Rent Officers (Housing Benefit Functions) (Amendment) Order 2001

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First Standing Committee on Delegated Legislation

Monday 14 January 2002

[MR. EDWARD O'HARA in the Chair]

Rent Officers
(Housing Benefit Functions)
(Amendment)
Order 2001

4.30 pm

Mr. Andrew Stunell (Hazel Grove): I beg to move,

    That the Committee has considered the Rent Officers (Housing Benefit Functions) (Amendment) Order 2001.

I am not a fan of the order. I hope to demonstrate that the Committee should decide that the order needs further consideration rather than that its consideration should be thought complete.

I shall start by giving the Committee some background information. The order arises from a court case that was concluded last October. The case was triggered by four tenants of private rented accommodation, three of whom live in my constituency in the metropolitan borough of Stockport, which has a population of about 300,000. Three and a half constituencies fall within its confines. To the north is the city of Manchester; to the south is the county of Cheshire.

Until the summer of 1999, the administration of housing benefit and the determination of permissible rent levels by the Greater Manchester rent officer was carried out as follows. There was an inner urban zone, a suburban zone and what I would describe as a rural commuter villages zone, and the applicable local reference rents in those zones reflected the situation in those areas. The local reference rents were based on a characteristic property of three bedrooms and one living room. In the Manchester area, the figure was £75 a week; in the first inner urban zone of Stockport, it was £90 a week; in the suburban zone, it was £107 a week; and in the rural commuter villages areas in Cheshire, just over the border, it was £121 per week. That range of local reference rents obviously reflected property values and rental values in the private market–and, for most people who knew the areas, they reflected common sense.

In my constituency, as in the majority of constituencies, many residents are on housing benefit, but most of them live in council or housing association property and are not affected by the order. However, 400 or so people in my constituency live in private rented accommodation and are in receipt of housing benefit. Perhaps unusually, my constituency has a substantial estate of private rented semi-detached properties all owned by one company.

Generally, two sorts of people typically live in such private rented accommodation. Many are single parents of school-age children, usually following the break-up of a partnership, marriage or relationship. The fact that they have children, commonly aged between five and 15 years, is clearly relevant because

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those children go to the local school. Indeed, many of them would already have attended the local school, having lived in the area before the partnership was dissolved. Pensioners, who are often long-term residents of rented property, form the second category. Those two groups were seriously affected by the rent officer's actions in 1999, and they will be affected by this statutory instrument.

The area is prosperous, property values are high and there is great demand for property to rent, which means that rental values are high. As a segment of Greater Manchester, however, it is a diverse area. Many private tenants who rented were already required to top up their housing benefit payment by perhaps £1 to £5 a week, which reflected the fact that the local market was pushing up at the values granted by the housing benefit situation.

In the summer of 1999 the rent officer, who represents a Government agency and has nothing to do with the council, arbitrarily decided to treat the whole of Stockport as one locality–the Greater Manchester area has a rent officer who takes responsibility for that area and its 10 local authorities. That decision did away with the steps in the value of the local reference rent in an area containing 300,000 people and covering 15 miles in one direction and 10 miles in another.

I want to draw the Committee's attention to the contrast between the figures under the old system and those introduced by the rent officer. The figure for the Manchester zone rose from £75 to £77; the two figures within Stockport of £90 and £107 were reduced to £87; the figure for the Cheshire area was increased from £121 to £126. Later in the debate others may say that this is a suburban support system, but I want to make it clear that in the centre of Stockport the figure also decreased as a result of that arbitrary decision.

The consequences for my constituents were dramatic. Housing benefit support fell by up to £40 a week for 400 tenants and the average decrease was £20 a week. Tenants found themselves accruing arrears at a rate of between £80 and £170 a month. There was no transition, preliminary notification or consultation. A report prepared by Stockport metropolitan borough council in January 2001 reckoned that more than 350 tenants have had reductions. Of them, 190 have had reductions of less than £5 and nearly 60 have had reductions of between £5 and £10. Some 132 have had reductions of more than £10, of whom 51 have had reductions of more than £20 and six more than £35. Those figures represent the amount of support that tenants were receiving from housing benefit per week.

Tenants finding themselves in that situation have a range of options. They can run up arrears and face eviction. They can leave, which means that they must find cheaper accommodation within the envelope permitted by the rent officer. That is a question not of moving to the next street, but of moving to a completely different part of town or into Manchester. For many it means giving up part-time jobs, losing their care and support network and, perhaps most crucially, withdrawing their children from local schools, which often remain the one beacon of

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stability when family conditions are deteriorating. Many found that leaving was not an attractive option, because leaving with arrears generally meant that they would lose their initial deposit and had serious difficulty in trying to re-enter the private market later.

Apart from running up arrears or leaving, people have the option of providing a massive top-up. However, they are on housing benefit because they have low incomes and are not in a position to chip in with an extra £20, £30 or £40 a week. Some relied, at least initially, on friends and relatives. Some ran up debts in other areas or simply reduced the household budget and faced starvation.

Fortunately, housing benefit legislation makes provision for local authorities to give an emergency bail-out. Stockport council has been unusual among local authorities in committing significant amounts of money to help with topping up tenants' rent payments. However, by law that has to be an emergency payment. The council cannot give an undertaking to do it in the long term, even presuming that it has the resources to do so. I pay tribute to the council, which has worked exceptionally hard, in parallel with its welfare rights unit, to try to minimise hardship to families and tenants. The citizens advice bureau and several other welfare organisations have also worked hard to try to mitigate the damage that tenants face as a result of the decision.

We are not talking about some theoretical consequence of the change–all this has actually happened. The net impact is that people who are eligible for housing benefit cannot obtain private sector rented accommodation in my constituency unless they are prepared to make a substantial top-up payment. I have described that elsewhere as economic cleansing.

We did not take the decision of the rent officer lying down. Tenants approached me and other Members of Parliament in Stockport. Stockport's Members have worked together on this. I asked questions of the Minister and secured an Adjournment debate on 12 January last year. Members went in deputations to see the rent officer and, with council officials and others, we went to see the Minister then responsible, the hon. Member for Sunderland, South (Mr. Mullin).

In addition, tenants approached solicitors to challenge the basis on which the rent officer had acted. A company called Thrasher Walker, especially its partner Jean Walker, played an important part in the events that have brought us here this afternoon. Four test cases were selected, went through the courts and reached the Court of Appeal. On 26 October last year, the Court of Appeal ruled that the rent officer had been wrong, had misinterpreted the law and was producing altogether the wrong outcome.

I want to draw the Committee's attention to some aspects of the High Court's judgment. It says:

    ''By the time of the hearing . . . two of the four applicants had been forced to leave their homes because they could not make up the shortfall.''

That shows that, as I said, we are talking about real life and a real impact on my constituents. The Court of Appeal also said:

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    ''it is contrary to the meaning and purposes of the . . . statutory scheme . . . to treat an area as large and diverse as Stockport, and even more so Greater Manchester, as the relevant locality for the purposes of setting a local reference rent . . . when an immediate locality capable of furnishing a local reference rent can readily be identified. If locality does not stop here, there is no answer to the question 'Where does it stop?''

That was about as sound and complete a condemnation of the rent officer's approach as we could have hoped for. The Court of Appeal also said that a locality should apply to

    ''an area no greater than will enable the rent officer reliably to make the specified calculations and judgments.''

An

    ''area as diffuse or as arbitrarily related to the subject dwelling as the administrative borough of Stockport''

cannot be lawful.

That is the situation as the court saw it. It also explained its view of the precise purpose of housing benefit regulations, and of the exceptionally numerous statutory instruments and amendments that have followed their introduction. It said that the purpose of the regulations

    ''is to intervene in the market. It is not to drive people who have had to fall back on housing benefit out of more affluent areas where the benefit rules would otherwise have enabled them to remain and into poorer areas.''

The court noted that, as interpreted by the rent officer, the regulations would economically cleanse constituents from my constituency through the operation of local reference rent rules. It concluded that

    ''it offends the purposes of the Order to take as the relevant locality an area so large that the poorer dwellings in it will inexorably bring the median, and with it the cap, down to a level which drives out or pauperises otherwise eligible housing benefit claimants.''

We received the ruling, and that seemed to be that. The rent officer had tried it on, but on being tested in the court the provisions had been comprehensively shot down. The judgment was given in the Court of Appeal on 26 October, but the order before us was made as early as the Sunday of the following week, in an attempt to reverse a decision taken only eight days previously. In other words, five working days elapsed between the court judgment and the making of this order. I know that the Government are exceptionally speedy, deft, competent and error-free, but it is inconceivable that the statutory instrument was produced from scratch in five working days. It was clearly produced earlier in the reasonable expectation that the Court of Appeal would say, ''You're wrong.'' The Government wanted to reverse that decision as quickly as possible.

Some of my constituents take a cynical view. They think that the rent officer deliberately dragged the process through the courts and to the Court of Appeal, consciously wasting not only his own time but, crucially, tenants' time and money, and doing his best to exhaust their resources and to save embarrassment.

 
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