which has made some measure of improvement to the situation and we will continue to keep these matters under review.

Mr. Neil Gerrard (Walthamstow): If we are to move to a system of flat rates, based in some way on current local reference rents, how will we overcome the problem that has already been referred to in high-cost areas such as London of the big and growing gaps which exist between the reference rents and the real level of rents that people are being charged? On the question of choice, as that is what the statement is about, how many landlords, once they know exactly what the standard rate is, are likely to charge less than that figure? Will it not mean that low rents will go up unless we deal with landlords who let properties in poor condition, by refusing to let them into the system?

Mr. Smith: It is very important that decent housing standards are enforced more generally through the legislative protection of those standards and the work of environmental health departments. The reference rents system works by taking a middle point between high and low rents in an area and that should address the relevant problems over time, but as I said in an earlier reply, I acknowledge that there is a particular problem in high-cost areas and we will pay close attention to it in future.

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