Mr.
Boswell: I had not intended to speak,
but my remarks are to some extent fired, and even informed—if
that is possible—by the interesting contributions by the hon.
Member for Caerphilly (Mr. David) and my hon. Friend the
Member for Windsor (Adam Afriyie). I am concerned about fairness in
dealing with different claimants, which is a theme that I have
occasionally developed in this
Committee. It is with
some trepidation that I take on the burden of representing the Welsh
interest, which is by marriage rather than a direct connection. I have
a good deal of sympathy with the hon. Member for Caerphilly. In dealing
with areas with a high proportion of second homes, which is a deeply
political and controversial issue in all the Celtic countries and in
some parts of England, it is at least arguable that no normal housing
market is easy to assess. It would be helpful if the Under-Secretary
were to explain how rent officers could sterilise artificially high
rents driven by artificially high capital values, which are driven by
Chelsea money, if I may use that shorthand, and how that would
therefore create equity between areas with equivalent indigenous
incomes but different costs, even though other circumstances are the
same. That is one
concern. 2.45
pm
Kali
Mountford: I am grateful to the hon. Gentleman for
returning the favour. Has he noticed that in areas that are popular to
live in, and especially in those attractive to tourists, significantly
lower numbers of social housing are available for rent? Choice is
narrowed in those
circumstances.
Mr.
Boswell: That is a reasonable concern. On the other side
of the equation, a lot of people find themselves in bed-and-breakfast
accommodation, which is also a feature of some of our tourist areas. I
want to flag up with the Under-Secretary concern in the Committee that
there should be a degree of equity between claimants and no perverse
consequences in the way that the system
works.
Danny
Alexander: The hon. Gentleman is making a fundamental
point. In many rural areas, such as the Scottish highlands, the
definition of the rental market area and the level of local housing
allowances might well have an impact on whether someone chooses to let
out their property privately throughout the year to a regular tenant or
to make it a holiday home. In some communities, in which 20, 30 or 40
per cent. of houses might already be second or holiday homes, that
decision has a direct impact on the ability of individuals on low wages
to live in that community, and therefore on the sustainability of the
community asa whole.
Mr.
Boswell: I agree with the hon. Gentleman; he makes a very
good point. I, myself, have surplus farm cottages—not a large
number—because farming is so different from what it was, and I
do not mind saying to the Committee that that is exactly the dilemma
that I rehearse with myself: are we going to let them to local families
or perhaps make more money out of holiday lets? I think that Ministers
need to focus on
that. I
shall pick up on what the hon. Member for Caerphilly said. I worry
intensely about the two-tier system of benefits that apply to old and
new cases, and occasionally even feel motivated to write to the
Attorney-General about my concerns. That is precedented; it has
happened in the past. I would get a splendid lawyer’s answer
saying, “Parliament has determined that it is all right”.
However, our hearts are not comfortable when two systems run in
parallel. The underlying concern being expressed is that we should have
a fair outcome.
Mr.
Hunt: I wonder whether my hon. Friend can enlighten me on
a point with respect to the proposed local housing allowance that I
cannot get my head around. Obviously, as the hon. Member for Inverness,
Nairn, Badenoch and Strathspey (Danny Alexander) said, market prices
are dictated in part by Government policy on housing benefit, which
impacts on local house prices. However, does my hon. Friend agree that
if the Government, as they do now, pay whatever the rent is, wherever a
person chooses to live, they could exacerbate the peaks and troughs in
local house prices? However—I do not want to pre-empt the
Under-Secretary—if we have a single housing allowance, which is
the Government’s proposal in the Bill, we could even out those
troughs by reducing demand in the most expensive areas and increasing
it in the least expensive ones. Does my hon. Friend think that the
proposed allowance could have a mitigating
effect?
Mr.
Boswell: It is catching. Another of my colleagues might be
making some of the Under-Secretary’s point for her. My hon.
Friend is absolutely right. The existence of a benefit creates feedback
into what happens in the real world. The market clearing prices offered
on housing units vary depending on whether people have the benefit in
their hands to pay for them. That must be right.
There could be a smoothing
effect, but on the other hand, the point that I was
emphasising—I shall not do more than that, because I do not wish
to subvert the proposals—is that there are wrinkles in relation
to areas with a high second home population, differences between old
cases and new cases and possible anomalies resulting from the
introduction of the new structure depending on the size of the housing
area, as the hon. Member for Colne Valley mentioned. None of that
utterly rules out the idea, and I do not wish to do so, but it requires
the Under-Secretary to respond to a particularly absorbing debate and
to give us her thoughts on how to iron out such
wrinkles.
Mrs.
McGuire: Well, I suppose that that is one way of inviting
a Minister to address the Committee—saying that I am here to
iron out the wrinkles. I wonder whether that is stereotyping women
Ministers, but I know that that is not what the hon. Gentleman meant. I
was only joshing.
Mrs.
McGuire: It is an unusual word, one that I have
never used before, but it is nearly 3 o’clock on a Thursday
afternoon, after what has been—I agree with the hon. Member for
Daventry (Mr. Boswell)—an absorbing and wide-ranging
debate. I suspect that we will not be able to solve all the problems
this afternoon, or iron out all the wrinkles that have been identified.
Hopefully, though, we will make a smooth transition to accepting the
clause. I should like
to respond to something that the hon. Member for Windsor said, because
he made an important point. Perhaps he did not realise how important it
was.
Mr.
Ruffley: I bet he
did.
Mrs.
McGuire: Perhaps I am underestimating his political nous.
He spoke about discrimination. Introducing a local housing allowance is
about ending discrimination in the private housing market. Like many of
my colleagues from all parties, I see adverts in local papers for flats
or houses for rent with the sentence below, “No DSS should
apply.” By introducing the local housing allowance, we are
dealing with long-standing discrimination against those who receive
housing benefit. We are translating a person from a benefit recipient
to a player in the market.
That links in with the comments
of the hon. Member for Windsor about financial inclusion. It is a
cultural change for the individual, the landlord sector and society as
a whole. Why, when looking for a house, should a person have to
identify their personal circumstances and the relationship between them
as an individual and the state benefit system? A high moral philosophy
underpins the introduction of the local housing allowance, over and
above all the issues of transparency and
simplification.
Mr.
Boswell: I entirely agree with the Under-Secretary about
the Bill’s intentions, which are admirable. She has put it very
well. Would she not agree that it is yet another way of getting away
from the old idea of the truck system, where things were made available
in kind rather than left to the choice of the autonomous individual? I
am with her on that. Does she also agree that it will be desirable in
the medium term to consider a transition to other forms of social
housing? I did not make the point in my remarks that there is a danger
that if that is not done, a further anomaly will open up or intensify
between the private rental market and the social housing
market.
Mrs.
McGuire: It is a long time since I have heard the truck
system discussed. It takes me back to the higher history days that we
did in Scotland while everybody else was doing GCSEs and A-levels. I am
delighted by the historical analogy. I intend to discuss the social
rented sector in more detail later on. We should recognise that the
social rented sector is a different beast from the private rented
sector. There is very limited capacity in the social rented sector to
negotiate rents. That is why—I hope that this will reassure my
hon. Friend the Member for Caerphilly and Mrs. Hart,
one of the Ministers in the Welsh Assembly Government—it is not
our intention to introduce the local housing allowance into the social
rented sector. Yes, it was in the consultation document, but we
listened to the consultation responses and recognised that it would be
inappropriate to roll it into the social housing sector. I trust that
my hon. Friend can take that message and that reassurance back to
Mrs. Hart.
I hope that
I can get through most of the points that have been made, although I
hope that hon. Members will forgive me if I do not deal with every
specific
detail.
Mrs.
McGuire: Yes. I appreciate how important
the hon. Member for Bury St. Edmunds is. He asked very specifically, as
I would have expected of him, given his background, about the funding
of the roll-out. As the hon. Gentleman may be aware, we have set aside
some £62 million to support the national roll-out of the housing
allowance. The precise allocation of the funding has yet to be decided
but, as he also raised in his contribution, the financial support would
also ensure that local authorities could support those aspects of
financial inclusion that were in the pathfinder areas. Those included
help to claimants to access bank accounts—which he fairly
identified as one of the very positive elements in the pathfinder
areas—the provision of basic financial literacy material, such
as how to open a bank account, based on existing DWP literature,
signposting the most specialist advice with debt and money management,
and the citizens advice bureaux. I hope that that will give the hon.
Gentleman some comfort about our analysis of the costs of rolling out
the local housing allowance, although we do not yet know what the exact
benefit expenditure is. There is obviously an administrative side and a
benefit side, and it will depend on the future rents in the private
sector, which we have no way of knowing
now. On the issue of
IT, which was raised specifically by the hon. Member for Bury St.
Edmunds, the five major IT suppliers to local authorities have
developed local housing allowance software. Some modifications have
been needed, but I can give the assurance that the IT will
work—she says confidently. [Interruption.] We are nodding
in agreement here. If hon. Members see me duck, Mr. Amess,
you will know where the answer originated. We will provide the
necessary funding to ensure that that happens. We have made an
extensive investment in local authorities over the current spending
review, which has put in place a firm basis for further improvements
over the next few
years. I come to the
£15 cap, and why we have decided on that. It was always going to
be difficult to decide where the cap was going to be. However, we think
that the£15 cap strikes the right balance between
providing tenants with a choice over their accommodation and removing
the disincentives to work. As I said earlier about other parts of the
Bill, the cap is very much about encouraging an incentive to work. We
think that the £15 cap is the right amount, and our
understanding is that it would leave about 75 per cent. of the caseload
unaffected, so the overwhelming majority of the recipients of the
allowance would benefit from the cap.
3
pm The hon. Member
for Bury St. Edmunds rightly raised the matter of work incentives. We
cannot change the culture overnight, but local housing allowance is
part of that change. Instead of a person thinking about taking a job
not knowing what the impact would be on their housing benefit, the
greater transparency of the local housing allowance will ensure that
such a person knows how much they will have in their hand to negotiate
for accommodation. Jobcentre Plus advisers will be able to say how much
a person will get, without having to make all the calculations that are
currently undertaken in relation to housing benefit.
Hon. Members will recognise
that a range of factors have an influence on whether people move into
jobs or not. Housing benefit plays a part, but only a part. We are
doing all that we can to raise awareness of the fact that the new
housing benefit and local housing allowance can be paid to people in
work, because sometimes the information is abroad that the benefit is
available only to people who are not in work.
I hope that hon. Members will
accept that deciding on the £15 cap was a matter of striking a
balance, but we think that it is the right
balance.
Danny
Alexander: Before the Under-Secretary leaves the subject
of work incentives, will she address the question of the withdrawal
rate of housing benefit? From memory, I believe that the rate will be
65p in every extra £1 earned. That will have a dramatic impact
not only on people’s work incentives, but on their incentives to
progress in work, particularly when one considers the way in which the
rate interacts with the tax credit system and other aspects of the
benefits system.
Mrs.
McGuire: I was going to come to that later, but I will
deal with it now. The assessment of the income and the tapers will
remain the same as under the housing benefit system. In that respect,
it replicates the current scheme. Recent research suggests that the
taper is not the main barrier preventing people from moving into work.
Sometimes the barrier is that people lack knowledge as to whether they
can retain their housing benefit and move into work. However, in the
next stage of the reform programme we intend to consider the
relationship between all the elements, including the tax credit system,
which the hon. Gentleman mentioned, and housing benefit. Interaction is
an issue, but the research indicates that the taper, although
important, as the hon. Gentleman said, is not the main barrier
preventing people from moving into work.
Danny
Alexander: May I suggest that the Minister places the
research to which she has referred in the Library, if she has not done
so already, so that hon. Members can study
it?
Mrs.
McGuire: If the DWP research has been made public, I will
place it in the Library. Before Monday, the hon. Gentleman may like to
look at the DWP website and he might find that the research is already
there.
Mr.
Hunt: It’s a wonderful thing to do at the
weekend.
Mrs.
McGuire: Yes, sometimes it can be very cold in Inverness
on a weekend night when there is nothing else to do. They have
broadband now. On
getting the right size of localities, as the hon. Member for Daventry
pointed out, the issue is a matter of judgment. If we go for smaller
localities, there is a danger that we could create pockets of
deprivation or reinforce deprivation. Having a large number of
localities could increase complexity for claimants and local authority
staff. We have listened to what hon. Members have said on the issue,
and it is a fair point that housing markets are different from area to
area. In the highlands and islands, for example, the housing market is
starkly different from elsewhere. We will reflect on the comments made
on that matter. On
the question whether rent officers should operate with greater
transparency, I reassure the Committee that officers liaise with
stakeholders, such as local authorities. Such situations will always be
difficult. We are demanding greater transparency, and there is a strong
view that, in order to maintain their professional independence,
officers need to avoid undue influence by some stakeholders. Once
again, the key is getting the balance right. We would not necessarily
want to specify in guidance how rent officers liaise, but there is an
increasing amount of consultation and discussion between them on the
matter. I hope that
my next comments will allay some of the fears that we have heard
expressed about median rent. Until now, under the current system,
including pathfinders, the rent officers looked at the market evidence
database, which included all the evidence on rents apart from local
authority rents, I think. They then chose to remove the significantly
high and low figures in pathfinders to reach the midpoint. At the
national roll-out, a true median rent will be used. Outliers, as they
have been called, will be excluded. I hope that my hon. Friend the
Member for Colne Valley is reassured that the figure will be a true
median, based on the analysis of rents in the locality; it will not be
an artificial figure, because the outliers at the top and the bottom
will have been knocked off. I hope that that reassures
her.
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