Mr.
Boswell: As my hon. Friend has mentioned
the magic word “finally”, could he reflect on what one
might call the rent profit cap, about which he spoke a few moments ago?
Is it not worth considering, at least in principle, whether that cap
should be linked to the level of local rent determination rather than
being somewhat arbitrarily determined as a monetary
amount?
Mr.
Ruffley: There is no end to my hon. Friend’s
skills. He is a wordsmith, a life enhancer, a caring and compassionate
historian and a guide, philosopher and friend—to me, at any
rate. Importantly, he has added being a policy wonk to his list of
accomplishments, because he has just come up with a policy idea that
had not occurred to me. That might indeed be one way of doing it. I
have already asked the Under-Secretary why the policy cap has been set
in the way in which it has, and I am extremely keen to hear the
answer. In the
interests of time, I shall not detain the Committee, but I hope that
the hon. Member for Colne Valley (Kali Mountford) will detain us on the
issue of the size of what is referred to under the current regime as a
locality. Worrying data have been produced by Citizens Advice. In one
particular part of the country, Barnet, the locality—the Bill
will change the term, but I shall call it the locality for the sake of
simplicity—is very large, which leads to the midpoint of rents
for the area being completely unrepresentative of what a real market
rent would be in some parts of the
locality. I trust that
we shall hear more about that, but if the research conducted by
Citizens Advice in Barnet is correct, something must be done. From the
evidence that Citizens Advice has provided, it seems that there are
serious shortfalls, which need not occur if the rent officer draws the
map more sensibly. Why have the localities been allowed to grow so
large for the purpose of rent determinations by the rent service? I am
not sure what the logic is, but I am sure that it is leading to very
large shortfalls in certain parts of the country.
Although LHA is a sensible
proposition, there are a few questions, and we need the answers if we
are to have full confidence that people whom the scheme is designed to
help, and who need and deserve that help, will receive
it. Kali
Mountford (Colne Valley) (Lab): I shall not continue with
the weather theme in our conversations, but I note that the Room is
considerably chillier than before. In the interests of hon. Members at
some point being able to go and warm their hands on a hot drink, I
shall try to be brief, despite the scope of the
clause. I have not
tabled an amendment, because I believe that there will be an
opportunity to examine matters when regulations are made. However, I
look to Ministers to consider my concerns during passage of the Bill
and to return with further recommendations or reassurances that will
satisfy me and those who have advised
me. I should like to
thank the CHAS Housing Aid Service, for which my husband worked until
1998 as a director in Kirklees and for which I have some affection. I
no longer have any direction connection with it, but Niall Holland came
to see me and has been extremely helpful in advising me about its
concerns. CHAS is a small organisation and therefore was not involved
in the consultation, but perhaps that could be remedied in the course
of our further deliberations, so that it can discuss matters directly
with Ministers and so that proper solutions can be found in the
future. The
hon. Member for Bury St. Edmunds (Mr. Ruffley) mentioned
shortfalls, and the way in which they have come about. We do not wish
to exacerbate an already difficult situation by what we are about to
do. The CHAS report, “Behind Closed Doors”, covers a
number of large metropolitan areas, including Kirklees, and one of its
studies covers south Kirklees in my constituency. For single rooms, the
current shortfall is approximately £18, but in more typical
rental accommodation, the shortfall is £28 for one-bedroomed
accommodation and £16 for two-bedroomed accommodation. For
bigger properties, the differences vary considerably. Those shortfalls
in my area were replicated in all the areas that were studied,
including Bradford, Doncaster, areas right across south and west
Yorkshire and beyond to, for example, Exeter. The study concentrates
largely on areas in Yorkshire—it is none the worse for that, but
the concerns do not only apply to Yorkshire. I suspect that shortfalls
are replicated to varying degrees across the country, depending on
market rents and on housing demand and
availability. There
is another way in which shortfalls may be exacerbated: the move from a
mid-point assessment to a median assessment. On the face of it, the
Government’s Green Paper entitled “A new deal for
welfare: Empowering people to work” gives a useful explanatory
note on how median rent could improve the situation. The example given
is of a range of 13 houses with rental values between £50 and
£200. In that group the median is £150, and the mid-point
is
£125. 2
pm My next problem
arises out of the work of rent officers. When rent officers were asked
how they apply their own values and about the research that they do in
setting those values, we found that they cut out the lowest and the
highest of those 13 properties available for rent in order to reach
their mid-point. In a
parliamentary question, my hon. Friend the Member for Huddersfield
(Mr. Sheerman) asked how the median would be reached. He
asked specifically whether the median that has been referred to would
include all rents or would exclude significantly high or low rents. The
answer was that it comes from the rent officers’ market evidence
database. Our problem with that is that we know in our own area that
the rent officers’ market evidence database already excludes the
lowest and the highest rents available in our area. We need to ask
whether guidance will be given to rent officers. The median, which
would on the face of it bring about an improvement for people, needs to
be a true median and not one that is being
disguised.
Mr.
Ruffley: Am I right in thinking that the size of the
locality exacerbates the problem that the hon. Lady is
describing?
Kali
Mountford: The hon. Gentleman, perhaps
not unusually, is a little ahead of me because I am about to come to
the size of the locality, which has an impact on deciding a median
because the bigger the locality, the larger the variation in rent for
similarly sized properties. My area has some leafy and quite wealthy
areas. Holmfirth, for example, is a relatively wealthy area when
compared with England as a whole, with average annual household incomes
of £30,000. Even in Colne Valley—which is not the
worst-off in Britain—the average income in the poorest ward is
£20,000. Therefore, there is a £10,000 difference in
incomes. That is followed by a difference in house prices and rental
markets. However, Huddersfield and Dewsbury, which are included in the
Kirklees area, have significantly lower incomes per household and a
following variation between house prices and rental values.
It is not
only that Holmfirth—if anyone wants to visit it, it is the
location for “Last of the Summer Wine”—is
extremely beautiful and a great tourist attraction. However, the fact
that it is a tourist attraction affects its house prices. That is
noticeable in my village, Slaithwaite, which is also a tourist
attraction due to the production of “Where the Heart is.”
It shows how a market can be so easily affected by something that does
not appear to be a market change. However, the fact that the television
crew decides to film there changes the value of the properties.
[Interruption.] That may also have a negative impact on
prices—we may look at that in future—but it is currently
seen as a beautiful place and one that has a sense of community,
something that cannot be easily quantified. I do not know how a rent
officer would evaluate that. While a sense of community is one of those
things that changes market values, it cannot easily be put into a
guidance note to rent officers. Nevertheless, they might look more
closely at what is affecting market values in their own
areas.
Some areas in
the pathways have been very large indeed. Taking Sheffield and Leeds as
examples, I am an ex-Sheffield girl myself and, not having lived in one
of its leafy areas, knew that there were certain areas in which I would
never even have aspired to own a property because the property values
in Sheffield vary so greatly. It is a city that was built up from a
number of smaller
communities, which urbanised over the years as the steel industry grew.
My own area is very rural with many formal agricultural properties,
smaller villages and even tiny hamlets. There is a great deal of
difference between the kind of rent that can be attracted in a tiny
hamlet and one that would be attracted in another area. A motorway, for
example, could have a huge impact on the market. In some places, it
would have a beneficial impact as it would give an easy route to other
places where people could go to get work, but in other parts the impact
would be seen as detrimental because people do not like the
noise. Mr.
Jeremy Hunt (South-West Surrey) (Con): Is the hon. Lady
concerned that having a single rate for a large area could discourage
labour mobility, because it could mean that people looking for work
might feel restricted to living in a particular part of the area and
might not be able to move to some of the areas that she has referred
to? It might impede the desire for people to move back into the labour
market if they are out of it.
Kali
Mountford: Indeed. The report produced by Labour MPs in
1997-98 was about that very point. It was one of the first surveys of
rural communities and was carefully produced, considering the reasons
why people were leaving rural areas and going to urban areas to find
work: the travel-to-work problems, the community effects, rising house
prices that meant that they could not afford to stay and the need to
follow the work. There are other effects. In an area such as my
constituency, for example, most people go to work in Manchester, Leeds
or Sheffield. People going to those towns are followed by the
development of four-bedroomed houses, because when people can afford to
get on the motorway and tootle on to work in such places but come home
to the beautiful Colne Valley with its fantastic scenery, they want to
live in the houses that they desire. They change the whole housing
market for the people who already live
there.
Danny
Alexander (Inverness, Nairn, Badenoch and Strathspey)
(LD): I have been following the hon. Lady’s remarks
carefully, and I agree with most of what she is saying. Does she think
that there is a further problem with the phenomenon that she is
describing? A lot of evidence in housing policy suggests that we need
to create mixed communities where people of all income groups, families
and so on live in the same area. Allowing the broader areas that she is
worried about risks putting that policy in
jeopardy.
Kali
Mountford: Of course, some of that can be catered for by
looking at planning guidance, which makes a huge contribution. I have
taken many an opportunity to object to some developments that I thought
did not add helpfully to the social mix. This is not the only way in
which social housing can be provided, and it is not the only way in
which we can ensure that houses of a suitable type for rent or cheap
purchase can be provided, or indeed some mix of the two so that people
can have part-equity. There are other ways of looking at the market,
but what does not change is the variation between one locality and
another.
Kali
Mountford: I am feeling generous, because I am so fond of
the hon. Gentleman.
Hon.
Members:Favouritism!
Mr.
Boswell: I am mortified, but also deeply flattered. Has
the hon. Lady seen the dilemma that I see? She cogently made the point
about striking off the outliers in determining the median. She also
made the point about the huge variations within wards that we may all
have between affluent and less affluent areas. I am sure that is true.
However, given the need to have a good statistical base to inform the
rent officer’s determination, one needs a large enough sample,
and given the need to be precise enough to deal with local market
conditions, one needs a local solution. Does the hon. Lady at least
acknowledge that that is a dilemma whoever is in
government?
Kali
Mountford: Of course it is a dilemma. In order to get more
information, CHAS contacted our local authority and asked for the
information in order to make a better assessment of the rents
available. Unfortunately, the rent officers did not feel—some
for not such good reasons, but others for good reasons—that they
could provide all the information that might have informed us better in
this debate. In their decision not to provide that information, they
cited the exemptions under the Freedom of Information Act 2000
about revealing information that might be against economic interest or
would affect the financial interests of the UK Administration. That is
a pity. I can understand some of that. I can understand some of the
other reasons that they gave. But given that most of us in a locality
know the general amount of rent that is on offer and the kind of
benefits that are paid for that type of property, I do not entirely
accept what the rent officer said. It might have informed our debate
better if we had had a clearer picture of what was really happening in
Kirklees, but unfortunately I cannot advise the hon. Gentleman further
on that because I simply do not have the
information. But any
fool can see by looking in the adverts in the local paper the type of
variation that exists. That gives rent officers considerable problems.
One would not want to skew a market or to attract a higher rent to an
area simply by setting a level that its market value would not attract.
That would be a mistake. I do not see why taxpayers should pay for
something that the market would not attract. Also, reasonably, people
should be able to find a mechanism to ensure that the rent that the
market attracts is true and fair and does not lead to further,
unexpected and unnecessary consequences, especially around the issue of
rent shortfalls. That is what we must focus our minds
on. We must also take
account of the fact that markets change constantly. There is not one
fixed locality that we can draw a red ring around on a map and say that
it is there for all time. This problem surfaced in the case of
Heffernan v. Rent Service, which was heard in Sheffield. I will
not read out all the determinations by Judge Gilbert on that occasion,
but in his examination of the issue of locality he talked at some
length about
the difficulty of defining a locality. If anyone wants to read the
judgment, this is in paragraphs 84 to 87. The problem in that case was
that the definition of locality that was being used at that time was
not being properly applied. The definition
was, “a broad
geographical area made up of a number of neighbourhoods with a mix of
property types and tenure where a tenant could, as an alternative to
the property in question, reasonably be expected to live and benefit
from similar amenities.”
I do not want to go through all
the particular types of tenure, property and amenities that this case
looked at. We all know about the changes that can happen in an area. A
new school might attract more properties and different types of
properties; a new amenity and proximity to other desirable amenities
can also change markets. There is not one fixed area. That gives us a
problem. We need to look at ways through the regulations to advise our
rent officers on how to determine what a locality is, rather than use
too broad a brush. Unless I am misadvised about how the median will be
used, it might mean that people find themselves with a bigger shortfall
than we would
wish. We
also need to find a way through the system for particular tenants. It
is difficult sometimes to understand how rent officers come to their
conclusions. Some people have asked me to ask for greater transparency
on rent officers. I have thought about this a great deal. If the
information about every property that a rent officer looked at were
made available for anyone to see, would that in and of itself cause a
skewing in the market? Would transparency alone be the solution? I am
not absolutely convinced that it would but I should like the
Under-Secretary to think about and respond to that. In her assessment,
will the greater transparency of the work of the rent officer aid the
process or inhibit it? There is scope for greater transparency and
perhaps greater liaison between rent officers and other departments.
Sometimes rent officers have seemed reluctant to engage with other
sectors, especially the housing association and social housing market
sector. If they had a better understanding of how the market
operates—I am not talking about controlling it—they could
come to an understanding about how a reasonable rent could be set in an
area.
2.15
pm I am not sure
that transparency alone would lead us to the result we want. There may
still be times, as in the Heffernan case, when people feel that they
have had a raw deal. That being so, at present they either pay their
rent or they do not. They either decide to live in a property or they
go elsewhere. People have to do their best and get on with what is
available to them or make another
choice. There is a
problem in the attitude of, “Never mind, if you can’t
live in that house go and find a cheaper one”. We all know why
people choose to live in a locality. Opposition Members have already
raised the issue of people in a travel-to-work area wanting to be
nearer to places where there are job opportunities. Some people, for
example, parents who are having trouble raising their children, want to
be near to relatives or friends who can give them support. I have had
cases in my constituency of women who were intimidated by a former
partner and who needed people nearby whom
they could trust. They were reluctant to move out of their locality and
away from those who provided an important support network in their
daily lives. That is a reason for people wanting to stay where they
are, in the community they are used to. People do not
necessarily want to move their families around. There is much credit in
a family having stability, which can be found in the community that
people live in, as I know from my constituency experience. It is a
credible, and creditable, reason for wanting to stay in a locality,
even if the accommodation is much smaller than rent officers think is
appropriate. Another
way of dealing with the problem is to consider the work of the rent
advisory committee in the Kirklees authority, for example. As well as
rent officers, the committee includes estate agents and other people
with a housing interest who come together to discuss the area’s
general housing needs. They are well informed about what is happening
in their local housing market and know what is available, what the
houses prices and rentals are likely to be, and what types of amenities
are planned that might have an effect on the market. Those people are
under-utilised at present and they could add something to the mix,
especially if they were used as a point of appeal by those who felt
that the rent officer had sent an unreasonable rate for their benefits,
given the locality.
Will the Under-Secretary
consider regulating for a group as a mechanism for providing an
over-layer, so that people can be certain that what they have been
offered has been properly considered and know that they have a right of
appeal? It is a right that exists throughout the benefit system, yet it
seems to be curiously unavailable in this proposal.
That brings me to another point
that was raised in respect of the Heffernan case: the appropriate
maximum housing benefit, to which the hon. Member for Bury St. Edmunds
alluded. Whether we are talking about the median, the mid-point or any
kind of average, it is the maximum that in the end causes the crunch,
and all these matters will affect that. If someone as eminent as Judge
Gilbart could not find an absolute answer to that because, in his own
words, he was having to determine only whether or not the rules had
been applied correctly, rather than whether or not the rules were
correct, I should like to ensure that the rules that we have are
correct and that all tenants feel that they receive a fair
deal.
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