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Housing Benefit (General) Amendment Regulations 1996

5.37 p.m.

Earl Russell rose to move to resolve, That the Housing Benefit (General) Amendment Regulations 1996 (S.I. 1996 No. 965) be not proceeded with and that this House invites Her Majesty's Government to lay amended regulations in place of Part 1 when they can show that it will significantly help to alleviate the problem of over-payment of housing benefit and in place of Part 2 when they can show that the supply of shared accommodation is sufficient to carry the burden which would be placed on it.

The noble Earl said: My Lords, before beginning any other argument, I should like to offer my thanks to the noble Viscount the Lord Privy Seal and to the usual channels for their courtesy and kindness in passing the business Motion to enable this Motion to be taken before the Prayer which follows it.

The regulations to which I draw the House's attention are divided into two parts. The first provides that housing benefit shall be paid in arrears instead of in advance. The second provides that young people under 25 shall receive housing benefit only at the rate appropriate to shared accommodation which is defined, for some reason which I have not fathomed, as accommodation not including use of their own sitting room.

My concerns about the regulations are, first, that they will tend to shut out the unemployed from the housing market, secondly, that they will drive large numbers of landlords either out of business or out of the housing benefit market, and, thirdly, that they will create considerable homelessness among those under 25 years old.

However, those are not the points I am making in my Motion. In my Motion I give the Minister the benefit of the doubt on all those points. We are all wrong sometimes. What I complain of--it is the subject of my Motion--is that the Department of Social Security has not done enough work on the regulations to be able to tell me whether or not I am mistaken. If I am, the

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department will not know it. Therefore, the point of the Motion is to ask the department to go back and do its homework.

I have said in the past that the Department of Social Security, left to itself, is the most competent in Whitehall. I do not withdraw that phrase; but the operative words are "left to itself". If I should describe the regulations as "a pesky proposal", I should not be returning--greatly though I might like to--to old-fashioned 16th century abuse. I should say it originated from the public spending round. With apologies to Gilbert and Sullivan, we will never get social security right until Exchequer spokesmen,

    "do not itch

    to interfere in matters which

    they do not understand".

    I can see the Minister already thinking out his reply and I have a fair idea what it will be.

We all agree with the argument put by Mr. Chris Smith in his excellent lecture on Social Justice in the Modern World that one should aim to get the social security budget lower. That is no excuse for measures which are more likely to have the effect of increasing the social security budget. Also, while we are in dialogue with Exchequer spokesmen, we should remind them that a large part of the social security budget is the result of their errors. It is their responsibility to put it right.

I am also concerned that the Government are showing a considerable degree of discourtesy to the Social Security Advisory Committee, to which we are, as usual, much indebted. The Government say that they welcome the recognition and support for the proposals provided by the committee in its report. However, from the committee's conclusions we see what kind of recognition and support it is. Paragraph 47 states:

    "We do not believe that, as presented to us, the potential effects of the proposals for paying Housing Benefit in arrears and for cutting Housing Benefit for people under 25 are sufficiently well understood to make it responsible to proceed with them. There needs to be a more thorough assessment of costs and benefits before any change is implemented".

    On the first part, the committee recommends that the department takes more time to consider the implications for claimants and the private rented sector. On the second part, it recommends that the proposal be not implemented in the form presented to the committee. If that is support, one can do without it. To describe it as the Social Security Advisory Committee's "recognition and support" I am tempted to regard as cocking a snook at the committee. I do not believe that it is a courteous response.

In Part I, the Government show considerable concern about tenants taking housing benefit and absconding without paying the rent. I know that that happens. Once in my bachelor days it was done by my next-door neighbour who was known as "Mr. Lawless". But we have no evidence before us on the extent of the problem. The Government admit that the abuse may not be widespread. Noble Lords will note from the "may", that the Government have no figures available to them whatever.

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There we have one mischief which may not be widespread, but if the regulations go through they will create other mischiefs which may be more widespread. In the first place, it is an incentive to breach of contract. The almost invariable landlord's contract is for rent in advance. The citizens' advice bureaux comment that they have never heard of a landlord willing to take his rent in arrears. So tenants who do not have the money will be put into a position of breaking their contract. The National Federation of Housing Associations is surely right that that will discourage landlords from renting to people on housing benefit or will encourage those of them who go on doing so to do what one always does in response to late payment: increase one's charges. Of course, the Government will pay for that in housing benefit too.

The delay may be much longer than the two months envisaged. The idea that all local authorities settle housing benefit claims within two weeks is not in the real world, especially since the two weeks only run from when the local authority has all the relevant information. Local authorities are often in no hurry to obtain it. In the London Borough of Brent, from which I come, delays of three months are by no means unusual. Add another couple and the landlord is waiting for a long time.

Delay is often caused by notification of change of circumstances, to which the local authority does not react with the requisite speed. One case which the citizens' advice bureaux have found is of notification in June, reaction on 5th September; overpayment of £172. That is not abuse by the tenant, it is a grave hardship to the tenant. Before the Government use overpayments of housing benefit as a justification for the regulations they need to know a great deal more than they do at present about why there are such overpayments: which are error by the local authority; which are error by the Department of Social Security (and that happens too); which are honest error by the claimant and which are fraud. Until some distinction is made, we can have no reliable proceedings.

The Government admit that they have little evidence concerning hardship to the landlord by an absconding tenant. But there will be a great deal of hardship if the regulations are proceeded with. The National Association of Citizens Advice Bureaux quotes a case in North London, which is not exceptional, where with two months' rent and a deposit the claimant would be forced to provide out of his own resources, while waiting for housing benefit, £1,213. What person, recently unemployed, is in a position to do that? The Government said that people recently unemployed will have several weeks' wages in hand. If I had no other reason for looking forward to the next election, I should look forward to it for the pleasure of hearing Conservative candidates repeating that argument in Manchester, Liverpool, Sheffield and Newcastle. I should expect it to confirm the Conservatives' status as the third party in all three of those cities. It is not in the real world.

Apart from that, we must consider the effect on former prisoners. They do not come out of prison with several weeks' wages in hand. All of us, even the Home

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Secretary, agree that if prisoners are to go straight they must be able legally to be housed and to work. If they cannot do that, the costs will be much greater.

The second part of the regulations is, if anything, even worse. People of 24 are too old to be compulsorily kept at home. They are not children and their parents do not want to treat them as children. They are entitled to live independently. When I got married 25 was the average age of marriage for men and 21 for women. To be kept at home, as the Government wish, up to the age of 25 is an unnecessary indignity. I find it a curious provision that such people are not to be allowed a sitting room. It is the opposite mirror image of what happened in the 1930s when male undergraduates were first allowed to visit St. Hugh's College, Oxford. The college laid down that they could only visit between the safe hours of two and five in the afternoon and that all beds were to be moved out into the corridor before they came. The Government seem to have got that back to front and I do not understand why. It puzzles me. The biggest problem is that I do not see what they know about the supply of shared accommodation. To quote their own argument at paragraph 29 of their note to the advisory committee,

    "There is no reason why Housing Benefit, which is intended to meet reasonable housing costs, should meet rents for types of accommodation which tenants would not be able to afford if they had to meet the rent from their own resources".

    But that argument does too much. It is an argument against all housing benefit. The essential point of housing benefit is that it meets rent that the tenant could not otherwise have met. If that is the argument on which they rely, I shall be asking, come the general election: could we expect them, if in office, to continue housing benefit at all for another Parliament? It creates a very real doubt.

The supply of shared accommodation is the most surprising element. The Government invoke the housing market for students. I do not think they will find anyone in any university who agrees that that proves a plentiful supply of shared accommodation.

In a Written Answer to me on 29th January, the Minister said that there must be a large supply of shared accommodation because young people move house so frequently. I should have thought that evidence might have proved exactly the opposite. Many people move because their shared accommodation is not satisfactory, in many cases not safe: the fire rate in houses of multiple occupation is considerable.

The only quantifiable information we have is from Gloucestershire. We owe it jointly to Shelter and Gloucester city and Gloucestershire county councils. They found shared accommodation for 949 people. In a Written Answer, the noble Earl, Lord Ferrers, went better and found 1,223. There is a difference of definition there which I have not found, a shortfall--on Shelter's figures of 900 places, and on the noble Earl's figures of 600; and he knows absolutely nothing about the supply of shared accommodation or the demand for it in Gloucestershire. The Government should have had that information before they brought in these regulations.

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That is the sort of evidence that makes me believe that this measure must lead to homelessness. It is my view that the Gloucestershire figures are likely to be typical. If the Government have one bit of evidence to the contrary I shall hear it with very great interest. The Minister will doubtless say that the Government are confident. They are often confident, but that confidence is sometimes misplaced. I beg to move.

Moved to resolve, That the Housing Benefit (General) Amendment Regulations 1996 (S.I. 1996 No. 965) be not proceeded with and that this House invites Her Majesty's Government to lay amended regulations in place of Part 1 when they can show that it will significantly help to alleviate the problem of over-payment of housing benefit and in place of Part 2 when they can show that the supply of shared accommodation is sufficient to carry the burden which would be placed on it.--(Earl Russell.)

5.53 p.m.

The Lord Bishop of Oxford: My Lords, my concern is with the regulation that restricts housing benefit for people under 25. The trouble with youth, as someone said, is that it is wasted on the young. It is easy to pick up a false stereotype of young people as though they were all having a thoroughly wonderful time as purveyed by the colour supplements. But for a good many, life today is not at all easy. We need, particularly in this House, to hear some of their concerns.

I understand that the purpose of the regulation is, above all, to ensure that young people on housing benefit do not take on accommodation that will lock them into dependence on benefits and prevent their taking up modestly priced employment. I imagine what is envisaged is a person in a flat paying more rent than he or she can earn and that money at present being paid through benefit.

The aim of helping people into employment is entirely laudable. But it needs to be set against the background of a number of other considerations. The first is the very high level of unemployment, particularly in some areas and especially among young people. In some areas of the country unemployment is still over 20 per cent. Jobs are simply not there for very great numbers of young people. We need to bear in mind also the increasing homelessness, disillusionment and other problems associated with so many of that age group. This will be one more blow to a good many. It has been calculated that some 144,000 young people could have their benefit reduced by the regulation.

The Social Security Advisory Committee could not accept the principle of making rates of benefit that distinguish those over 25 from those under 25. I have to agree. There seems no good or logical reason for drawing a line on the basis of that particular age.

The relevant regulation restricts the amount of benefit payable to someone under 25 to "single room rent". That means in effect that the young person will have to live in a multi-occupancy house if he or she is to have benefit paid in full. That might be perfectly acceptable to a good number. Those of us who were sent away to boarding school or served in the forces may very well

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not consider it to be much of a hardship. But some people will be badly hit. For example, there are young people who had work but who have suddenly become unemployed. While in work they managed to afford modest accommodation which included exclusive use of a small kitchen and bathroom and toilet facilities. When unemployed, they will lose all that. The single room rent benefit will not be enough to cover the rent for that kind of accommodation.

As mentioned by the noble Earl, Lord Russell, there are those who have been discharged from prison or who have mental health problems. Such people do not always find it easy to obtain accommodation. And there will be people who, for a variety of perfectly understandable and good reasons, might very well need something more self-contained than a single room in a house of multi-occupancy. Few of those will have family resources to fall back on. Some will be estranged from their families. Their problems can only be exacerbated by the regulation.

Life is already difficult enough for many young people today. It is estimated that 100,000 of the homeless in Britain are under 25 years of age. Many people affected by the regulation will come from a broken home or one from which they are excluded. They may have very little in the way of skills and training. The jobs open to them are few and far between. The rents in an area of acceptable accommodation may be way beyond what would be covered by benefit for a single room. I am afraid that this regulation, although well meant, far from helping young people into modestly paid employment as is its aim, will further depress and demoralise a good number.

5.58 p.m.

Baroness Hollis of Heigham: My Lords, we thank the noble Earl, Lord Russell, for today's Motion on the Order Paper. When the regulations were foreshadowed in the social security Statement last November, we on these Benches strongly opposed them.

Of course it is true that the housing benefit bill has soared--and we know why. The reason for some of that increase is demographic; the increasing numbers of lone parents and more particularly pensioners. Some is due to the recession and the growth in unemployment and of irregular, temporary, casual work combined with falling wages and low pay. But most of the reasons for the growth in housing benefit is the deliberate decision by the Government to introduce into housing the market and market economics. In the local authority and private rented sector there has been a deliberate switch from subsidies in bricks and mortar to subsidies for individuals, thus, at a stroke, creating dependency, without adding a single extra house to the housing market.

The second way in which government policy added to the growth in housing benefit was the deregulation in 1988 of the private rented sector. The Government hoped--it was not an unreasonable hope--that it might encourage investment in private rented housing. That has not happened. At most, something like three-fifths of the new private rented tenancies are one-off

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properties let by individuals--individuals like me, for example. I am temporarily a landlord of my parents' former home until the market becomes sufficiently robust to sell it on into owner occupation. There is no evidence, except at the luxury end of the market, that significant portfolios of permanent rented housing have come onto the market.

The Minister at the time, Sir George Young, said that housing benefit would take the strain of government policy decisions. It has done so. Whereas in 1987-88 the housing benefit bill was £3.9 billion, it was £11.1 billion in 1994-95. So it has risen threefold or fourfold. That was because of demography and recession but, above all, because the Government willed it so by way of their policy decisions. Now the Government complain of the cost of their own folly. Did they not think of the consequences before making those policy choices? The Government now seek to cut the very housing benefit bill that they themselves forced upwards. Having made the mistake, they are determined that someone else will pay the price. In this case, as the noble Earl, Lord Russell, and the right reverend Prelate said, the price will be paid by those under 25. I wish now to speak about those people.

Why have the Government targeted the under 25s? It is in the belief that young people under 25 can and should live at home. The Government believe that they do not do so because they are enticed into their own luxury accommodation through the generosity of housing benefit. The argument goes: cut housing benefit, get young people to shop around for cheaper accommodation--or better still, go home--and the DSS bill will at a stroke be cut by £65 million and one will simultaneously strengthen family life.

Every point of that analysis--if such it can be called--is false. It is false that those young people could live at home; that they are living in luxury accommodation and do so because of the generosity of housing benefit. The Government know that analysis to be false because, to my certain knowledge, since 1990 they have commissioned three significant pieces of research which show their arguments to be false.

Can and should those young people live at home? The great majority already do so. Two-thirds of young people under 25 live at home. A further 850,000 are owner occupiers. Only about one young person in eight lives away from home in private rented housing. Especially if they come from a rural area, to move to a place where they may find work may be the only way for them to get a job, however ill paid. Many others have left home because they are highly vulnerable there. Research by the Rowntree Trust showed, for example, that of those leaving authority care, something like 60 per cent. did so because of a background of family conflict and around four in 10 had experienced abuse at home which made it unsafe to return there. But, even if they could return home, they would not be particularly welcome there. If the parents themselves are on housing benefit, the Government, by virtually doubling the non-dependent adult deduction, have made sure that their parents' housing benefit will be cut. Therefore those young people will not be welcome there.

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Let me move to the second part of the Government's so-called analysis. Do those young people seek up-market accommodation, courtesy of housing benefit? No, they do not. Peter Kemp's research for the DSS itself shows--I quote from Report 26--that housing benefit has "minimal effect" on young people's housing decisions.

Single people under 25 already have a hard time in the housing market. Why is that? First, it is because the private rented sector is a landlord's market and not a tenant's market. The landlords in private renting choose the tenants. It is not the other way round. So, whom do the landlords choose? Research by Peter Kemp for the Government has shown that over half of all landlords will not accept DSS tenants. Among those who do, most of them prefer couples with or without children or the elderly. By far and away the least popular letting that a landlord will make, and then only grudgingly, is to a single person on benefit and not in work. Landlords will not let to those young people if they can let to anyone else. As a result, those young people end up in the grottiest accommodation. It is of the poorest quality, represents the worst value for money and stock that private landlords cannot let to anyone else. Therefore, the Government's notion that those young people can somehow shop around for more modest accommodation is utter nonsense. That argument has been proved false by the research and the Government know it. If they do not, they have not read their own research and should not have commissioned it.

Is housing benefit funding over-expensive accommodation? No, it is not, because housing benefit is already capped. Again, the Government do not seem to be aware that two-fifths of private tenants already find that housing benefit does not cover their rent by, on average, something like £19 a week. Deregulation in 1988 encouraged landlords to raise their rents dramatically. But housing benefit did not follow because local authority rent officers capped the benefit that they would provide. A childless couple in a two-bedroom flat will not receive full housing benefit, however low their income, because they are regarded as being over-housed.

So what happens then? What happens if a young person under or over 25 in a modest flat or a bedsit with kitchen and bathroom finds that housing benefit does not cover the rent? That young person has to top it up out of his income support. However, if one is under 25, income support is £9 a week less than if one is over 25. Perhaps I may give the example of a young person to whom I was talking just four days ago. He is under 25 and lives in a bedsit which he rents for £43 a week. That was the only one he could find that was reasonably salubrious. The rent officer said that the accommodation was worth £27 a week in housing benefit. So from that young person's income support of £36 a week, he has to top slice £16 a week to add to his housing benefit to remain in the very modest bedsit that he currently occupies. He has £20 a week on which to live--£3 a day for food, heating, clothes, a newspaper and bus fares in order to search for a job. It is absolutely impossible.

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The more reluctant the landlord, the more the young person has to spend; the younger the person, the less income support and the more will go on rent. Those young people are caught in a vicious circle. As a result, because housing benefit does not cover the rent, there is an increased risk of rent arrears and eviction. When such a young person is evicted, he finds it that much harder to find another home, not only because of his record of rent arrears but because in future housing benefit will be paid four weeks in arrears.

Nearly half of all single homeless people are under 25. One of the biggest reasons for their homelessness is the lack of affordable rented accommodation and the reluctance of landlords to take them in. Most of those young people are unable safely to go home. Without a home they cannot get a job; without a job they cannot afford a place to rent; without the money for rent they cannot afford a home; and without a home they cannot obtain a job. And so they go round the treadmill of dependency that the Government, by their policies, have created.

Now, after the battering that those under 25 year-olds have taken, they are told that housing benefit will be depressed even further in order to finance only a room in a shared house. The Social Security Advisory Committee has said that shared accommodation is already in short supply. Such young people are out-bid by students who share or families wanting the entire house. It is precisely that accommodation--a room in a shared house--which will be withdrawn from the rented sector when housing sales pick up. In any case, a high number of those young people, as the right reverend Prelate said, come from homes where they have been abused. There are 20,000 young people who come from local authority care but do not come under the Children Act. There are those with some degree of health or mental problem, wheelchair users, partially sighted people or those dependent on a guide dog. Some of them are HIV positive. For all those young people, it is not clear that shared accommodation is right or right for the people with whom they would share. Yet that is all that they will be able to afford without top-slicing their income support, thus forcing them into deeper poverty. The discretionary moneys available to local authorities do not even begin to touch the problems that will emerge. The standards are extremely low. Finally, to add insult to injury, those under 25 will not have the right to a 50 per cent. top-up between the actual and average rent that those over 25 will enjoy.

These regulations are monstrous. The Government encouraged rents to rise deliberately and said that they would be underpinned by housing benefit. When, as a result of what they did, housing benefit rose, the Government fingered those living in rented accommodation, especially young, single people, for the folly of the consequences of the Government's own decisions. Then the Government have the effrontery to say that young people have an alternative to private rented accommodation. They can live at home, which they cannot; they are living in upmarket accommodation, which they are not; and when they make a legitimate claim, housing benefit is available, which it is not. Already half of all young people are

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paying part of their income support to contribute to a housing benefit which does not meet their rent. The Government will plunge them further into poverty.

What are the implications? For the young man I spoke of, with a net income of £20 a week, these regulations will mean that he will have a net income of £11 a week--£1.50 a day; not even the cost of a McDonald's meal of a burger and chips. That £1.50 a day must buy his food, clothes, newspaper and travel in his search for a job, his toiletries and so forth.

The Social Security Advisory Committee said that these regulations should not be implemented. It is quite right. Hence we will support the Motion on the Order Paper as hostile, but not fatal. We accept the strict convention of this House that we do not vote against a statutory instrument because to do so would create a situation where, unlike amendments to a Bill, the view of an unelected, largely hereditary House would prevail over that of an elected Chamber. In my view that would be wrong. But we feel so strongly about the inequities of these housing benefit regulations in which the Government created a housing policy which forced up rents and therefore housing benefit, and having done so are then penalising young people for the consequences of their policies, that if the noble Earl chooses to press his Motion, we will be happy to support him in the Lobbies.

6.13 p.m.

Lord Mackay of Ardbrecknish: My Lords, the amendments we are debating tonight are designed to serve two purposes: first, to focus housing benefit more effectively in the private rented sector; secondly, to strengthen the Government's fight to tackle the abuse of public funds.

We have just been treated to the noble Baroness explaining how appalling the social security system is; how monstrous it is; how miserable it is; and how inadequate the various levels are. As always, the noble Baroness never ever puts anything into her speech in the way of numbers as to what her party would prefer to do; what they suggest; how much extra government expenditure they will be prepared to put into housing benefit. The logic of the 14 minutes to which I have just listened, as I have listened on a number of occasions, is that there ought to be a considerable increase in taxpayers' spending in this field. Fine. If that is the case, let the noble Baroness say so and let her come to the conclusion, as she must do, that either something else must be cut--perhaps another part of child benefit--or that taxes will have to be increased.

I do not need to challenge the noble Earl in that regard; he is honest enough to say, when we discuss these matters, that as a taxpayer he is happy to pay more taxes in order to increase benefit. I hope that he is not going to disillusion me.

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