UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 469-ii

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Work and Pensions Committee

Changes to Housing Benefit Announced in the June 2010 Budget

Wednesday 3 November 2010

Lord Freud, NEIL COULING and PAUL HOWARTH

Evidence heard in Public Questions 97-197

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Work and Pensions Committee

on Wednesday 3 November 2010

Members present:

Miss Anne Begg (Chair)

Harriett Baldwin

Karen Bradley

Alex Cunningham

Richard Graham

Kate Green

Mr Oliver Heald

Glenda Jackson

Sajid Javid

Stephen Lloyd

Theresa Pearce

________________

Examination of Witnesses

Witnesses: Lord Freud, Minister for Welfare Reform, Department for Work and Pensions, Neil Couling, Benefit Strategy Director, Department for Work and Pensions, and Paul Howarth, Divisional Manager, Housing Benefit Strategy Division, Department for Work and Pensions, gave evidence.

Q97 Chair: Order, order. Welcome, Lord Freud, to this, our second formal evidence session of the Housing Benefit inquiry that we are undertaking. Would you like to introduce the people that you have with you?

Lord Freud: Thank you very much. I have brought with me Neil Couling on my left, who is the Director of Benefit Strategy in the DWP, and on my right I have Paul Howarth, who is the Head of Housing Benefit Strategy, again at the DWP.

Q98 Chair: You are very welcome. I am sorry about the room; it is a bit large and we are a bit far away from you, but I am sure the quality of your evidence will not be affected by that. Can I just ask some practical questions to begin with? I understand that the Government are planning to lay the statutory instruments shortly that will give effect to the changes that have been proposed in Housing Benefit; the ones that have been announced. We know there are a number of different changes; the cap, the 30th percentile and then the 10% deduction on those who have been on Jobseeker’s Allowance. Which of the changes will be covered by that initial group of regulations?

Lord Freud: We will put all the regulations into one, so those regulations will all be presented as a package, even though their timings are slightly different. So they are coming in in one place and they are due to be laid late this month.

Q99 Chair: Late this month?

Lord Freud: I do not have the precise date-

Chair: Are we talking the last week of the month, second last week of the month?

Lord Freud: Neil, do we have a precise date yet?

Neil Couling: There is a mixture of measures. The caps and the move to the 30th percentile we wrapped into one statutory instrument that we are expecting to lay some time in November. We try to give local authorities six months’ notice. Then there are other measures; the non-dependent deductions measure will be enacted through the uprating order, which on normal timings is January, February time. Then there are provisions for the changes to the social rented sector and the 10% reduction in Housing Benefit for Jobseeker’s Allowance; those measures need primary legislation.

Chair: Right, okay. That was going to be my next question; what needed primary legislation.

Paul Howarth: Could I just add to that, to be clear, that the package to be introduced in November will also include the measure to remove the £15 excess and the measure to give extra help to a non-resident carer for disabled people.

Q100 Chair: What parliamentary procedure will the SI go through?

Lord Freud: Well, I think it will go through the standard SI. Some of it is negative, isn’t it?

Neil Couling: It is all negative.

Lord Freud: Is it all negative? It is all negative SIs. We will bulk them up, effectively. Obviously, we will not touch the 10% one, which goes into primary legislation next year, but the regulations we will bunch up.

Q101 Chair: I suppose really my question is will there be any chance to debate this on the Floor of the House? Or will it be done in Committee? Unless it is prayed against.

Paul Howarth: They will need to be prayed against.

Q102 Chair: Right, okay. But even then, it may not be able to be debated on the Floor of the House; that would still be in Committee?

Lord Freud: Yes.

Chair: Okay. Oliver.

Q103 Mr Heald: The Government have talked about three reasons for the Housing Benefit changes. First of all, curbing costs against a fast-rising background; secondly, the issue of fairness with taxpayers; and third, disincentives to work. Just starting with curbing the costs, you have obviously had a chance to look at this over a period of years, because I think you were an adviser to the last Government as well as being a Minister in the coalition, but we are having different evidence given about what is driving these increased costs. On the one hand, the British Property Federation say that the new Local Housing Allowance has made the situation more transparent; that landlords now in effect are establishing a going rate around the level of LHA and that is driving increases. Others say no, it isn’t that; it is the fact that there are fewer of the Housing Benefit claimants in the social rented sector and therefore they are moving into the private rented. Others say that there are other factors; that rents are rising faster with earnings. What is your take on what it is that is making this happen?

Lord Freud: What is happening in the housing market is clearly immensely complicated and has a number of different factors at play. Let me just focus in on the factors that are playing in the particular area that we are talking about, which is the private rented sector. Here we have a position where in practice the dominant buyer is the Government. We are effectively, in the private rented sector, supplying benefit for just short of 1.5 million people: 1.46 million people, more than 1 million of those in the LHA system. The total market for private rentals is around 3.6 million currently. So you can see we are looking at a position where the Government represent 40% of the market. Now, that varies depending on the market: some places it is 20%; some places it is 70%, obviously. Now, what our data are showing is that the rents that we are paying-what benefit recipients are paying-are rising faster than the market. I am sure I will be probed on numbers, but it is in real terms rising considerably faster. For instance, figures for 20002007 show an overall private rental market gain of around 15% in real terms; our rents are going up 25%.

The impact of the LHA is difficult to analyse. When you have published what rate you are prepared to pay, it is not surprising that the market tends to gravitate to that rate, particularly as we have put it effectively at rather a high rate at the halfway point. I would not agree with some of the evidence you have seen saying that there has been no bunching at LHA; we see quite a lot of bunching already. So there is a lot of evidence that prices are going up in our area; they are going up faster than in the market as a whole. We can see a mechanism whereby that can happen and it does not take very much to get very concerned about the feedback loops that we are creating in the marketplace, of driving up the whole rental market. Injecting that kind of money into a marketplace drives the whole marketplace, just like the starter buyer drives the whole of the purchasing marketplace. So we are a very big factor and we have to get pretty smart about-sorry, I am moving on now to why we are doing it. I think that summarises the position.

Q104 Mr Heald: No, that was very helpful. Just moving on now, you are quoted in The Telegraph as saying that landlords are ripping off the system and there is this piece of research-the Low Income Households DWP research-that is often quoted in this context. Do you take that research to be saying that landlords are renting properties out to Housing Benefit tenants at higher rents than they would actually charge to somebody who was not on Housing Benefit, or is it the situation that lower income working households are actually renting property at a lower cost than Housing Benefit claimants are, which is another interpretation of it? In that context, the evidence we have heard is that somewhere between 30% and possibly as many as half of landlords would respond to the changes that you are making by cutting rents or accepting lower rents. What is your take on that?

Lord Freud: Well again, the bottom line is when you are such a big purchaser there is an element of negotiation going on between Government and landlords. Some of the things one hears, and results of surveys, have to be taken in that context. However, we are putting out a paper, I think next week, on the comparison between low-income working households and Housing Benefit households, which is dealing with information at the current time. A lot of the debate that has been going on has been looking at rather out of date pre-LHA information. The information that we have and will be putting out and clearly can share with the Committee is that the low-income households rent at about 90% of what the Housing Benefit recipients are renting at. So they are renting at a lower level.

Now, exactly why that is happening-clearly one can have a long debate about whether they are a more or less desirable tenant and they can do deals, or whether they are better at negotiating. So there are a number of reasons, but the facts are that low-income people who are not taking Housing Benefit are having to live in cheaper housing.

Q105 Mr Heald: The Mayor of London, London Councils and others have expressed concerns about what the changes may mean for local government in terms of cost. There is obviously also the Discretionary Housing Payments fund that you have established to deal with the transition and the problems that may arise, but have you worked out what the costs are likely to be, first for local government and secondly in terms of discretionary payments to set against the savings that you are hoping to make?

Lord Freud: We have put aside a total of £140 million in this spending review, the bulk of which is in the discretionary housing. £20 million is coming out of CLG; two lots of £10 million. Our expectation is that will be adequate to support the people who need supporting. It will keep people in homes where needed; there are some people who may be living in more expensive homes than the LHA rate will become who will need to stay there, for instance people who have very heavily adapted that home. I suspect that is not a large number of people; we think that is not a large number of people. Clearly, the rest of it will be to help with the transition and to support recipients.

Q106 Mr Heald: And what about DCLG having to spend more money on their homelessness obligation side of things?

Lord Freud: Well that is what the CLG money is for; the two lots of £20 million. I must put on the record that we are not expecting any significant increase in homelessness as a result of these changes; we do not expect that at all. We are expecting transitional costs but not a substantial increase in homelessness.

Mr Heald: No. Thank you very much.

Q107 Chair: Can I just be clear about that? Richard Blakeley, the Mayor of London’s Director of Housing, writing in this week’s House Magazine, says, "These changes could result in an additional bill of £78 million a year in temporary accommodation costs." Do you dispute that figure?

Lord Freud: Yes, we do dispute that figure. We do not think some of these very dramatic figures that are being put out bear any relationship to what is likely to transpire.

Chair: Glenda Jackson.

Q108 Glenda Jackson: Well can I just follow up on your last answer to Miss Begg’s question? What is your evidence for that? The Chartered Institute of Housing has done a breakdown on the actual weekly loss of every single category of Housing Benefit claimant within the private rented sector and that ranges, off the top of my head, from something like £1 a week for a shared room, for example, up to £256 a week for a family in a four bedroom property. Certainly, in the questions that I raised with one of the local authorities that serve my constituency on the initial announcement of the £400 cap on four bedroom properties, 313 families in the Borough of Camden will lose their homes because of that cap. So can you flesh out your answer with something rather more than simply not accepting the figures?

Lord Freud: Yes, of course I will. Do you want me to take it right from the top?

Glenda Jackson: Well I want you to explain to us how it is that people will not be made homeless when they cannot actually meet their rents. That is what will happen.

Lord Freud: Well, let’s just look at the housing market, because there is a lot of misunderstanding about what the private rented sector actually is. It is not like the social rented sector, where people are very long-term tenants. There is a lot of churn in the private rented sector. 40% of people have been in their rented accommodation for a year or less and 70% less than three years. So in this area, people do move and move on a regular basis. So the fact that people are moving is not something that is abnormal or odd in any way in this sector. When you start looking at these figures-and we can go into the actual numbers-in principle we are expecting a large number of people who receive less Housing Benefit to be able to negotiate their rents downwards and that the landlords will move to the new LHA rate. The new LHA rate, in many cases, at 30% is not very far apart-I can go through numbers again-from the 50% rate in the rest of the country outside London. I think the average difference is around £6? £9? We have some data on that. Sorry, I caught you out, Neil.

So the move from the difference between the 50% and the 30% is not great. There is a larger impact with the caps and clearly, when people make their next move and their anniversary comes up, they will have to look at housing that is affordable for them and indeed the kind of housing that ordinary, working families afford when they are making their housing decisions.

Q109 Glenda Jackson: But many people on Housing Benefit are ordinary working families. I find it very hard to accept that landlords are going to lower their rents when we have a situation at the moment where, increasingly, landlords in the private rented sector are refusing to accept tenants on Housing Benefit; where there is already a discrepancy between the rent a landlord in the private rented sector will charge and what the local rent officer deems to be a proper rent for that property; and where claimants are already seeing a shortfall in the rent that they have to pay. So with the increasing caps, I do not know how you can say that there will not be an increase in homeless. Is it in order, Miss Begg, for me to read out a briefing of the Citizens Advice Bureau on this very issue?

Chair: I think that might be a bit too detailed, but-

Glenda Jackson: Not at this moment? Okay.

Lord Freud: Sorry, so-

Chair: I think the question -

Q110 Glenda Jackson: The issue centrally is that you are arguing that what the Government are going to introduce in reductions as far as Housing Benefit is concerned is not going to create homelessness, because you also argue that apparently people on Housing Benefit are constantly churning every year. That might be the case for single individuals; it most certainly is not the case for people with children; it is not the case for people with disabilities; it is most certainly not the case for pensioners. Where are they going to live?

Lord Freud: Well, as I say, we have £140 million going into a discretionary housing allowance.

Glenda Jackson: That is peanuts.

Lord Freud: So where there are hard cases-and there will be some-there is-

Glenda Jackson: Several.

Lord Freud: There will be some. We have made arrangements and provided funding to allow those people to be supported as appropriate. But the bulk of people who have relatively small reductions in their Housing Benefit-and the average in London is £22 overall-we would expect to be able to establish new rates with their landlords. The reason we are expecting that to happen is not very far to seek. In many, many markets, when you are a 40% purchaser and you are changing the terms of trade, there is nowhere else for many landlords to go. Now, I know that is not the case in every market and there are different sub-markets, but as an average and as a whole, that is what we would expect to happen. The evidence against that has been based on very small surveys with very small response rates and is absolutely not compelling.

Q111 Glenda Jackson: So you are disputing my statement that, increasingly, landlords in the private rented sector are refusing to accept tenants who will pay their rent via Housing Benefit? If you are, can you give me the evidence?

Lord Freud: There may be in some markets some difficulty, but the raw truth is that since 2007, an extra 400,000 households have been added to the private rented sector. So there has been a huge expansion, which would fly straight into the face of a claim that said that landlords were shutting their doors to these renters. Indeed, when you are looking at 40% of the market, it is very hard to see how that can happen. It can happen individually and the market can adjust; different people specialise in different areas. But what we see is that there is a degree of specialisation among landlords and landlords who specialise in this area, interestingly, on the survey work that we have done, say that they are intending to stay in the market.

Q112 Glenda Jackson: And do you intend to carry out a survey with those who do not?

Lord Freud: Well, we have done general surveys; there are general surveys.

Q113 Glenda Jackson: With respect, you have just said that the surveys are very small. You seem to be undermining your own argument.

Lord Freud: No, I was talking about surveys done-

Neil Couling: The Mayor’s survey had a 3.5% response rate from landlords.

Lord Freud: The Mayor’s, yes.

Q114 Glenda Jackson: So will you do another one in the light of these changes? Clearly not.

Lord Freud: Paul, would you like to pick that up?

Paul Howarth: Well we will do a full evaluation of all of these changes. So we will involve landlords in that. We are also conducting a two-year review of the Local Housing Allowance in any case and that will report later this month. That will include evidence from landlords about what is happening in the market.

Q115 Glenda Jackson: So the evaluation will be done before the changes are introduced?

Paul Howarth: Well, there was a commitment to do a review of the Local Housing Allowance in any case and that commitment will be kept. What I am saying is that when the changes are introduced there will be a full evaluation; a much bigger evaluation, actually, than the one that is being done already.

Q116 Glenda Jackson: And if that evaluation shows that homelessness has vastly increased, will the Government be changing their policy?

Lord Freud: I had better pick that one up. Again, this is the kind of thing where if things come up, clearly one reacts to them, but at the moment that is a hypothetical question and impossible to answer at this stage.

Glenda Jackson: Not as hypothetical as you think.

Q117 Chair: While we are talking about figures, you mentioned to Oliver Heald that you have evidence that the rates in the Housing Benefit part of the private sector have gone up by 25% as opposed to 15% elsewhere. I know we do not have that evidence; do you have that evidence that you could supply to the Committee?

Lord Freud: I actually have quite a lot of data that I am very willing to let the Committee have at the end of this and we will make sure that we pass it on.

Chair: That would certainly be useful. Certainly that is not what we have been hearing about up to now; that differential. There may be the odd case where there is a differential between what somebody on Local Housing Allowance is getting and somebody who is on private rent, but we do not seem to have the evidence that covers all of that.

Lord Freud: I will of course make some of these data we have just been working through available.

Chair: Right. Yes, Oliver.

Q118 Mr Heald: On the surveys you were mentioning, we have had evidence from many organisations on how many landlords will reduce their rents. The variation is from about 29% to 30%-that is the Shelter and Residential Landlords Association evidence-London Councils said 40% would reduce their rents and, in evidence last week in working out their calculations, the British Property Federation said, "Let’s say that 50% of landlords did reduce their rents," and then went on to calculate the cost. What is your take on the likely percentage who will reduce their rents? What is your working assumption?

Lord Freud: What we have-I am just trying to look at a particular piece of evidence that we have and I might ask either Paul or Neil to just hone down on the actual figure.

Paul Howarth: One comment I would make in response to that is that I think it is important to look at the amounts of the shortfalls in rent that people will have, rather than just the percentage of landlords who will reduce their rent. In a sense, when you talk about the percentage of landlords who will reduce their rent, it is a bit meaningless. What we really want to know is how many people have a shortfall of a certain level and what that will mean; how that will translate into landlord behaviour. I think when you look at the fact that, for example, 450,000 people will end up with a shortfall between their rent and their Housing Benefit of less than £10 per week, if you look at it from that perspective then I think you might be able to make some better assumptions than some of those that we have seen.

Lord Freud: The evidence in the London C ouncils - and as I say, that was a fairly poorly responded-to survey - suggested that half of the larger landlords would be prepared to reduce their rates, but clearly there is an element here of sending messages through polls. So our experience on previous occasions like this is that landlords do not necessarily behave in the way that their polls previously suggested.

Mr Heald: Thank you.

Chair: Sajid?

Q119 Sajid Javid: Thank you. Minister, I think you said earlier that the rents on average paid by low-working income households was lower than people on Housing Benefit; I think you said it was about 10% lower or something on average. I assume that is just a reflection of the fact that Housing Benefit is currently set at a median, whereas low income obviously is at the low end of the spectrum. I guess that the changes proposed by the Government reflect a policy desire that people on Housing Benefit should be forced to make similar housing choices as people on low incomes. Clearly as a result of that there will be, as you have said yourself, people who will be forced to move homes. There has been a lot of talk of homelessness in previous panels that we have had here as well, but would you agree that although someone may be forced to move their home, let us say, from a five bed to a four bed property, as long as they are in a four bed property, perhaps in a different location, they are not homeless?

Lord Freud: Well I was very interested to read the last Committee evidence session where you went in fascinating detail into the way that we define homeless. Clearly, the common view of homelessness is nothing over one’s head at all. The statutory and different definitions of course are different from that and they are about adequate housing. Interestingly, just looking at these figures here, the number of people living in overcrowded accommodation on those terms is actually already pretty substantial; in the social rented sector it is over 250,000 and in the private rented sector it is now 160,000-odd. So depending on how one defined it, one could if one wanted to be dramatic say they were homeless.

Q120 Richard Graham: Chairman, can I just come in on that? In fact, Minister, the definition of homelessness goes even further than that, in a sense, because it includes the phrase "threatened with homelessness", which includes a definition, "If it is not reasonable for them to continue to occupy their accommodation because of the severity of overcrowding." So in fact, a local authority can define a household as homeless if they have decided either that a family could not afford the rent or if they believe that that family is overcrowded in either the bedroom standard or the LHA standard. Do you believe that it is possible for the DWP to actually calculate the numbers of people who will be defined as homeless, in answer to a couple of questions from other members of the Committee, or in fact could that figure be any figure that local authorities decide to make it on the basis of judgments on overcrowding or statutory definitions of homelessness?

Lord Freud: That is a very good question and a difficult question. That is one of the reasons that this debate is being slightly bedevilled by some extravagant claims, because at a pinch a council can say, "Anyone who has to look at their financing and cut their cloth to what they can afford has a risk of homelessness." That is the point you are making. So we have found it very difficult to define homelessness in this country for that reason. The estimates of it go from a few thousand to hundreds of thousands depending on who you are talking to. Indeed, if I can just make the point, it is immensely unhelpful when people and commentators stir up fears using somewhat arbitrary figures about potential homelessness, because it frightens people.

Q121 Richard Graham: Do you believe it is time for a redefinition, in fact, of the word "homeless"?

Lord Freud: I actually think it might be quite valuable.

Q122 Richard Graham: Could I make the suggestion the DWP look at this, which would then enable not just members of this Committee but other voluntary organisations outside to revise some of the calculations on which they are making assumptions of homelessness at the moment?

Lord Freud: Thank you very much.

Chair: Alex and then Kate.

Q123 Alex Cunningham: I was interested earlier on when you were talking in terms of landlords may well accept a reduced rent, particularly where somebody is maybe £10 a week short of that. I just wonder what evidence you have, because we have a situation where the outer-London boroughs are already buying up bed and breakfast accommodation; they believe that there is going to be a movement out of the inner parts of London to the outer parts. We also have a situation where the landlords believe that the marketplace is good enough for them to let to young professionals or others, so there are enough people to fill the properties that other people may leave. So I wonder, what discussions have you had with landlords or what evidence do you have from landlords that they will be accommodating to people who might actually just be on the margins of losing their homes?

Lord Freud: Well there are clearly many, many thousands of landlords. We have to go on past evidence and evidence of current behaviour and what we are seeing is many landlords-the ones who are specialising in this area-starting to bunch their rates around the LHA, which is, after all, only going for a couple of years. The bunching is quite substantial now. We have moved from seeing 41% of Housing Benefit recipients within the £10 either way of the LHA rate to now it is up at 56%; so it is moving very quickly to that. Now, the straight answer is when you are 40% of the market on average, it is very difficult for the supplier to do anything but take serious notice of the new terms of trade.

Q124 Alex Cunningham: So are the landlords actually telling the Government that they will accommodate this?

Lord Freud: The survey is not very well filled out in percentage terms; a 3.5% response rate. However, those surveys are saying that half of larger landlords would adjust. Clearly, what you say in a poll is a message and our expectation is that we would do better than that.

Q125 Alex Cunningham: So does that mean that the outer-London boroughs are wasting their time and resources in buying up bed and breakfast accommodation that is not going to be needed based on your figures?

Lord Freud: The London boroughs are buyers of bed and breakfast and have been for years. That is what they do.

Q126 Alex Cunningham: But we are being told that they are buying up everything that is available in order to deal with the number of people they are expecting to move out.

Lord Freud: Well I cannot see any evidence except a claim that they are buying up everything; I have not seen any evidence. Let me turn to Neil on this.

Neil Couling: When we asked Communities and Local Government whether they had any evidence that this was going on, they could find no evidence of this mass buyup that was being alleged was occurring. So we have no evidence that it is occurring.

Alex Cunningham: I suggest, Chair, that we need to explore that.

Richard Graham: Chairman-

Chair: Sorry, Richard, I was going to go to Kate and then I am going to move on. So I will go to Kate first and then I will move on, because we are still on the first question, believe it or not. So Kate first and Richard, you can come back later.

Q127 Kate Green: Thank you. In passing, I note your interest in revisiting some of the homelessness and accommodation standards, and I would just point out that our overcrowding standards are based on standards that really date back to around the time of the second world war. I would hope that we could be more ambitious now, given that living standards generally have risen so substantially over the last 60 or 70 years.

I wanted to pursue a little further the issue Alex was raising about bed and breakfast use and temporary accommodation. Prethe 1996 Act, we did see a substantial number of families forced into bed and breakfast accommodation, and one of the reasons that the definition of homelessness was looked at again leading to the 1996 Act was because we saw the damage that that kind of accommodation did to children and families. I wonder what evidence you have considered in relation to the poor outcomes for children of time spent in temporary accommodation and what assessment you are making of the likely numbers and periods that families will have to spend in temporary accommodation as a result of these measures.

Lord Freud: As I say, we are not expecting substantial numbers to have to go through that kind of process.

Q128 Kate Green: What evidence have you looked at?

Lord Freud: We are looking at the numbers of people affected by these changes. Let me just run through the numbers. A third of people-32%-will see no increase in their shortfall at all. If you take all Housing Benefit customers in inner London, 7% have losses of more than £10 a week and only 4% of them have a shortfall of more than £20 a week. As I have been saying, I am anticipating that the more modest shortfalls will in practice be made up by landlords. That leaves us with relatively modest numbers. What we have looked at has been considered over a period; this is not just done in an instant, it is done at the anniversary of people’s rental agreement. So there is plenty of time for councils to manage the process of getting people moving into their next affordable home in a timely way.

Q129 Kate Green: So you do not expect a significant increase in the use of temporary accommodation as a result of these measures?

Lord Freud: We do not expect a significant increase in the use of temporary accommodation, no.

Kate Green: No doubt when we have the evaluation that Mr Howarth mentioned, we will be able to look at that.

Chair: I am going to move on. Stephen has been waiting patiently for the last half hour to come in with his question.

Q130 Stephen Lloyd: Back on to impact assessment, what do you have to say about Shelter? The Observer a couple of weekends ago ran a long story that 82,000 people in London will be made homeless on the basis of the changes you are bringing in.

Lord Freud: I was very disappointed in that kind of story. It was based on the raw figures that we supplied in the impact assessment and then the poll that we have been talking about-I think it is the same poll as the CLG poll, isn’t it, Neil-which had a response rate of 3.5%. So they put two and two together and made a very large number and I think created some very exaggerated figures; very exaggerated indeed.

Q131 Stephen Lloyd: Right, okay. Thank you. What assessment have you made of the wider property market and demand for rented accommodation and how that affects the ability of claimants to find property at or below the 30th percentile of rent?

Lord Freud: One of the most shocking things that has been happening in the market, when you look at the marketplace, is what happened after the crash and the onset of the recession. From November 2008, for the next 15 months, the property index declined by 5% and our HB claimants’ payments went up 3%, which shows the disconnect there is between what is happening in the marketplace and what we are paying. It is one of the reasons that we took the view that we have to break this feedback loop of us pumping in money that pumps up the amount of money we have to pay. That is a very, very good example of what has been going wrong in the marketplace as a result of us being pretty unsmart buyers of private rented accommodation.

Q132 Stephen Lloyd: So to a great extent, we are back to the fact that generally speaking we are 40% of the market; that means the buyer has the whip hand. So you are very confident that the size and scale of the Government market means we are going to be able to drive the changes aggressively through?

Lord Freud: Clearly, one has to look at micro-markets and an average is an average. So there will be areas where we are not the dominant buyer and where there will be more of an issue, but across the country as a whole, the fact of being a 40% purchaser is a very important one.

Q133 Stephen Lloyd: Okay. I am particularly interested in the direct payments concept and we have taken quite a lot of evidence, as I know you are aware. Landlords, local authorities and other stakeholders would like to see LHA paid direct to landlords to address concerns over nonpayment, arrears and shortfalls. Also there is a reasonably strong argument that the changes that the Government are proposing mean that there is an even stronger rationale to revisit paying direct to the landlords from the DWP. Are you in favour of direct payments to landlords and what are your thoughts about possibly reintroducing it or not in the next year or two?

Lord Freud: Currently I think about 20% of private rented tenants have direct payments; the rest pay for themselves. The reason that this was driven in so that tenants pay for themselves was to allow them financial responsibility. Indeed, that was an aim of the last Government that was supported by this Committee in its previous incarnation. So there are some valuable things to be said to allow tenants to pay their own way. We have committed to looking at this in the context of the review of the LHA and the report that is coming out later this month. I have to say I have glanced at some of the outline at that report and I am not sure that it is going to be hugely helpful in taking that decision, but we are committed to looking at the issue; we understand the issue.

It is not straightforward and I will explain why. We are bringing in the Universal Credit in three years’ time and the essential component of the Universal Credit is that we are trying to break down the distinction between out-of-work benefits and in-work benefits to try to eliminate the problem of being stuck on out-of-work benefits and being frightened to go into a job. So the Universal Credit, with a single taper, is designed to do that. If you are going to do that system, it clearly begs the question: if you are going to have direct payments to landlords, at what point do you break that as you run down the taper, and have you created an unnecessary block on people going from being out of work to in work just based on who is paying? It is, however, something that landlords have been calling for, but that should not be a surprise to anyone, because who would not want to go from a triple C subprime payer to a triple A-we have kept our triple A in this country-sovereign buyer? So that is no surprise that we are getting the call; the issue is balancing these quite complicated factors out as we try to get the cost of Housing Benefit under control.

Q134 Stephen Lloyd: I can appreciate the challenges you will have because of the Universal Credit and the tapering; I do understand that. That was going to be one of my supplementary questions, so thank you for answering that. What would you have to say to the proposition that will be coming from the private landlords-and I have had a number of them make representations myself in my own constituency-that, "Stephen, we accept the Government’s narrative and the direction of travel; we accept that there are going to be reductions in rental from LHA. But we think"-and I am using this anecdotally to a certain extent-"that if the Government are able to go back to that direct payment our experience from our own perspective and from all our colleagues who we have talked to is that that would make a significant difference in denying the dangers that Shelter are alluding to of these ‘tens of thousands of people’ becoming homeless"? They propose that for the very reasons that you alluded to. So presumably you appreciate that and so, despite the difficulties of the Universal benefit and how we would squeeze it in there, can you confirm yes or no whether that could be seriously considered and looked at within the evaluation?

Lord Freud: Yes, no, we are committed already to looking at this issue. It is one of the key issues within the two-year review that we are undertaking of LHA. One of the issues that we are committed to look at is the direct payment issue, but I have to tell you it is a very complicated issue; as I was trying to explain, it has a lot of implications. It is not an easy issue.

Chair: Can I bring Karen in on this ?

Q135 Karen Bradley: It is actually on the same theme but not specifically on the private rented sector; I merely wanted to make a plea that has been made to me by social housing providers that they have a great fear that the Universal Credit will take away direct payments to them and that could cause problems in the social housing sector. It was merely just to make that point.

Lord Freud: Okay, I hear the point.

Q136 Glenda Jackson: One of the reasons that affording Housing Benefit should be paid essentially to the tenant and then the tenant pay the landlord was-I frankly admit I thought it was misthinking-that avenue meant the tenant could negotiate the rent down and that clearly did not happen. You also gave the example of the first stages of the recession, where I believe you said the housing index fell, but rents went up. So I am still somewhat perplexed as to why you think that the Government’s introduction of these changes to Housing Benefit will bring down rents in the private rented sector. What is the evidence to support this? What we have seen, as I have said, is rents increasing.

Lord Freud: Well as I say, we have actually seen rents coming down recently.

Q137 Glenda Jackson: Where?

Lord Freud: I think I take the point about expecting tenants to negotiate and incentivising them to do so, which you said in retrospect you would not have supported.

Glenda Jackson: It didn’t work.

Lord Freud: I think the evidence on whether it has worked is that there is not much evidence it worked, and when you think about it, there is a very good reason for that. That is, if you are negotiating and someone has put up on a screen what your final negotiating position actually is, you are not going to be very effective in that negotiation. In practice, that is exactly what the excess system was doing; the landlords knew exactly what they could charge and that therefore undercut the tenants who were trying to negotiate a discount from that rate. So it is not surprising that we have not had evidence that the excess has worked.

Q138 Glenda Jackson: But you are confident, are you, that the obverse of that, namely private rented sector landlords seeing just how much the Government are prepared to pay in Housing Benefit, will automatically bring those rents down, even though, as I have had occasion to say, many private landlords are refusing to accept tenants on Housing Benefit? Why would they refuse to accept them when the rents are high, when you are arguing that they will be only too happy to accept them when the rents go down?

Lord Freud: We’re going back to-

Glenda Jackson: It is rather central, I think.

Lord Freud: Yes, but-

Q139 Richard Graham: Chairman, can I come in just to try to clarify? Minister, would it be fair to say that effectively, the Department’s position on the 10% reduction in housing allowances in April 2013 is based on the assumption that with buying power of about 40% of the market, you can go to the provider and oblige them to discount slightly in the same way that a supermarket would go to a supplier if it had 40% of the market?

Lord Freud: No, that is a different measure. This is the measure to reduce people on JSA for more than 12 months that we are going to is it, Richard?

Chair: Can I maybe come back to this, because I think what Glenda Jackson asked was a legitimate question. I wonder whether, if you can remember what the question was, you can answer that. Glenda, very quickly, if you could say it again.

Q140 Glenda Jackson: Well essentially, you are arguing, it seems to me, that in the past because landlords saw what they could obtain, they refused to negotiate their levels down. You are now asking us to accept that because landlords will see the maximum that Government are prepared to pay as far as Housing Benefit is concerned, they will automatically lower their rents, even though they are at perfect liberty to refuse, and are indeed so doing at the moment, to accept Housing Benefit claimants. I do not understand how those two views can coincide.

Lord Freud: Well, you have to distinguish between the average and the particular. On average, we are a 40% buyer. Now, on average, that is a very powerful position. In particular markets, you will find attractive markets-and indeed Camden, in some parts anyway, may very well be one of them-where people have more ability to pick and choose. You are meeting landlords who have decided to go into particular parts of the market, but overall, whereas we have had a system with the excess of expecting individual tenants to negotiate down and be incentivised to do so, we have now effectively gone to an end-to-end negotiation where we are just saying what our rate is. So that is a completely transformed nature of negotiation.

Q141 Chair: Can I be clear about this 40% figure? Are you saying that in a local authority area-a broad area of housing-40% of the homes are procured by Housing Benefit tenants?

Lord Freud: Yes. Let me just go through this-

Chair: That figure cannot be right for the rest of the country; I am sure it cannot be anything like that in Aberdeen, for instance.

Lord Freud: Well let me take you through the actual figures. The private rented market in the country as a whole is 3.6 million. That is the private rented market; those are the number-

Chair: Well we have been told it is about 100 million.

Lord Freud: 3.6 million units.

Chair: Oh, sorry.

Lord Freud: Okay. We are buying 1.46 million, the bulk of those on the LHA. So we are the buyer of 1.46 out of 3.6 units of housing.

Chair: Sorry, that is an average, but-

Lord Freud: It is an average across the country. It will be different in different areas. Some areas-London-it is 20%; others, it is 70%. Go to Blackpool and it is 70%. That is the average.

Chair: Right, okay. Kate I am going to bring in and then I am going to go back to Richard, because I think he has already asked some of his questions.

Q142 Kate Green: It is on this point and at the moment I am very willing to accept the Minister’s figures at face value and I am sure he has examined the evidence. I also absolutely accept that it is going to be different in some markets than in others and in London, for example, the private rented sector is a market that is accessed by many more than simply Housing Benefit recipients; young professionals, for example, are competing for those properties. In my own borough of Trafford, 10 times the number of working families are looking for two bedroom properties than it seems will be available to rent at the LHA rate, according to a brief that has very helpfully been provided to us by the British Property Federation. What I want to ask, Lord Freud, is: in those markets where there is an alternative for the landlord, he could shop around and go to another tenant; how is he going to ensure that a Housing Benefit claimant, often quite vulnerable-perhaps a pensioner, perhaps somebody with mental health difficulties-is going to be able to negotiate with the landlord given the inequality in the bargaining relationship? What support is he going to put in for those more disadvantaged individuals who are trying to do a negotiation?

Lord Freud: Well clearly we are going to be putting out a lot of information and support in this process and we have committed to doing that. We are expecting councils to help more vulnerable people through this process. That is what their job and our expectation is.

Q143 Kate Green: Will you be pressing your colleagues in CLG and Justice to ensure that there is adequate funding for advice and advocacy services because councils are facing real attacks on those budgets?

Lord Freud: Well, our view is that it is the job of the local authorities to make sure this happens for their clients, smoothly and effectively. That is our view and we are putting a lot of resource into helping councils do that; that is the £140 million that we are putting in over the period. Clearly, this will take place over a period, giving time for councils to put that support in.

Chair: Okay. Richard, I think you have maybe asked some of your questions.

Q144 Richard Graham: Not many. Chairman, can I just start by just putting on the record-in response to an earlier comment from Kate about hoping that we would be moving forward in terms of improving the LHA standard or bedroom standard of accommodation provided to everyone because it had been designed a long time ago-that my wife and all her brothers and sisters were brought up in a house that did not meet the definition of satisfactory accommodation in terms of the bedroom standard, and my children’s accommodation did not meet the LHA standard? All of them, as far as I know, have grown up to be pretty sensible sorts of people and I do not believe that this constant trend to try to isolate children in separate bedrooms where they watch their own TV, play with their own computer games and do not have interaction with other people in the family is a positive for the families in this country. I would just like to start by putting that on the record. When it does come to looking at the redefinition of homelessness, bedroom standards and LHA standards, there is absolutely no reason, in my view, for trying to isolate children even more than they already are.

Turning now to the Minister and the evidence today, we have heard quite a lot, Minister , about the question of evictions and homelessness. I think we have probably gone into the homelessness business enough for now, but i n terms of evictions, does your Department believe that there will be significant numbers of people actually evicted from privately rented accommodation and therefore moving out of the area in which they currently live , and do you believe that a certain amount of that is what actually happens in the non social housing world, where people move from job to job in different parts of the country, commute into jobs from outside where they live or , in the case of people in the a rmed f orces , are transferred by their employer from place to place, their children move school and move house? W hat do you see as the balance here?

Lord Freud: Well, it is very easy to get into a very static mindset about where people live and how they behave. The reality is that we are a hugely mobile society. Just taking even London alone, the number of moves every year within inner London alone is around 250,000. We are also expecting London to expand-I forget the exact figure-5% or 6% over the coming year. So we are expecting to see big movements of people and we do see big movements of people.

We also need to remind ourselves that commuting is a fact of London life. The average Londoner commutes just short of 10 miles every day-5 kilometres. So people are moving around in terms of their homes and they are moving in terms of getting to their jobs around London as a normal part of being a Londoner. So that is the context in which we are looking at some of these changes.

Q145 Richard Graham: Thank you. Can we move on now to the linkages of Housing Benefit to the CPI index? Of the various charities and voluntary organisations we have already taken evidence from, I think it is true to say that the one thing almost all of them would like to see changed if they could-and many of them singled this out as the one thing they would like to have changed-would be to take away the linkage to CPI, presumably back to RPI where I imagine it was, on the basis that this will mean that the proportion of the market available to people on Housing Benefit will shrink below the bottom third. Do you believe that is the case? Do you anticipate changes in the composition of the CPI that may alter that? Or is it something that you are not too concerned about?

Lord Freud: Of course I am concerned about all aspects. Let’s just address it. What we used to have is rents set by the broad market rent-the average figure that landlords charged. The CPI figure will come in in the year 2013 and effectively it is set for the next two years, because we are talking about a settlement for this spending review; the SR10. So what we are doing is breaking the link into the market as a whole for two years, in order to keep downward pressure. That supposes that it is downward; as I say, rents have been going down so it may not be downward when we get there-we do not know-but we are trying to keep pressure on this ballooning figure in those two years. Now, it will be up to future Governments to decide whether that approach needs an adjustment; if rents get well out of kilter, for instance, there could be an adjustment. But that is a matter for another Government. To try to extrapolate CPI, which I think some of your witnesses have done, for decades on the basis of a two-year attempt to squeeze the ratcheting up of rental inflation is not sensible.

Q146 Richard Graham: Thank you. You talked earlier about effectively the bulkbuying power that the Government has in the private rental market. You have also heard from the Committee about the Committee’s interest in reviewing again the possibility of rental payments being made directly to landlords as effectively a pay-off for accepting a lower rent in return for greater security of income. To what extent have you seen programmes in other places, both in the UK and outside, that give the Department confidence that the measures being introduced on housing are likely to succeed? For example, quite a lot has been talked about the Edinburgh experiment. I wonder whether you would like to say more about that and any other pilots or practices you have seen overseas that could give the Select Committee encouragement that what you are doing has shown evidence of success elsewhere.

Lord Freud: Well I think I ought to turn to Paul on this, just to go through what the evidence base on this kind of thing is-to the extent that you have it at your fingertips, Paul, which you may or may not have.

Paul Howarth: Yes. I do not think we have a lot of evidence from other countries. I think the problem with looking at Housing Benefit in other countries is that the whole social security system is so different in other countries that it is very difficult to make meaningful comparisons. So, although we can certainly pick out policy measures that other countries have adopted and consider those, to actually look at a system outside and say, "Well that is something that we would like to adopt in full," is not something we could do.

Q147 Richard Graham: Does that imply that our system is much less generous or similar or rather more generous than what is available, for example, in continental Europe?

Paul Howarth: In continental Europe-I think things are changing now-by and large, certainly historically, there have been very much higher rates of benefit for living expenses, often earnings related. Therefore, it has been much more possible to contemplate the idea of the housing allowance being somewhat less and that people might be expected to spend some of their other benefit income on their housing. I think that is the expectation in some continental countries, but in this country then typically the income-related benefits are primarily designed for living expenses and Housing Benefit is designed for the rent element on top of that. So it is rather different and I think the way the benefit system has been developed in this country is very different indeed.

Q148 Richard Graham: And can you say something about the Edinburgh method, which I believe means that there are very low arrears in Housing Benefit because of more proactivity from the local authority in collecting arrears? Do you know anything about that?

Paul Howarth: I am not familiar precisely with what you mean by the Edinburgh experiment.

Richard Graham: I believe what happens is that, in essence, if a tenant falls into arrears, the local authority is very quick in changing the method of payment so that the Housing Benefit is then paid direct to the landlord.

Paul Howarth: Right. Yes, well that happens, actually, in quite a few areas and it is something that we very much advise local authorities to do. What we say to local authorities in the guidance on direct payments is that, "If there are signs of trouble, don’t wait for eight weeks to elapse before you intervene. If there are signs of trouble, try to manage that situation; try to talk to the landlord; try to ensure that you are doing everything you can to safeguard both the interests of the tenant and the landlord."

Q149 Richard Graham: You effectively have two options, don’t you? One is to statutorily decide that the payment should be made direct to the landlord and the other would be to work with and encourage local authorities to speed up the way in which they handle arrears so that, effectively in both cases, you arrive at the same solution, which is to give the private landlords the confidence they need in the marketplace and the certainty of income, in return for which that gives you greater buying power on the discounts that effectively you are applying.

Paul Howarth: Yes.

Lord Freud: Yes. Just to pick that up, when we are looking at this issue, we will look at it quite widely in terms of there being more ways to approach this than just a simple, "Right, we’ll pay then," because, in the end, we must get it to be consistent with the Universal Credit, through which we are trying to blend all of these payments into one. So we will take it in the round.

Q150 Richard Graham: Yes. Last question, Chairman, if I might. Clearly, whenever you are making radical changes to a policy it will never be easy to anticipate exactly what the response in the marketplace is going to be. If some of these dire predictions about shortfalls, evictions, real homelessness-people without roofs over their heads-and so on start to become a reality, what is the Department’s plan in terms of response, evaluation and so on?

Lord Freud: Well, we are going to evaluate this rather carefully. Indeed, I have been pretty disappointed to see the evaluation done on the introduction of the LHA, which is to be published shortly. I think that was starved of funding and I am absolutely determined that we will get a proper assessment and evaluation of these sets of changes, for just the reason that you are pointing out that we need to know what is happening and we need to be able to respond.

Richard Graham: Thank you, Chairman.

Chair: Theresa?

Q151 Teresa Pearce: Richard asked you a question about eviction and your reply seemed to be about London and commuting, which confused me a little. I would just like to ask you about that, because when you are talking about that, I presume you mean that people who are working and on Housing Benefit have no need to live in Central London; that they can commute in every day, like many people do-like I do-and that is why the idea of having this cap, say for a one bedroom property of £250 a week, is being brought in, because that is public funds. I just wondered how you felt about the fact that, if that is meant to be fair and we are all in this together, Members of this House can claim £350 a week out of public funds for a property in Central London.

Lord Freud: Well I don’t think it is for me to comment on the level of payment that-

Teresa Pearce: I am asking you because you were talking about normal people commuting in. So why is it not normal for other people?

Lord Freud: What are you saying?

Teresa Pearce: You were saying that people do not need to live near their work; it is perfectly reasonable for them to commute and that it is not right that public funds should pay more than £250 a week for a one bedroom property. But I am just asking why that is-

Lord Freud: Well we have taken a decision at what seem to be reasonable rates. If you take the top rate-£400-it is already £20,000 a year; that is a lot of money. I think six average taxpayers’ income tax goes to support that rate. I think we would all want to live in a country that supported people who needed this support-that is entirely right and appropriate-but it is not entirely right and proper that we support people to live in houses that people who are working and supporting those people cannot themselves afford. To take a rent to a payment at the top cap-the £400-you would have to be earning, I think, in the £80,000 to £85,000 bracket; £83,000, I think the exact figure is. That takes you right up into the top third of earners in the country.

Richard Graham: Significantly more than the MPs’ allowance.

Lord Freud: More than the MPs. So the level of support that we are still offering is by no means ungenerous at all. I think you could hear criticism-

Q152 Teresa Pearce: It is not equivalent, is it? £250 is not £350.

Lord Freud: No. Alright, I am taking the different-

Teresa Pearce: You are taking the higher and I am talking about a one bedroom flat.

Lord Freud: Okay, you can do the sums; 250 times five-I am sure I could do it if I had a calculator here. On the direct comparison, the way that the MPs’ figure was arrived at was entirely different and was made within the context of a whole set of issues, so, frankly, I do not think I am in a position to offer a direct comparison.

Teresa Pearce: Okay.

Chair: Can I just move on to Sajid, because I think this may come up in his set of questions as well?

Q153 Sajid Javid: I just want very quickly to ask a question prompted by that as well, before I move on to these, which was about the quality of accommodation for Housing Benefit recipients. As a member of the Armed Forces Parliamentary Scheme, I had the privilege of going to an army base recently. One thing that struck me that is directly relevant to what has been said about quality was that I had the opportunity to see housing accommodation for soldiers and their families. At this particular site, a large chunk of that accommodation had been sold off recently to the local council and it was made available to mostly Housing Benefit recipients. However, once the local authority first received those properties, they deemed them unfit for people receiving Housing Benefit. So I just wondered, is that something the Government have looked at? What really struck me was how can homes be deemed fit enough for our brave men and women in our armed forces and their families but at the same time there seem to be somewhere in the Government rules that say they are not fit for people on Housing Benefits? Is that something you have looked at?

Lord Freud: To be honest, it is not something we have looked at. I am conscious, like everyone else, that there were concerns about the estate of the armed forces and indeed that is why I think the selloffs were occurring. Certainly, we have not done any work on that.

Q154 Sajid Javid: Okay. I just wondered if that if that is something that could possibly be looked at by DWP later on, because I just think that there should be some consistency there. From what I could tell when I looked at the Army accommodation, it seemed perfectly adequate for what was required. I think they told me that on average £25,000 per unit had to be spent to bring the Housing Benefit units up to standard. It just struck me that there is obviously a big difference in standards and many people around the country wonder why that exists.

Back to these questions, this is really on the impact on local authorities and community cohesion. As a result of these changes, as you have already said, a number of people currently on Housing Benefit will be forced to migrate to homes similar to those occupied by low-income working households. To manage that migration, in one of our previous panels we were told by London Councils that they thought further Discretionary Housing Payments were required in 201112 of around £20 million nationally, of which they thought £18 million would be required in London. Is that something you have looked at?

Lord Freud: Clearly we are looking very closely at the costings. What we have is £140 million available for managing, of which the bulk-£130 million-is in the Discretionary Housing Payments and £10 million is in the homelessness stream. Sorry, I must correct myself; I made a mistake when I said it was £20 million from CLG; it is £10 million from CLG-if I could correct myself-and another £130 million over Discretionary Housing Payments. So that is the money we have made available to help and support councils in this process and it is essentially up to them to manage those resources in a way that makes this transition smooth.

Q155 Sajid Javid: Okay. As some people move from their current home to a new home, some of them will potentially move out of their current local areas and that will put some pressure on public services in the new local area they may move to, such as schools and hospitals. Have you done an assessment of what the likely impact might be in certain areas of that?

Lord Freud: Well we have had a look generally at where the extra cost might arise in terms of schooling and so on and so forth. The schooling figures in London show that there are primary and secondary places available in most schools.

Neil Couling: 74% of primary schools.

Lord Freud: 74% of primary and what, 80% of secondary, is it?

Neil Couling: No, it is 74% of primary schools in London and 66% rounded-65.8% actually-in secondary have surplus places. The actual places for London are: 50,500 surplus places in London primary schools and 31,000 in secondary schools. I have the figures nationally as well if the Committee wants them.

Lord Freud: Now, do not forget we are looking at a context where there are a lot of moves going on anyway; I talked about the 250,000, plus the influx of people as London grows. In the context of those, the figures that we are talking about pale by comparison.

Q156 Sajid Javid: Okay. It would be useful, I think, for the Committee to get some of those numbers, if they are available; it would be helpful.

Lord Freud: Yes, as I said to the Chairman, we are very pleased to supply these data.

Q157 Sajid Javid: Thank you. As those moves take place, a natural consequence of any move from one area to another will be an impact on the social capital that you had, such as childcare arrangements and things like that. Is that something that your Department has looked at?

Lord Freud: Yes, we have. But as I say, some people who will have to move, but not the kind of huge numbers that other commentators are talking about. Some people will need support in their move and support in the area in which they move to.

Q158 Sajid Javid: And I assume social capital is probably only an issue when they are moving to a different area?

Lord Freud: An entirely different area. You can move four miles down the road and keep your networks. We have some of the best transport networks in the world in London, still. They may be overcrowded, but in terms of actual access, we are not talking about huge areas. We are not talking about, as in America, where people are moving hundreds if not a thousand miles; we are talking about moving a few miles. So we are not talking about a wholesale breakup of networks.

Q159 Sajid Javid: Also, presumably you could even possibly stay in the same street and just get a house with one less bedroom or something.

Lord Freud: Well yes, or a few streets over, in some cases. So just because you have to adjust your house does not mean you have to adjust your area and then when you move your area, it does not mean that the area has to be very, very far away. So, looking at the figures, as you start moving down them, you end up with a relatively modest problem.

Sajid Javid: Thank you.

Chair: Glenda, v ery, very briefly.

Q160 Glenda Jackson: Very briefly on the issue of movement, indeed the distance may not be very great, but the fares are constantly rising and for people on already very restricted incomes, that is a serious consideration. On the issue of the surplus places in London schools, both junior and secondary, could you furnish us with those figures for every one of the London boroughs, so we know how many spare places there are in all the London boroughs? Could we also have a rather more detailed breakdown of the numbers and those on benefits who you believe will have to move from their present homes? If you are discounting the idea that the movement is going to be very great, that should be quite simple to furnish the Committee with, shouldn’t it?

Lord Freud: Do you want to deal with this, Neil?

Neil Couling: Certainly on providing a breakdown, I will talk to colleagues in the Department for Education and see if we can get you a breakdown by local authority area for London. On fares in London, bus fares are currently 26% below their 1999 levels in real terms; I think it is about £1.20 with an Oyster card for a oneway bus fare, about to go to £1.30. So there are issues of cost, but fares have actually been falling in London.

Glenda Jackson: Not on the trams though.

Neil Couling: And the other thing I would just add in terms of the dynamic population movements in London is that now, in any one year, one in 11 people in inner London moves across a local authority boundary-this is even before these changes-and in outer London that is one in 16. So there is already quite a dynamic movement of population going on inside the London area.

Q161 Glenda Jackson: Yes, but in the light of what the Government are proposing, it would be interesting to know who those people are, because it is my contention that people, for example, who are pensioners, who suffer from disabilities, who may have to take care of a member of the family, are not this peripatetic population that you are attempting, with all due respect, to represent Housing Benefit claimants as being.

Chair: In fact, on that very question, that is Harriett’s. So I am going to go to Harriett.

Q162 Harriett Baldwin: Thank you, Chair. Lord Freud, you were an adviser on benefit reform to the previous Government. Can you share with the Committee whether, in that role, you looked at the limit that was set by the previous Government that currently exists for Housing Benefit, which is £104,000 per annum, or the tax and national insurance of 16 low-income working families, in fact average working families?

Lord Freud: Well I will just make clear what my previous role was so that there is no misapprehension. I wrote an independent report for the Government of the day on how to reform the welfare system, with particular emphasis on how to help people back into work. I then was asked by James Purnell if I would be an independent adviser-and I use that word very expressly-on getting my proposals through, which I was very happy to do, obviously. So I had a particular function then of advising the Government on what the welfare to work measures could be, which I did until the White Paper and Bill was available and then I had done the task. I did not in that period actually deal with or advise on housing or Housing Benefit. So I kept myself to this other particular area.

Q163 Harriett Baldwin: In that role, then, as an independent adviser to the previous Government, were you aware of any work that the Department might have been doing to look at that overall limit in terms of Housing Benefit?

Lord Freud: Apart from overhearing conversations in corridors that housing reform was very important, I bluntly did not hear anything.

Q164 Harriett Baldwin: I have read the paper that has just been published-‘Low-income working households in the private rented sector’-with a lot of interest and perhaps you could help me understand one of the things that I found contradictory between the evidence from that paper and the evidence that we have been given at the Committee. In evidence to the Committee, Sam Lister from the Chartered Institute of Housing said that, "It is nonsense to say that people have an unequal playing field in terms of what access they have to accommodation because Housing Benefit is an in-work benefit as well, so you should be able to access it." That was evidence to the Committee. In the ‘Low-income working households in the private rented sector’ paper-just for the record, that is in page 2 of the summary-it says that, "The great majority of low-income working households"-and it mentions the number 99%-"meet their rent without" any assistance from Housing Benefit. So can you reconcile those two seemingly contradictory statements for me?

Lord Freud: This category-the low-income working household-is broadly the category that does not get help from the state, and certainly not Housing Benefit. There are actually some elements of overlap, because as you pointed out, people who are in work also can get Housing Benefit, and I seem to remember a figure of around 14% of the Housing Benefit recipients are actually in work to some extent or another. So it is a comparison between two pretty distinct but not completely distinct categories. The comparison, however, when you look at the figures in that particular paper that you are referring to, was actually looking at somewhat historic data; it was comparing them in 20078. It was not comparing the two categories in the postLHA world and we are producing some research, which I think is due to go out next week, which does do that comparison. It is that work that illustrates that there is a gap opened up; this 90% to 100% gap. We actually have some interesting data, again, that we can make available to the Committee, that shows what low-income working household families are paying for their rent and what Housing Benefit recipients are paying, broken down around the country. If someone could whip that table in front of me, I could give you some illustrative figures-I find it very hard to work my way through it. Right, I have two examples.

Just take a Lewisham resident, for instance, in a one bedroom property. The Housing Benefit tenant would be paying £185; the low-income working household would be paying £172. That is an example. Let’s take-what is a nice place to go? Brighton and Hove; that’s lovely. On a two bedroom property there, a Housing Benefit tenant is paying £190 and the low-income working household pays £178. So we have that information coming out; it will be available next week in time for you. But that is actually new information that the Committee and some of the people giving evidence have not had the advantage of seeing properly.

Q165 Harriett Baldwin: That is very interesting. So the £217 a week, which the paper says is the average that a low-income working household pays in London, dates back now a few years and you have some more updated data that you will be able to share with the Committee.

Lord Freud: Yes.

Q166 Harriett Baldwin: In terms of these two categories of people, then, it sounds as though about 86% of people on Housing Benefit are currently not in work. When we were doing evidence with individuals, we did meet people living in London in quite expensive accommodation who had refused work because they saw that it was going to affect their Housing Benefit and mean that they would not be able to live where they are living. So to what extent does Housing Benefit-and perhaps you could focus particularly on London-act as a barrier to work or as one of those barriers and economic disincentives to work?

Lord Freud: Well this is an immensely complicated issue, in which it is actually hard to take housing in isolation. Just setting it in context, what we have now built over decades is an extraordinarily complicated benefit system, which frankly nobody understands. Kate might be the only exception. So people have managed to get on a set of benefits and they are very reluctant to risk that by changing their situation. Forget the incentives; just that pure complexity factor is making it difficult for people to move. Now, over the years, Governments have put lots of bits of sticking plaster on and one of the bits of sticking plaster is that you can keep your Housing Benefit even though you are going into work, although it is usually for a period and there are some uncertainties around it, because obviously Governments have tried to protect themselves from a wholesale transfer over.

So as we were saying, 14% of people are getting Housing Benefit and are on a taper, and you can go on doing that for a period, but a lot of people are unwilling to take the risk; they have themselves sorted out and they are unwilling to take the risk. Clearly, if you are in a house that you know you could not afford on any kind of job that you are likely to be able to get, it is a huge disincentive to take the risk of launching into a situation where you do not know what will actually happen to your benefit support rate. Indeed, even if you went to an adviser in Jobcentre Plus, you would probably be sitting there for three quarters of an hour or an hour trying to work out what would happen to you with all the scenarios. Housing is such a huge element of the benefit support system that it is actually acting as a very great brake on people taking a risk.

Harriett Baldwin: Thank you.

Q167 Chair: Just to pick up on Glenda Jackson’s point, not everybody on low income is in work or could have the expectation of work; they might be too old or too ill. When we went out, we met an elderly gentleman who already under the present system is having to supplement his Housing Benefit to the tune of £10 a week out of his pension credit. Now, he is unlikely to be able to find anything much cheaper, even if he does move; he has tried to find as cheap as he possibly can. So what is the rationale for effectively sanctioning that group of people with regard to the Housing Benefit? With the best will in the world, what they get in benefit is all they are ever going to get and there are no barriers to work because they are not going to go into work.

Lord Freud: Well, just to close off the issue, it is a technical description. The low-income working household is what we have been talking about, which are people in work. That is just a category, which is clearly lots of people with low incomes generally, but we have been talking about a very specific category and comparing them with another specific category of Housing Benefit recipients and then there is a bit in the middle. Just picking up your more general point about some people finding themselves in very difficult circumstances as a result of this, that is exactly what we have been putting the discretionary housing allowance in for, to allow hard cases to be looked after. That is the reason and the thinking, and there are groups-some people with disabilities, some older people-who we expect would be recipients of that allowance.

Q168 Chair: And that would continue year on year on year?

Lord Freud: We are keeping that, yes; it goes up from £10 to £20 in the next year and then it goes up to £40 and it runs at £40 until the end of the Spending Review.

Q169 Chair: And if you find that that amount of money is not enough - and most of the evidence that we have received would suggest it is not enough and most of it will be sucked into London - at what stage will you review the amount of money that is going into the discretionary allowance?

Lord Freud: Well, we have £140 million in this spending review; that is the money available for this and that is what we are expecting local councils to use in the best possible way.

Q170 Glenda Jackson: On a follow-on to the unemployment issue, you said-and it is entirely right-that people have refused work because if they do they will inevitably lose their home. So presumably, you are looking-I do not know if you have figures on this-at the number of people who will lose their homes because you want to take away that disincentive to look for work. Have you any figures on the kind of jobs that you expect them then to be able to take; what those wage rates will be? Will they still, even though they have to move, have to claim Housing Benefit, for example, because the rates that they will be receiving will be so low? Do you have any figures on this?

Lord Freud: Well, what you are really asking is about dealing with all the perverse incentives in the current welfare system, which we would absolutely endorse. One of the most important initiatives of this Department and even of this Government is to try to reform the welfare system so that we do not have these perverse behaviours and perverse incentives in them. That is exactly what the Universal Credit is designed to do. Essentially we will be able to take people and give them a gross entitlement. Everyone will have that; everyone in this room will have effectively a gross entitlement, which will run down at a steady rate depending on the earnings; I think most people in this room have earnings that would take them out of the taper. People would then be able to understand that work will always pay and you are not tied up with concerns about what happens to your overall income if you take work. Frankly, unless we set up not only a system that does it but a message that is really simple and clear that work always pays so that you do not have to spend a huge amount of time researching it, because it is just how the system works, we will have odd things happening. The concern is that housing, which is such an important part of this, interrelates with all this complicated perverse incentive and that is what we are aiming to remove.

Q171 Glenda Jackson: But with respect, the Universal Credit does not come in for another three years. The changes in Housing Benefit are coming in now. You have argued and made it clear to the Committee that you do not expect there to be increases in homelessness, yet you have told us that there are people who will lose their homes because they do not work, because work is the way that they see they are going to lose their homes. They are going to lose their homes anyway, so what I was asking you for is if you have any figures on those kinds of numbers of the people who will lose their homes and what the types of jobs are that you expect them then to be able to take, because you told us that they will have to move to areas, where they will still be able, I presume, to claim Housing Benefit, but much, much lower Housing Benefit if they are not to be permanently homeless.

Lord Freud: Well, I do not think I accept any of the steps leading up to your argument. People do not lose their homes because they take a job; they simply do not. We are talking about getting a level of housing that is commensurate with the kind of housing they could afford if they had actually a rather decent job. As I say, if you just take the cap again-the £400 overall cap; the £20,000 for which you would have to earn £80,000-odd-you can hardly consider that an ungenerous level of support.

Q172 Glenda Jackson: But that is the minority of Housing Benefit claimants. The majority of Housing Benefit claimants are in one or two bedroom properties; they are not in four bedroom properties.

Lord Freud: Well, yes. Sorry, I am using that as shorthand for the whole level of caps. None of them are ungenerous.

Q173 Glenda Jackson: But you have just told us that one of the disincentives for getting people off Housing Benefit is that they believe if they take a job, the job will not pay sufficiently for them to be able to afford that property. What I am asking you is, have you any estimate of the number of people who will, because of the changes you are introducing as far as Housing Benefit is concerned, lose their homes? If they lose their homes, then where are they going to find the work and will that work ensure that having moved out of the areas where you say they should not be living because they cannot afford it, they will still be able to claim Housing Benefit or will they actually be permanently homeless?

Lord Freud: Clearly, as I have said, I am not expecting any substantial increases in homelessness as a result of this. In terms of if people move to an area and whether there are jobs there, the evidence is that the level of unemployment is pretty steady right the way across London; east and west London. We have some data on the unemployment. The inactivity rate and the unemployment rates across London vary between 14% in some areas, while we have lower rates in places such as Bromley and, interestingly, we have lower rates of unemployment and, by implication, more jobs in outer London than in some of the inner-London areas. Some of the concerns that people will move from inner London to outer London, away from jobs, are exactly the opposite of what these data would suggest. In practice, if you were to go out from central London to Bromley, for instance, to take one of these outer areas, you are actually more likely to go to a place with jobs than where those people are currently living.

Q174 Glenda Jackson: So your argument would be that having made people homeless in central London, you would advise them to go, for example, to Bromley, where they will be able to get a job with great ease and be able to rent a house without recourse to Housing Benefit. Is that the argument?

Lord Freud: As I say, I am not expecting people to be made homeless because they have to move, because people move regularly in the private rented market anyway. So I am not accepting-

Q175 Glenda Jackson: No, we are talking about people who do not take work because they are afraid that if they take low-paid work, they will lose their home. I am asking you what figures you have on the number of such claimants at the moment who will inevitably lose their homes; that is the whole purpose of the changes to Housing Benefit. Where will they go to find the jobs that will pay them sufficiently well? You quoted Bromley and I am asking you, do you have the figures of the number of available properties and jobs in Bromley that will ensure that the person who loses their home, because of the changes in Housing Benefit and they are not employed, will not be permanently homeless?

Lord Freud: I am completely baffled by your question.

Glenda Jackson: Well , I must be honest : I am completely baffled by your answers.

Chair: I think we need to move on. Kate Green.

Q176 Kate Green: A supplementary question from me, first of all. Returning to a point you made a few moments ago, Lord Freud, in which you said that the link to CPI was for this Parliament, will the Government put a sunset clause into the legislation to that effect?

Lord Freud: We have not. Neil, this is primary legislation?

Neil Couling: Yes.

Lord Freud: So we have not yet-

Kate Green: You might consider it.

Lord Freud: We have not yet drawn up the legislation.

Q177 Kate Green: Fine. The previous Government were looking, among other things on Housing Benefit, at extending runons-

Lord Freud: Sorry?

Kate Green: The previous Government were looking at extending runons of Housing Benefit as people moved into work at the same level as they had been receiving while out of work, for perhaps a longer period. That seemed to command of a lot of support across the country and across the political divide. Is that something that the present Government continue to be interested in?

Lord Freud: I will turn, I think, to Paul for this. Our fundamental view is to get the Universal Credit in.

Kate Green: In the meantime?

Lord Freud: Well, I am just coming to answer. In the meantime, I think the energy and effort that is required to get the Universal Credit in is much better spent in a root and branch transformation of the system as a whole, which will solve the problem, than in tinkering with little bits of it for an interim period of a year or two in practice, with all the energy and implications required. But I will turn to Paul, if he has anything to add to that.

Paul Howarth: I do not think I have much to add to that, because you are right. I think now we are in a position where we want to put all our effort into developing Universal Credit, which is going to be a major change that will improve work incentives for all. So I do not think we have any plans to look at it. You are right, it was a very interesting idea and did command a lot of support, but I do not think there are any plans to introduce that now.

Q178 Kate Green: Okay. That is disappointing, but I note what you say. Can I turn to the moving of people off incapacity benefit or income support and on to Jobseeker’s Allowance and the risks they now face if after 12 months they are not able to find work and will see a reduction in their Housing Benefit as a result? When will that 12 months start to run for those people? Will it be at the moment that they move on to JSA or will it be from when they first went on to benefits?

Lord Freud: The way that it is constructed at the moment is from the time that they start on JSA. So it is 12 months from the time that they start on JSA.

Q179 Kate Green: Good, thank you. Lord Freud, you are well aware, because we have had many conversations about it in the past, of the barriers that, for example, lone parents can face to finding suitable employment. Doesn’t the Government think that this blanket reduction in Housing Benefit after 12 months on JSA will bear very harshly on some of those lone parents? Wouldn’t it be preferable to consider an approach that said that it was a refusal to accept suitable employment that triggered this reduction in Housing Benefit and not simply a failure to find work at all?

Lord Freud: We are trying to set up, or we are setting up, a balance here. This is a measure that is coming in in 2013, by which time we will have on the other side put an enormous amount of resource into introducing the Work Programme, which is a national programme designed to have a lot more resource than current programmes into helping people back into the workplace. We are balancing that effort and energy with a clear message to people on JSA that they really have to get into the workforce, by putting this measure in to cut the Housing Benefit to 90%. Now, I just want to put that into context. That is not taking their Housing Benefit away; that is reducing it by 10%. So the average figure of reduction is around £9 in practice. So that is the design of the system; it is to balance an expectation with a lot more support to get back into work.

Q180 Kate Green: Don’t you think it would be preferable, though, to have something that was a little more nuanced in order to recognise the substantial barriers that a small number of lone parents may face?

Lord Freud: The risk is you can overnuance things. We want to send out a very clear message that work is what we expect people to go to and we are going to put a lot of resource into helping them get back into work.

Q181 Kate Green: Last question from me, Chair, which is in the context of the Government’s overall cap on benefits in total not to exceed, I think, £26,000, which I have heard Ministers argue is actually £35,000 when you gross it up. I am still trying to get my head round that; perhaps later on someone will explain it to me. But can you clarify for me within that overall cap of £26,000 what that would mean in terms of potential maximum levels of Housing Benefit and council tax payments?

Lord Freud: The overall cap comes at the end, in 2013. Before then, we will have put in a lot of these other measures, which will actually, if you like, take the strain. It is within the context of an overall cap arriving. I have to make the point that we are excluding people with disabilities and we are excluding people who are in work; who take a job. So it is another measure-the £500 measure-that reinforces the fact that you can avoid this cap if you take a job.

Q182 Kate Green: How many families are we talking about? How many households are we talking about that you expect to be hit by this cap?

Lord Freud: By the overall cap?

Kate Green: Yes.

Lord Freud: By then?

Kate Green: Yes.

Lord Freud: Well I think we have put in an expected saving on this, haven’t we?

Neil Couling: That is right.

Lord Freud: Which is what, £200-

Neil Couling: It is about £240 million.

Lord Freud: £240 million.

Q183 Kate Green: How many households is that?

Lord Freud: Well, you can do the sums. Neil?

Kate Green: I don’t think I can, actually.

Neil Couling: It is about 50,000.

Lord Freud: 50,000.

Kate Green: 50,000?

Lord Freud: Yes.

Q184 Chair: Can I just be clear on a couple of things? Kate asked about the year on JSA. The changes come in in 2013, so if someone has already been on JSA for a year by April 2013, will they immediately face a 10% reduction in their Housing Benefit?

Lord Freud: Yes. That’s how we expected-

Chair: So it will be a historical thing?

Lord Freud: Yes.

Q185 Chair: You also mentioned the Work Programme. Maybe you can clarify this for me. When the Secretary of State was before us, he said that people would not go into the Work Programme until they had been out of work for a year, unless they came through the IBESA route. I’ll start again, shall I?

Lord Freud: Sorry, I find it difficult to use my ears twice.

Chair: Yes, I appreciate that. The Secretary of State, when he appeared before us, said that those who would go into the Work Programme would not do so until they had been out of work a year, unless they came through the ESA Incapacity Benefit route, where they would go straight on to the Work Programme. So if the Work Programme is going to help them get into work, they will have already been out of work for a year and they will already be facing the 10% reduction in the Housing Benefit before they get the specialist help, the extra investment to get them into work that the Work Programme would bring. Is that not a bit unfair?

Lord Freud: We are looking hard at the timings of when people go on to the Work Programme and we are looking in particular at fast-tracking particular groups on to it early. We are exploring how to get the more vulnerable groups on earlier to get earlier support. We think that the most vulnerable will be getting support.

Q186 Chair: But you have the single person on JSA, who would not be classed as vulnerable ; it will be a year before they get their help from the Work Programme . JSA is only £65 a week, but you are saying on average they will lose £9 a week in Housing Benefit . On top of that, they have all these travel costs because they may have to move out to find accommodation they can afford. It is rather a lot of sanction, which they do not seem to be able then to get out of, because presumably that 10% will follow; even if they move house and they try to get a cheaper rent, that 10% sanction will follow them wherever they go. They can’t get away from it.

Lord Freud: No. The way they get away from it is getting a job.

Q187 Chair: And if they genuinely cannot find a job? They have done everything that the Government has asked of them; they have done absolutely everything and after a year they do not have a job.

Lord Freud: Well we are putting a huge amount of resource into helping people back into the workplace and this is the counterpart of that. This is a very substantial message to tell people that the solution here is to get into the workplace.

Chair: Thank you. I am going to go to Karen next, if that is okay. Sorry, Kate, did you want ask a question.

Q188 Kate Green: I just wanted to ask one final supplementary on my question to Lord Freud about the £26,000 cap, which will imply a substantial downward pressure on help with housing costs and council tax costs. Can you give me some more information about the make-up of the families that will be affected by that cap? How many of them will be families with children? What sort of family size are we talking about? Clearly, to be able to be in receipt of benefits of such a substantial amount, you are going to be meeting a high level of needs, probably supporting a number of people in the household. So if you have some information on the differential impact on different family sizes, that would be useful.

Lord Freud: Neil.

Neil Couling: I thought I could start by just slightly correcting my savings figure as well. I had plumped for £240 million, but in fact the 201415 saving figure is £270 million from the cap. Apologies for that, Chair and the Committee. In essence, the people affected by the cap is a function of high housing costs and larger family size. In terms of breaking down that 50,000 figure, I cannot recall in my head exactly how that falls by and if you would like, we can pop you in a note that just sets out what we have. I have to say that when you get into the larger family sizes, the sample sizes that we are drawing the estimates from are quite small in the Family Resources Survey, so you get more uncertain as you go up in family size in terms of trying to model those numbers exactly.

Q189 Kate Green: Yes. But essentially, what we are saying is this cap will affect larger families who, by definition, are likely to have higher housing costs. What do you say to the argument that has been made that that might be an inducement to families to break up?

Neil Couling: Can you take that?

Lord Freud: You want me to take that? Well, the reasons for break up are pretty wide and we do not anticipate that a cap like this effectively puts a very substantial pressure on break-up rates. There are two solutions to this for people: find appropriate, affordable housing within the cap; and, bluntly, the moment you get a job-one of the parents, if it is a two-parent family, gets a job-the cap will no longer apply. So it is a pretty straightforward solution.

Chair: I am going to move on to Karen and questions on transitional arrangements. This is our last section.

Q190 Karen Bradley: Thank you, Chair. We have touched on many of these issues, but I just wanted to cover the specific transitional arrangements. One of the suggestions that has been put to us by a number of bodies, particularly the Citizens Advice Bureau, is the possibility of effectively grandfathering existing leases to the point where there is a break clause, so that instead of the cutoff coming on 1st April or 1st October where that household is affected, perhaps having a few months where the Housing Benefit is still paid at the existing lease level. I just wondered whether the Department had looked into this at all.

Lord Freud: Well that is exactly what is happening, because the process starts in April or October, depending on the start date, and takes effect at the next anniversary. So in practice we are doing exactly that; this is not just a sudden death on those two days. It is an important thing, because that means that the whole transition period runs over an extended period. We are talking about running right out to October 2012, in practice, the whole process, which does two things: it means that it is not sudden death-it runs to the natural break point, the annual anniversary of your contract-and allows the adjustment process to take place over this extended period.

Q191 Karen Bradley: Okay. So if you are in accommodation today that has a lease that runs until, let’s say, June next year and you would have been affected by the changes that are coming in with effect from 1st April, you will continue to receive the Housing Benefit at current level until the break clause?

Lord Freud: Exactly.

Paul Howarth: What will happen in practice is that for existing customers, benefit will change from the anniversary date of their original claim for Housing Benefit, so it is not related to the tenancy as such, but it does mean that there will be this gradual takeon for existing cases.

Q192 Karen Bradley: So it is not the point at which you can get out of the lease; it is the point that is the anniversary of you first claiming Housing Benefit?

Paul Howarth: That is right, but in practice it will mean that a lot of people will be in the position you describe and will have that long period of time in which to get out of their lease.

Karen Bradley: Okay. So -

Neil Couling: Sorry, can I just say that we think Crisis, in their evidence to the Committee, although it is not their fault, have misunderstood how this will work, because they have suggested that people who take a job will immediately then trigger the new system. That just will not happen, as Paul has been saying; it is on the anniversary of the claim that the new rules take effect.

Q193 Karen Bradley: And presumably, for anyone who is in a situation where they can’t get out of their lease and their anniversary falls earlier, the discretionary housing allowance is there to help them.

Lord Freud: That is exactly what it is for.

Karen Bradley: That is very helpful. I think that covers the transition.

Q194 Kate Green: Can I just ask one very final question on that? What are the plans for communicating to current Housing Benefit recipients about the changes that are coming and how they will affect them? Are you confident that the Department has an adequate communications budget, because I understand it has been under pressure?

Lord Freud: We are determined to, and we have planned a very thorough consultation exercise. Paul, why don’t you just outline the elements of it?

Paul Howarth: We do appreciate that it is absolutely vital that we give as much information to recipients of Housing Benefit, particularly existing recipients, as we possibly can. So as soon as the regulations are laid, we will be working very closely with local authorities, both the Housing Benefit and the housing departments, so that we can link up together and get the messages out. We will be, on this occasion, breaking our ban on paying for communication materials, you will be glad to know, and we will be funding whatever is needed by way of leaflets, posters, draft notification letters; anything that we can do, basically, to help local authorities in this transition, we will do.

Q195 Richard Graham: Chairman, could I just ask that it be made sure that that information goes as widely as possible; to MPs, CAB, Age UK; all the people who are inevitably involved with constituents who are confused?

Lord Freud: Yes.

Q196 Chair: I promise this is the last question. First of all to say well done in recognising that some disabled people may need a live-in carer and that will be recognised in the system. However, a lot of disabled people do not need a livein carer, but they do need a bigger house; they perhaps need an extra bedroom because they cannot share a bedroom with anyone else or because of the equipment. Now, that is recognised in terms of the council tax system, but I see no recognition in any of your plans that in fact someone who needs a wheelchair to get around will need a bigger house, with potentially extra rooms. That does not seem to be recognised in your plans with regard to Housing Benefit.

Lord Freud: Our whole thinking around this really is we are trying to get the people on the ground-the councils, who should be aware of these particular needs-the funding so that they can take measures based on the needs of individuals; this is what our discretionary housing allowance is about. So rather than us, every time there is a problem, putting in a blanket system, which is incredibly expensive and not needed-an unnecessary expense for many people-making it the responsibility of people on the ground and providing resources in the discretionary housing allowance is precisely the way that we can allow for those tough cases of people who need support. We can then get that support to them. That is the idea behind it.

Q197 Chair: So they will have to go into negotiation with the local authority if they are in that position?

Lord Freud: Yes, absolutely.

Chair: Well thank you very much. We have kept you a bit longer than we intended. Thank you very much for coming along. This is the last of the evidence sessions; we will now write a report. I know you have offered to provide us with a lot of statistics and figures; we would much appreciate if you could do that and that would help us as well.

Lord Freud: We will get those to you.

Chair: Thank you very much for coming today.

Lord Freud: A great pleasure. Thank you.

Chair: Order, order.