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House of Lords

Wednesday, 14 December 2011.

3 pm

Prayers-read by the Lord Bishop of Oxford.

Royal Assent

3.06 pm

The following Acts were given Royal Assent:

London Olympic Games and Paralympic Games (Amendment) Act, Terrorism Prevention and Investigation Measures Act, Public Bodies Act, Charities Act.

Justice: Pre-trial Publicity


3.07 pm

Asked By Baroness Quin

The Minister of State, Ministry of Justice (Lord McNally): My Lords, there are no current plans to legislate. The Government referred the subject to the Law Commission in the summer and we will study with interest its conclusions in due course.

Baroness Quin: My Lords, this Question was prompted by the case of Mr Jefferies in particular. He recently gave evidence to the Leveson inquiry and described how, although innocent of any crime, he was vilified in the press to such an extent that he was in fear of his life. Any of us as citizens could imagine ourselves being caught in such circumstances simply by being linked through coincidence or circumstance to a crime. Although I welcome the fact that the Attorney-General has shown himself willing to prosecute in such cases, will the Government none the less look at amending, for example, the Contempt of Court Act so that action can be taken at an earlier stage rather than when havoc has already been wrought on innocent victims' lives?

Noble Lords: Hear, hear!

Lord McNally: My Lords, I think that the response to the noble Baroness's question reflects concern in all parts of the House about this matter. There are a number of problems with the operation of the contempt laws which are set out in detail in the Law Commission's Eleventh Programme. Since 1981, when the Contempt of Court Act was enacted, the world of publishing has

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evolved considerably in terms of technology and the structure of the media, and the internet is now a significant influence in this area. That is why we have referred the matter to the Law Commission. In no sense should this be taken as our kicking it into the long grass or as the Attorney-General not appreciating the real public concern about these matters.

Lord Thomas of Gresford: My Lords, some in the press take a gamble with pre-trial publicity that the suspect will be charged and convicted, after which there will, of course, be no proceedings. In the McCann and Jefferies cases, they then became completely contrite and settled the claims without any question. Should they not lose a day's edition as a result of circumstances as bad as that? Can we not have measures that will really bite on the press when it goes astray?

Lord McNally: My Lords, my noble friend's idea is an interesting one. I understand-just a thought-that an editor has not been sent to prison for contempt since 1948. The Attorney-General, who has been alive to this matter, said in a lecture at City University on 1 December that, in his opinion, the press has been pushing at the boundaries and in a sense has subtly been seeking guidance on what is acceptable. I hope that the Attorney-General's action has given it suitable guidance that we take this matter very seriously.

Lord Morris of Aberavon: My Lords, while I am confident that the Attorney-General will keep a watchful eye on this issue and commence proceedings, as he has indicated, where necessary-as I had to do two or three times-I also wonder whether standards have deteriorated. Have there been discussions-should there be discussions-with the press generally to try to avoid prejudice long before contempt proceedings have to be contemplated?

Lord McNally: My Lords, I agree with the noble and learned former Attorney-General. At the City University lecture to which I referred, the Attorney-General said that it appeared to him that,

We are indeed making it clear to newspapers that the law exists in this area. As he has already demonstrated, the Attorney-General is willing to follow the example of his predecessor and take action under that law.

Lord Cormack: My Lords, it is not only the press which is to blame here; the police made no secret of the fact that they had arrested Mr Jefferies on suspicion of murder. Should there not be a prohibition on the police announcing that sort of arrest until someone is actually charged with an offence?

Lord McNally: Again, that is very sensible. One of the things that has come out of recent revelations is a perhaps unhealthy linkage between the press and the police in high-profile cases. The police themselves should be very concerned to observe all proprieties when dealing with such serious matters.

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Lord Pannick: Will the Minister bear in mind that the Contempt of Court Act 1981 liberalised the law precisely because the previous law restricted newspapers from publicising matters of public interest, in particular scandals such as the thalidomide affair?

Lord McNally: My Lords, we are aware of that, and we are very concerned to make sure that we get the balance right. However, where the press's desire to sensationalise actually jeopardises a case, either by prejudicing the case against an innocent man or, almost as bad, so prejudicing a case that someone who is guilty has to be released, it cannot be in the interests of justice.

Lord Richard: My Lords, the noble Lord has told us what the Government intend to do and I think that they are wise to involve the Law Commission in this matter. However, he will know, as we all do, that Parliament's record in implementing the Law Commission's reports is not exactly very good-it is not a speedy process. Will the noble Lord note, certainly from the mood of the House this afternoon, that if the Law Commission reports on this, the feeling would be that it is not a report that can hang around for two, three or four years before Parliament looks at it? The matter will need some urgency once they have had a look at it.

Lord McNally: I thank the noble Lord for his comments. I am the Minister responsible for liaison with the Law Commission. One of the things I said to Mr Justice Munby, the retiring head of the Law Commission, is that during my stewardship I would hope that we could remedy some of the faults that he indicated and that, certainly on this point, we would approach any Law Commission report with a due sense of urgency.

Baroness O'Neill of Bengarve: Does the Minister agree that one of the problems is that the media have confused their right of freedom of expression, which in the European convention contains many legitimate restrictions, with the rights of self-expression which we may accord to individuals without damage to others?

Lord McNally: I agree, but also the law is very clear. I tend to agree with the Attorney-General that the media have been pushing the envelope of the law to an extreme. That is why he is taking action.

Armed Forces: Housing


3.15 pm

Asked By Lord Dubs

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Lord Wallace of Saltaire: My Lords, the majority of service family accommodation is already of a very good standard. In the United Kingdom, some 96 per cent of homes-that is 46,000 out of 49,000 homes-are at the top two standards out of four standards for condition, with more due to be upgraded to the top standards in this financial year. The MoD continues to target funding on the most pressing accommodation issues.

Lord Dubs: My Lords, I understand what the Minister says, but does he not agree that to bring all housing for families of servicemen up to the right standard is going to take about 20 years and that this is not good enough when families will come back from Germany and when our troops in Afghanistan are entitled to believe that all their families are adequately housed?

Lord Wallace of Saltaire: My Lords, I do not agree with that. Under the previous Government's programme, the target for 2020 was for all service families' accommodation to be at standard 1 level. I think they were confident that they would hit that target. As the noble Lord knows, we have now had to put into the advance budget of the MoD a pause in major upgrades for three years from 2013, which may make the 2020 target hard to hit. Minor upgrades, however, will continue. The vast majority of service accommodation will continue to be of a very high level.

Baroness Sharples: Will my noble friend tell us whether Wellington barracks, which I have visited twice in recent years, has now been brought up to scratch?

Lord Wallace of Saltaire: My Lords, I do not have that information. I promise to write to the noble Baroness.

Lord Dannatt: My Lords, is it not a great disappointment that over the past few years when extra funds were found for service family accommodation there now has to be a pause and that expectations which were raised are now going to be lowered? I accept that there is not the money for all the things that we would like to do, but when our soldiers, sailors, marines and airmen are heavily committed, it is a great disappointment not to be able to refurbish their houses to the timescale previously promised. Would the Minister not agree?

Lord Wallace of Saltaire: My Lords, we are talking about around 1,000 houses. We very much hope that serious problems will not arise during this three-year pause. We are doing everything that we can to avoid that problem. As the noble Lord will know, one in eight service houses turns over every year, because there is a considerable churn in Army housing in particular. That requires a constant programme of minor refurbishment, which will of course continue.

Lord Palmer of Childs Hill: During the passage of the Armed Forces Bill, I raised the dire state of forces housing. I suggested that we look to fill the gap by the greater use of housing associations in garrison towns. I did not really get an answer, but the Minister did at

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that time say that the upgrades since May 2010 of service housing personnel was 900 units. Can the Minister-bearing in mind his previous response about 2013-give a number of the houses that will be upgraded by the end of 2012?

Lord Wallace of Saltaire: My Lords, I understand that there will be another 500 to 800 houses to be upgraded next year. I add that not all service families are living in service family accommodation; part of the intention of the new employment model currently under negotiation is that fewer service families will have to move as regularly as before. More will therefore be able to invest in their own homes. I was, indeed, asking some of the doorkeepers about their service accommodation and service life, and I was interested to hear how many of them had loans through the services to buy their own houses.

Lord Touhig: My Lords, no sensible person would move into a house that they had not first looked at, yet for many service families the first time they see the accommodation that they have been allocated is the day they move in. Does the Minister agree that this is not the right way in which to treat our servicemen and their families? If he does, what are the Government doing about it?

Lord Wallace of Saltaire: My Lords, as the noble Lord will know, part of the problem has been the sheer number of moves that service families have been making, particularly in the Army. With the return of our forces from Germany and the changes in the forces structures that we are implementing, we hope that there will be less frequent and fewer rapid moves, which would enable service families to be consulted a good deal more widely.

Baroness Finlay of Llandaff: Can the Minister tell us how many of the service family houses are fitted with carbon monoxide alarms, given the danger of carbon monoxide poisoning, particularly in poorly maintained buildings? We know that some of these buildings are poorly maintained. If the family move in and put the heating straight on, that may be the night when they get carbon monoxide poisoning.

Lord Wallace of Saltaire: That is a very good question, and I will of course have to write to the noble Baroness about that. I do not have the accurate, detailed information.

Lord Pearson of Rannoch: My Lords-

Lord Brooke of Sutton Mandeville: My Lords, may I remark to my noble friend that my noble friend Lady Sharples asked a question about the Wellington barracks when we were in opposition? It has clearly therefore appeared on the screen of the Ministry of Defence. If the first Duke of Wellington was alive today, I shudder to think what he would have said if it had disappeared from the screen during his lifetime.

Lord Wallace of Saltaire: I shudder to think what service accommodation was like when the Duke of Wellington was a general.

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Lord West of Spithead: My Lords, in furtherance of what the Minister said about people owning their own accommodation, it became very clear to us at the MoD that the benefits of people having their own homes were huge. Are the Government now ensuring that there are mechanisms in place to make it easier for our people to own their own homes if they need to, rather than investing in married quarters, which can be awfully expensive in comparison?

Lord Wallace of Saltaire: My Lords, I visited Sandhurst the other week, and noted that one of the first things that they had done there was to build houses for some of the staff, which they could buy. It is very much part of what is intended under the new employment model that this will make it easier for service staff to buy their own houses.

Business: Ethical Values


3.23 pm

Asked By Lord Haskel

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox): My Lords, the Chancellor's Autumn Statement reinforced the Government's commitment to deficit reduction and fairness, to rebalancing the economy away from one built on debt towards long-term sustainable growth for the safety and happiness of our people.

Lord Haskel: My Lords, last month the financial services sector was in trouble for mis-selling insurance to pensioners. Yesterday, your Lordships debated the excessive charges for payday loans. These are but the latest in a long list of ethical and moral failings of an industry that the Prime Minister says must be protected at the expense of Britain's wider industrial interests. In view of this, will the Minister now insist that the governance and management of these financial businesses be linked to the values of the rest of us-for instance, by adopting the City Values Forum?

Baroness Wilcox: I have had exchanges with the noble Lord on a couple of the issues that he has referred to today, so I know how fresh this is in his mind. The Prime Minister has spoken about a new understanding between business and government, with Governments committing to pro-enterprise and business-friendly practices. But more than anything, he believes that Britain's most successful businesses are those that invest in their people, communities and environment.

Every Business Commits is a new initiative taking place under our Government, to see whether we can get businesses to make a significant impact by improving skills and jobs, supporting communities and small and medium-sized enterprises and improving the quality of life and well-being for our people.

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The Lord Bishop of Oxford: My Lords, economic growth must be for some people an end in itself but for many others it is actually a means to an end: a larger end of human happiness, the quality of life and a fairer society. How does the Minister propose that the Government will try to co-ordinate an approach to economic growth, which is important, that also contributes to a richer, more holistic goal of human and social well-being?

Baroness Wilcox: Of course I agree with the right reverend Prelate the Bishop of Oxford that growth is not an intrinsic goal but a pursuit in order to achieve other ends. In November a year ago, the Prime Minister asked the Office for National Statistics to devise a new way of measuring well-being in Britain. His goal, he said, was to start measuring our progress as a country, not just by how our economy is growing but by how our lives were improving; not just by our standard of living but by our quality of life. The well-being factors that it identified were: jobs, health and well-being and the environment. They mirror closely our priorities under Every Business Commits, the new initiative which I hope that the right reverend Prelate will follow carefully and advise me, if he thinks necessary, along the way.

Lord Phillips of Sudbury: My Lords, given that highly complex, voluminous regulation is meat and drink to City lawyers and accountants-for example, some of our largest public companies pay a trivial amount of tax by avoidance schemes of the utmost artificiality-might the time not have come to consider in principle legislation rather more like our common law principles, which are more difficult to evade?

Baroness Wilcox: In response to my noble friend Lord Phillips of Sudbury, the Government agree that principles-based regulation will be an appropriate approach in many cases. There are existing examples of principles-based regulation in a variety of areas, as I am sure he well knows, such as the UK Corporate Governance Code, which contains broad principles against which listed companies are required to report. However, we will continue to monitor this and I will continue to talk to him about it.

Lord Young of Norwood Green: My Lords, does the Minister agree that the high executive pay which the public at large find so objectionable is only one symptom of the real illness, which is the broken relationship between shareholders and managers? How are the Government going to repair this so that the values of shareholders are reflected in the decisions of management, including perhaps having an employee representative on remuneration committees?

Baroness Wilcox: The independent Kay review will be looking at these things, which we have previously discussed and debated. I do not think any of us like to see the distance between remunerations growing wider and wider. There is no doubt that the Government are following this up.

Lord Sutherland of Houndwood: My Lords, David Hume argued that greed, which he defined as an avidity to acquire possessions, belongings, property and money, was a force destructive of modern society. Could he possibly be right and, if so, what shall we do about it?

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Baroness Wilcox: Well, my Lords, greed was of course only one of the seven deadly sins. If I reflect on some of the others, I can see that they can be just as contagious and nasty. However, I shall reflect on the fact that one of my favourite poets, Kipling, wrote a wonderful poem called Norman and Saxon in which he describes how the people of this land will put up with pretty well anything at all, but they will not put up with the fear of unfair dealing. If we look for fair dealing in the relationship between the Government, their people and our business community, we should get somewhere.

Lord Tebbit: My Lords, does my noble friend not agree that the best way of asserting the rights of the owners of a business, as opposed to the hired help-men like "Fred the Shred"-would be if some of them were put on trial for falsifying the accounts of the businesses which they ran? They either knew or ought to have known that the accounts and the balance sheets that they brought forward were false.

Baroness Wilcox: We know that the shareholders hold the power in this country's large corporations, and if they will, please, use it to call the people in those companies to account, we should see some movement. That is what we are encouraging.

National Institute for Health and Clinical Excellence


3.30 pm

Asked By Lord Naseby

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe): My Lords, the Government's Statement on the life sciences set out a range of actions to support the adoption and diffusion of innovation in the NHS. This includes a commitment to establish, through the National Institute for Health and Clinical Excellence, an advice service to support medical technology companies in demonstrating the value of their products, and measures to improve NHS compliance with NICE guidance. It is for NICE to consider any changes to its procedures as a result.

Lord Naseby: Is my noble friend aware how welcome the Statement on life sciences was both to patients who suffer from chronic diseases and indeed to the pharmaceutical industry? However, that welcome is tempered by the statement that my noble friend has just made, because, quite frankly, NICE is and has been a dead hand on development for many medicines. I note that the current chairman has been in position for 12 years, and is scheduled to stay for another two, while the chief executive has been there for 12 years, and is scheduled for an unlimited term beyond that. Many charities have commented on NICE, and I will quote briefly from Sarcoma UK: "In the UK the delays

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caused by NICE can add years to introduction and mean patients die waiting". Against that background, will my noble friend ensure that NICE has a new, younger and more modern management?

Earl Howe: My Lords, I need to put on record that I have every confidence in the senior leadership of NICE. The current chair and chief executive have overseen NICE's development into an organisation of global repute that provides robust, independent guidance on a range of issues. Continuity of leadership can be a very good thing, and I believe that it is in this case, where the leadership is of the highest calibre. I would also say that significant improvements have been made to the timeliness of NICE appraisal guidance on new drugs. NICE is now able to issue draft or final guidance for a significant majority of the drugs that it appraises within six months of a drug being licensed. That is extremely good, considering the complexity of some of these assessments.

Lord Walton of Detchant: My Lords, does the Minister accept that the Statement by the Government last week on life sciences is one of the most welcome Statements relating to the life sciences that we have heard in this Chamber for many years? NICE has had a very proud record. It is required not only to assess the value and importance in medicine of drugs and new procedures but to consider their cost effectiveness. While there are certain situations in which it can rightly be criticised, it has made an immense contribution to the development of new procedures and the introduction of new drugs in the NHS. It is actually envied in other countries, not least in the United States, which wishes that it had a similar mechanism.

Earl Howe: My Lords, I fully agree with the noble Lord, who puts the case very well. That is why NICE will be at the heart of our work to improve quality in the NHS. We are re-establishing it, as the noble Lord knows, in the Health and Social Care Bill, extending its role to social care and embedding the role of NICE quality standards in statute. Of course, it will still be there to provide independent advice to support clinicians in the way that we know it has over the last few years.

Baroness Sharp of Guildford: My Lords, the White Paper talks about establishing a NICE implementation collaborative. Could the Minister explain to the House precisely what is meant by this?

Earl Howe: My Lords, the NICE implementation collaborative is a collaboration between NICE and representatives or stakeholder groups, including the chief pharmaceutical officer, the main industry bodies, the NHS Confederation, the Clinical Commissioning Coalition, the Royal Colleges and, if Parliament approves, the NHS Commissioning Board. The idea is that its members are going to work together to identify where support is needed and to identify solutions for the NHS through the development of implementation guidance-in other words, to improve the uptake of new and innovative technologies in the NHS.

Baroness Thornton: My Lords, the noble Lord, Lord Naseby, has never really liked NICE very much, so I am not surprised at his Question. A lot of the work

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of NICE is not about approving new medicines but about care pathways. I invite the noble Lord, Lord Naseby, to look at its last 10 press releases; they are all about how you treat COPD or HIV, the care pathways for people with mental illness and so on. Will the Minister confirm that NICE's guidelines on care pathways will have the same effect under the new architecture as they have today?

Earl Howe: My Lords, our expectation is that the NHS will continue to use NICE clinical guidelines to inform local improvement activity. These guidelines are tremendously valued and very authoritative. The noble Baroness is quite right: they have the potential to make a big impact on the quality of care and to add value.

Baroness Masham of Ilton: My Lords, does the Minister agree that the Statement was very encouraging? Will it keep pharmaceuticals and more research here in the UK? That would be welcome.

Earl Howe: My Lords, part of the objective of the growth strategy is to break down some of the barriers that undoubtedly exist to pharmaceutical companies conducting clinical trials in this country. There have been unwelcome delays in the system and we are putting in place several measures to get rid of them, which in turn should encourage pharmaceutical companies to view the UK as the platform of choice for clinical research.

Lord Foulkes of Cumnock: My Lords, has the Minister thought-

Financial Restrictions (Iran) Order 2011

Link to the Grand Committee Debate

Motion to Approve

3.37 pm

Moved By Lord Sassoon

Motion agreed.

European Union Membership (Economic Implications) Bill [HL]

Order of Commitment Discharged

Moved By Lord Pearson of Rannoch

Lord Pearson of Rannoch: My Lords, I understand that no amendments have been set down to the Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless any noble Lord objects, therefore, I beg to move.

Motion agreed.

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Welfare Reform Bill

Welfare Reform Bill

Report (2nd Day)

3.38 pm

Clause 11 : Housing costs

Amendment 12

Moved by Lord Best

12: Clause 11, page 5, line 2, after "credit" insert ", subject to subsection (3A),"

Lord Best: My Lords, I am speaking to Amendments 12, 14 and 49. I know that amendments to my amendments have been put down and I will say a few words about them. I understand-I hope this is the correct procedure-that my Amendment 14, as amended, is consequential on Amendment 12. It is Amendment 12 that I shall concentrate on now.

These amendments cover the new underoccupation penalty for council and housing association tenants, the so-called bedroom tax for those on housing benefit. I am very grateful to the noble Baroness, Lady Hollis of Heigham, for her support, and to the noble Lord, Lord Kirkwood of Kirkhope, and the right reverend Prelate the Bishop of Ripon and Leeds, for theirs. Since the noble Lord, Lord Newton of Braintree, asked for his name to be added to the list, although of course only four are allowed, I know the amendment has support across all of your Lordships' Benches. The amendment also comes with the backing of an impressive list of concerned charities and voluntary bodies led by the National Housing Federation and Shelter, to which I am very grateful for their hard work.

The amendment seeks to prevent a change to the definition of underoccupation currently used by the Department for Communities and Local Government. The Bill paves the way for a much tougher test than at present, with a hefty underoccupation penalty-a cut to the housing benefit-for those whose accommodation fails the new test. Currently, as the Housing Minister Grant Shapps made clear in October, a household in council housing or a housing association home is deemed to be underoccupying only if it has two or more bedrooms above the basic bedroom standard. One spare room is permitted. Under the Department for Work and Pensions' proposed new definition, one so-called spare room would not be allowed.

Under the fierce new test, a family would be counted as underoccupying if, for example, two teenage girls were not sharing the same room, or if an older couple, one of whom is below pension age, have a two-bedroom flat. All those deemed to be underoccupying will have to move and downsize to somewhere smaller. If they do not, even if there is simply nowhere smaller for them to move to, then they must pay the new penalty. Six hundred and seventy thousand households receiving housing benefit will be caught in this trap, rising to some 740,000 in the years ahead. If they do not move out, they will be charged an average of £13 per week, which will have to come out of their low earnings or their other benefits, which are meant to cover food, fuel, clothing, and specifically not housing. These are

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by definition very poor households, and the new tax will represent a significant reduction in their living standards.

This may sound a heartless measure, but the Government's objectives are not dishonourable. The intentions are to reduce the high cost of housing benefit in respect of tenants who stay put, or to free up bedrooms for larger households where existing tenants are persuaded by the new penalty to downsize. I fear that neither of these perfectly understandable objectives will be achieved by this measure.

First, it seems improbable that this will raise tens of millions of pounds. Those deemed to be underoccupying who seek smaller homes as a consequence may well have to move into the private sector, where rents, and therefore housing benefit, will be much higher, costing the DWP an extra £50, £60 or more a week. Secondly, the savings for the DWP will often translate directly into costs imposed on councils and housing associations. These bodies will have to assume the role of tax collectors, extracting the average £13 per week penalty from each tenant who does not move, which will prove to be an administrative and financial nightmare. To see who should be sharing a room, a landlord will need to keep track of the age and gender of each child. They will need to measure the bedrooms to see whether they can fit in two beds. They will need to find out whether family members are living at home or have actually moved out. It will require an army of snoopers to see who must be deemed to have a spare room.

If tenants will not pay or cannot pay, the saving to the DWP simply becomes a cost to the council or the housing association in arrears and bad debts. Less money for social landlords means fewer improvements, fewer regeneration schemes, and fewer much-needed new homes. Since the underoccupancy issue is a much more significant one in the north, affecting 46 per cent of working-age tenants in the north-east, and 43 per cent in the north-west, this tax takes money out of local economies in places that most need it. In Bradford, for example, one of the big housing associations has calculated that if it cannot collect all the payments, and has to take the hit in lost rent, it will cost £2.7 million per annum, which it can ill afford. That excludes the heavy cost of evictions-pointless evictions, since so often there will be nowhere cheaper for the household to move to-wherever the landlord cannot keep tolerating rising arrears.

3.45 pm

Paradoxically, the new measure also makes addressing underoccupancy in council housing and housing association homes more difficult. At present, many social landlords have incentive and support schemes to address the very real problem of underoccupation by pensioner households. For these, a move to smaller premises is positively helpful in manageability, accessibility, cheaper heating and so on. However, pensioner households are excluded from the penalty, provided husband and wife are both over pension age. They can stay put, often in three-bedroom houses, which is what councils have mainly built for the past 70 years or so, without incurring any new cost or requirement to move. Conscientious councils and housing associations will have to change their priorities and henceforth allocate

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smaller homes that become vacant to younger households to save them from the new tax or penalty, which will lead to reduced incomes, possible arrears and debt. The penalty will hinder, not help, social landlords to tackle underoccupancy sensibly.

These are the financial and managerial issues raised by the new measure but even more telling, I suggest, are the human and social issues. The new penalty-the fine where a spare room is discovered-is likely to make normal family life much tougher for the poorest households. The rest of us take for granted the flexibility that comes from having a spare room. Just because young Johnny has left home-has got on his bike to look for work elsewhere-it does not mean that he will never return. To move house as soon as he goes-the liability to the tax starts on the Monday morning after he vacates his bedroom-would be crazy.

A spare room keeps a family together. It allows teenagers to have their own bedrooms; it allows parents to help older children pick up the pieces if they come home at a time of crisis; it allows the adult child to come home to look after a poorly parent when they come home from hospital; it allows the divorcee to have children to stay; it allows couples to sleep separately if one is ill or recovering from an operation; it allows the younger disabled child to have their own room; and so on. Houses and flats provided by councils and housing associations represent people's homes. They are not transit camps or hostels, with people constantly on the move as families expand and contract, but places to settle, put down roots and overcome some of the disadvantages that life has thrown at them.

As Christmas approaches, most of us understand what a home can be and how a spare room is so often part of that. This amendment keeps the status quo and maintains the current definition of underoccupancy, which already expects those in social housing to live more compactly than the rest of us. Let us not go down an uncharted road that is likely to add to the hardships of hundreds of thousands of our poorest citizens. I beg to move.

Lord McKenzie of Luton: My Lords, I will speak to Amendments 14ZZA and 49A, which are in this group and are amendments to Amendments 14 and 49. I start with an apology to noble Lords for tabling these amendments somewhat late. We thought, on reflection, that it was appropriate to import into the proposition of the noble Lord, Lord Best, the circumstances in which a local housing authority or registered provider of social housing is able to make a suitable alternative offer to somebody who is underoccupying social housing. I am pleased that the noble Lord felt able to signify his acceptance of that.

The presumption would be that such an offer would be taken up. In these circumstances a tenant could not rely on the spare bedroom to avoid an underoccupation charge-or tax, as it is more appropriately called. In that respect it would be consistent with Amendment 17A, tabled in my name and those of my noble friends Lady Hayter and Lady Hollis. However, the amendments would not disturb the basic proposition in the amendments of the noble Lord, Lord Best, so that where there is no suitable alternative offer the DCLG definition of

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underoccupation should be used, and the tax would not apply unless there was more than one spare bedroom. We support this.

Our amendment leaves the definition of what constitutes a suitable alternative offer to regulations-the same formulation we have used in Amendment 17A. It raises questions of how and by whom the determination is to be made, but these practical issues should not be insurmountable and may be dealt with in regulation. The definition would carry the implication that suitability should reflect the broad needs of the actual tenant in terms of size, location, extent of adaptation, proximity to transport and relevant support facilities. It should recognise that it would not, in all circumstances, have to be bedroom standard plus one, and would not carry any implications that RSLs or local housing authorities would have to manage their housing stock in any particular manner, although tackling underoccupation should clearly be a key part of the strategy.

No one doubts that underoccupation is a problem. We have a chronic shortage of housing stock and a huge demand for affordable housing. Yet the Government's policy is the wrong way to go about tackling the problem, as it punishes people for housing choices over which they have little control rather than enabling the best fit between the available properties and the needs of households. We have heard that this measure will encourage tenants to make the same choices about their housing as those in the private sector or those who own their own home. Social tenants are, however, the group least likely to be underoccupying their property using the standard DCLG definition. Eleven per cent of social renters, or 429,000 households, have two or more spare bedrooms above the bedroom standard and approximately half of these are pensioners. In comparison, 47 per cent of owner-occupiers and 16 per cent of private renters have at least two bedrooms over the standard. Social tenants are, therefore, much more likely than other households to be living in a property which is considered to be the right size. It seems that the Government are intent on strengthening this disparity. Under the reinvigorated right-to-buy provisions, there is nothing to stop tenants who underoccupy from buying their property at the full, relevant discount.

These matters depend on whether an additional bedroom is fairly described as spare. This implies that it is surplus to requirements but, as we have heard from the noble Lord, Lord Best, for many it is not. The Housing Futures Network survey shows just some of the uses to which such an additional room might be put. These include a couple sleeping apart for medical purposes, storage of equipment-especially medical equipment-occasional use by overnight carers and many more which the noble Lord, Lord Best, instanced. We know that the vast majority of tenants do not recognise that they are underoccupying their homes at all. This is a reflection of space standards confirmed in the national figures on occupation. The DWP definition is out of kilter with what has become the norm for reasonable occupation in England. There also appears to be a huge administrative advantage in recognising the flexibility of the additional room. Without it, there is the risk of tenants having to constantly report changes of circumstances such as the son or daughter returning from university, somebody returning home

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because they have been made redundant and are struggling with their rent and the onset of an illness or infection with requires a couple to sleep apart. Are we really going to make these routinely reportable events?

The Government have also suggested that a further aim of the policy is to increase work incentives. Claimants who are underoccupying and who cannot move will be expected to find, on average, £13 a week to meet the shortfall in their rent. The DWP impact assessment suggests that they may do so by moving into employment or increasing their hours-even in the current circumstances, even with the current unemployment figures. Given that the whole aim of universal credit is to make work pay, it seems unclear why this additional work incentive is needed. Even if it does force some people to move into work, they are likely to be outnumbered by those who will move into debt.

In Committee, the Minister cited research by the Housing Futures Network, a coalition of four housing associations, which had interviewed 452 of their residents who would be affected by the underoccupation penalty. The survey found that 29 per cent of these would consider a move into work, but also found that 52 per cent would find it "very difficult" or "fairly difficult" to make up the shortfall in housing benefit. More than a third of those surveyed said that they were "very likely" or "quite likely" to move into arrears. The department's own assessment notes the possibility of arrears, noting that the cost to social landlords of implementing this policy will include the cost to run schemes to enable affected tenants in the social rented sector to move home within the sector. The assessment also noted that the costs of action taken in relation to tenants failed to make up the shortfall between the rent and their housing benefit entitlement.

The third rationale given for the policy is the need to reduce expenditure on housing benefit. The equality impact assessment states:

"The overall cost of Housing Benefit needs to be controlled, and reduced in order to tackle the budget deficit. This measure is part of the effort to rein in Housing Benefit expenditure".

However, the impact assessment is also clear that these savings will be made only if the first intention of the policy, to encourage people to occupy more suitably sized housing, actually fails. The impact assessment states:

"Estimates of Housing Benefit savings are based upon the current profile of tenants in the social rented sector, with little tenant mobility assumed. If a significant number of tenants wished to move, this would reduce direct savings and place extra demands on social landlords ... If all existing social sector tenants wished to move to accommodation of an appropriate size, there would be a mismatch between available accommodation and the needs of tenants".

How perverse can a policy be, when structuring it to fail is an excuse for hitting 670,000 poor households? In this situation, where there is simply not enough accommodation available to ensure that everyone has a home of what the DWP considers to be the right size, tenants will be left with no choice but to either take a hit to their incomes or move to the private rented sector, where the state will pick up the bill for the considerably higher rent that tenants are likely to face.

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The people facing these choices are not likely to be able easily to absorb a £13-a-week hit on their income. The impact assessment shows that around 20 per cent of such families include a child under 16. The Housing Futures Network research found that more than 70 per cent of the households affected include someone with a disability or major health concern. The research also found that more than 40 per cent struggle to manage financially and more than two-thirds have an income of less than £150 a week, excluding benefits-meaning that they will have to spend around 10 per cent of their income to make up the rent shortfall.

The Minister has suggested that shortfalls might be met by discretionary housing payments, but there has been no indication that local authorities will be given extra resources to meet the cost. The impact assessment finds that the cost merely of administering these payments could reach £500,000. I ask the Minister: is there to be a top-up for this policy-a top-up to the pot that my noble friend Lady Lister in Committee called the "loaves and fishes" approach to funding?

The Government's approach will therefore fail to deal with the problem of underoccupation while asking some of the poorest and most vulnerable people to pick up the tab for this failure. We would expect a more rational approach to the problem of underoccupation that encourages local authorities to prepare a strategy to address the issues of occupation and enables them to encourage people to move, but only where suitable alternative accommodation is available.

We know that good policy and the right incentives can enable a better fit between people's housing needs and the available accommodation. Some people do want to downsize. The Housing Futures Network found that 12 per cent of those surveyed said that their current accommodation was slightly too large for them, but that they needed help and support to downsize. Shelter cites the successful example of the Oldham programme that offers financial incentives and support with moving arrangements, which has freed up 130 family-size homes in 16 months. If it were possible to roll out this programme nationwide, Shelter estimates that about 45,000 homes could be freed up. Shelter emphasises that, to achieve that, local political will is needed as well as sufficient local resource.

To summarise, Amendment 14, as amended by our amendment, and our Amendment 17A would imply that people had to take up suitable accommodation when it was offered. Amendment 17A would prevent the underoccupation tax applying at all where there was no such offer, and Amendment 14 would allow the reduction in housing support-the tax-to operate where there was more than one spare bedroom.

The Government's approach aims to tackle underoccupation, but will not do so, and will save money only at the expense of some of the poorest families in the country. Where there is a suitable offer of alternative accommodation, it may be reasonable to ask families to move, but to enable that to happen, we need to ensure that local authorities are working to address underoccupation rather than punishing those families for failure to do so. We support the amendment moved by the noble Lord, Lord Best, and, clearly, our Amendment 17A.

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4 pm

The Lord Bishop of Ripon and Leeds: My Lords, I have added my name in support of the amendment of the noble Lord, Lord Best, because of my concern, and that of those of us on this Bench, for the needs of children as we pursue the move towards universal credit. I am fully aware that that concern is felt on the government Front Bench as well.

This is an area where a small change to the Bill will bring about help for a significant number of children who are under the most pressure in social housing. What is proposed by the noble Lord in the amendment-whether or not it is itself amended-is a definition of underoccupancy in line with that of Communities and Local Government and which simply reflects the reality of family life. Under the definitions of the Bill, a family with an eight year-old boy and a nine year-old girl in separate bedrooms would be deemed to be underoccupied. That cannot make sense.

There is every reason to discourage genuine underoccupancy. When people think about underoccupancy, on the whole, they think of where a single person or a couple are left in a larger house, probably because their children have moved away. Surely that should not apply to a disabled child, for example, who needs care during the night and therefore needs a separate room. It should not apply to a room used for access visits by children following marital breakdown. It should certainly not apply to foster carers between placements. There is real concern that the Bill, if unamended, will discourage foster caring because the carers will not be able to retain rooms in which to place foster children if the need should arise.

We-or, at least, the Members on this Bench-are going to hear a good deal over the next fortnight or so about there being no room in the inn. The amendment will provide the flexibility so that families can live the sort of lives that most of us take for granted. I hope that we will be able to enable this to happen by the pursuit of this or a similar amendment.

Baroness Hollis of Heigham: My Lords, I declare an interest as chair of Broadland Housing Association. I am delighted to support this amended amendment. DCLG says that you are underoccupying if you have two or more spare bedrooms; DWP, in the Bill, if you have more than one spare bedroom-a very tight definition. If you then do not move to somewhere smaller, you will be fined by having your housing benefit cut by 15 per cent.

As my noble friend has said, this is not about finding homes for the 3 per cent of families who are overcrowded in this country. We could solve that tomorrow if we built bungalows or suitable flats for the pensioners who are queuing up for them-full stop. No, this is about cutting the housing benefit bill, by telling a third of our tenants in social housing, most of them disabled, that they have to find somewhere smaller to live. A middle-aged couple with health problems who therefore need that second bedroom will be entitled to only one bedroom. The family of four with two teenage daughters in a three-bedroomed home must move to a two-bedroomed home even though the girls will then have nowhere to do their homework. A disabled woman

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who sometimes has a carer staying overnight in her two-bedroomed flat must move to a one-bedroomed flat. A couple in their 50s, in a two-bedroomed house, who care for their grandchildren when their daughter with mental health problems cannot-in other words, they are occasional kinship carers-will have to move to a one-bedroomed flat, possibly some distance away, and the whole fragile family arrangement will collapse.

In theory, all the people in these examples are expected to move. The children are expected to change school one year before GCSEs, the middle-aged woman is expected to move away from her mother whom she is keeping out of residential care by her support, the disabled woman to move away from the friends who help her cope by doing her shopping and laundry. Six hundred and seventy thousand families-between 30 and 40 per cent of all tenants in social housing, two-thirds of them with a degree of disability-are supposed to go on the move if they can. Fine, if they can; but for most, even if they want to downsize, they cannot. Even though they may be pensioners who cannot heat their homes, they cannot downsize, and the DWP knows it. The smaller flats are simply not there to move to and all the fulminations of the tabloid press-that Ministers expect them to downsize when the same Ministers know that they cannot-are therefore cruelly irrelevant.

The National Housing Federation says that 180,000 households in two-bedroomed flats would have needed a one-bedroomed flat last year, but just 68,000 such flats-about a third of the number needed-became vacant. In future, the needs of pensioners who really want to move can never be met because, as the noble Lord, Lord Best, said, absolutely rightly, any smaller place that becomes available will have to be offered to much larger families who, however, do not want to move, rather than to the single pensioner who does. It is a cruel nonsense.

The department admits that, in its own words, there is a mismatch, and that the smaller properties that people are expected to move to do not exist. The department expects that 85 per cent of all of these tenants will stay put and take the cut in housing benefit because they have no alternative, as the impact assessment admits at the bottom of page 2. The Government are counting on people not moving, despite telling them that they should. So the Government's savings are going to come not because people do what the Government tell them to do, but because people do not do what the Government tell them to do: they stay put, because they have no option, and then they are fined for doing so.

What do the Government suggest that they should do to cover the shortfall? They should find work. Well, of course, if they could they would, and we welcome the support given for finding work within the universal credit system. Alternatively, it is suggested that they could take a lodger; but with small children I do not think that that will happen. The other suggestion is that they use-actually, use up-their savings. As the noble Lord, Lord Freud, reminded us on Monday, the average savings are only £300. That will last for four or five months of shortfall. After that, what then? It will be debts, arrears and pass-the-parcel. To pay the council

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tax, because their council tax benefit is being cut by 20 per cent, they will raid their housing benefit. However, that now does not pay the rent, so to pay that, they will fall behind on their utility bills, which are also on the rise. Threatened with their gas and electricity being cut off in winter, they will cut back on food, until ultimately the whole Ponzi debt pyramid created by this clause of the Bill will collapse. They will then face food parcels and eviction.

However, as the eviction is not their fault, as the Minister agreed in Committee, they will not be intentionally homeless, so they will be put into highly expensive B&B at taxpayers' expense with all its cost and all its misery, as, with a history of arrears, they will not be accepted by any private landlord. In time, they will be rehoused-quite probably, if my housing association is anything to go by, in a house that is still too large, because that is all we have-and the whole vicious spiral one year on will start all over again, taking disabled adults and children through a relentless cycle of cuts and evictions.

The alternative, of course, is that housing associations such as mine carry the arrears because we know the social and financial costs of eviction and the awful stress that it involves. Then what? Over time, the housing association goes into the red or, alternatively, we stop building and save the debt charges on erecting new homes, the money being spent instead on debts that come from cuts in housing benefit, thus guaranteeing that the shortage of social housing that is undermining the housing market continues for the next decade.

It is so unfair. Let us take JSA as an example. If people break the rules on job search, we cut their benefit to change their behaviour. However, if they observe the rules and, after a proper job search, cannot find a job given the unemployment figures, we do not cut their benefit because it is not their fault and they cannot change their behaviour. That is the social contract of social security. You sanction people when they break the rules and should change their behaviour; you do not sanction or fine them but support them when that is not possible. It is what we do with JSA. The DWP is, in this clause, breaking that social contract with these changes to housing benefit. In all my time in the social security field, I have never known that contract to be broken in this way.

Grant Shapps said that we should not bully people out of their homes. He is right. Yet in this Bill we are saying to people who have lived in their homes all their lives, done what was asked of them and behaved responsibly-two-thirds of them having some disability-that their benefit is being cut from underneath them through no fault of their own but just because we in Westminster are changing the rules. We tell them to downsize while knowing that they cannot do so, so we fine them instead for what is not their fault and for what they cannot change. It is morally wrong to punish people for something that is not their fault and to punish them when they are innocent. That is not decent, it is profoundly unfair, and we should not do it. If noble Lords agree, they will support the amendment today.

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Lord Kirkwood of Kirkhope: My Lords, I speak as someone who supported Amendment 14, and I am very happy to agree to the composite that the noble Lord, Lord Best, has now accepted and put to the House. I think that it is one of the most significant amendments in the whole of the Report stage. I am now speaking to my own side of the House because I support this amendment very strongly. If the noble Lord, Lord Best, feels the need to press this to a Division, I shall support him, and I shall do so for a couple of reasons.

First, it is important to reassure people on my own side that this proposal would not interfere with universal credit, the introduction thereof or anything thereby, but it would mitigate some of what I call the Treasury claw-back-that is, the money that was required of the department to set up the universal credit system. I do not think that that is an easy thing for the department to do but, for me, it goes too far. It is claiming back too much money too quickly from too vulnerable a client cohort, and that is something that colleagues on this side of the House need to bear in mind.

At the risk of embarrassing the noble Lord, Lord Best, I point out that he has been active in housing for longer than any of us care to remember and is an acknowledged expert. The noble Baroness, Lady Hollis, and the right reverend Prelate are experts in their own fields. I have had some experience myself as a former chairman of the Social Security Select Committee in another place, and I am telling the House that today we are looking at a qualitatively different sort of cut.

Secondly-seen from the perspective of the summer of 2010, when this deal was done with the Treasury-it was not unreasonable to start looking for the green shoots of a recovering economy by 2013 to 2014. I am no economist but I think that there is no prospect whatever of that happening, as the Office for Budget Responsibility has recently confirmed. I think that we are facing dire prospects. If we are facing a 13 to 15 per cent cut in our national wealth then people like me will be able to accommodate that, but people at the bottom of the financial pile will not. Were the assessment of summer 2010 made today it could not, in all conscience, extend to the level of reducing household incomes in the social rented sector by £676 annually. That is not fair. This does not affect the implementation of universal credit; it is an attempt to claw back money for the Treasury.

4.15 pm

Again, I say this to my own side of the House. This amendment mitigates the Bill's policy of tackling underoccupation; it is not a full frontal assault on the policy. The amendment targets the Bill to make it bite on high-level underoccupation. That is an important point. No one is saying that housing benefit does not have to be addressed in the long term or that underoccupation is not an important part of that, because it is. However, we should start as the amendment proposes and see how it goes. On 1 April 2013 we should extend the social security definition to the Department for Communities and Local Government definition and leave people with the flexibility to have one extra bedroom. We should see how that policy

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runs for a while. If it needs further amendment then the Government are perfectly entitled to return to it. They will be able to say they know how the provision has operated in terms of higher levels of underoccupation and now want Parliament's permission to take it to another level. That is a much safer way of proceeding in view of the impact of the change.

The one thing I know about social security is that households rarely survive a loss of their housing security. Benefits can be reduced and people are very resilient in their budgeting to deal with it-they box and cox, they rob Peter to pay Paul and they survive. They do not survive if their housing security is put at risk. If that happens, the local authorities and the other public provision that we make for challenged families will have to pick up the pieces in all sort of ways, including adult dependency services and special needs provision. Local authority colleagues are looking at what is going to happen on 1 April 2013 with huge trepidation. If they are not, they are not doing their job properly. Another objection-again, I say this to my own side-is that there is no sensible transitional protection, as I would call it, for this measure.

I am not making the Minister's job any easier although I am determined to stay best friends with him throughout Report. By saying that we have between now and 1 April 2013 for people to make arrangements, the Minister is suggesting that as soon as Royal Assent is given people will start looking for the houses that the noble Baroness, Lady Hollis, has just said do not exist. This is not a transitional protection of any kind. Most of the other changes in the universal credit in the Bill protect transitional arrangements, and rightly so. On 1 April 2013 people will hit a brick wall and arrears will spike in a way that means that we are transferring national debt through social sector working-age tenants into rent arrears. That will be picked up in other parts of public provision in a way that will not generate the savings that the Government think are to be drawn from these changes. It is impossible to quantify exactly how that cost-benefit analysis will work out in practice, but the impact assessment does not begin to give this House enough information to be confident. If we do not make these amendments, the Bill will cause dire consequences for 670,000 households across the United Kingdom.

The consequences will vary in different regions. There is a spatial dimension to this problem. Some parts of the country will avoid the worst effects but some regions-it is quite clear which-will carry the weight. The effects will not be spread evenly throughout the United Kingdom. This is not something that local government will be able to deal with in bits and pieces. Some local authorities will be hit. The Prime Minister was trying to train a big bazooka on the French, I think, but he is training his big bazooka at 670,000 social-rented sector households on 1 April 2013, and there will be no place for them to hide, for the reasons that the noble Baroness, Lady Hollis, made out.

If we are going to go for an unamended Bill, and if this amendment fails, it is unconscionable not to have a whole stream of exemptions. We discussed this upstairs in Grand Committee, and powerful cases were made by people who really know what they are talking about in terms of foster care and all the rest of it.

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There are all sorts of unintended consequences if we do not put a huge number of exemptions underneath this if the Bill's provisions go through as they stand.

My position is, yes, let us tackle underoccupation. It will be very difficult for the families that are hit by it on 1 April 2013, but if we leave the Bill unamended, it will be uniquely difficult for a very vulnerable set of householders in the social-rented sector who are going to be hit by other things as well. We can see what they are. The noble Baroness, Lady Hollis, made an important point about the context and what else will be happening at the time. We are facing a long stretch of austerity before better economic circumstances arise.

I say to my own side that this is not an ordinary amendment. The provision is not simply about trying to save money; it is about saving money in a way that is more likely to disrupt vulnerable households than just about anything else, partly but not exclusively because the household benefit cap is equally destructive of household integrity. This amendment deserves serious consideration. If noble Lords do not vote for it we are going to have to live with the consequences. I predict that, in the long term, those consequences will affect the public purse more negatively than the Treasury Front Bench and the Minister expect. This is a very important amendment. If the noble Lord presses it, I will certainly vote for it.

Lord Wigley: My Lords, I rise to speak in support of Amendment 12, indeed Amendment 14 as it was, and other amendments. If some of these amendments are not passed, there will most certainly need to be exemptions built in somehow or other, as the noble Lord, Lord Kirkwood, said a moment ago, or a lot of vulnerable people are going to suffer. I am concerned about the impact of the Government's proposals in relation to underoccupancy as they affect disabled people, including, particularly, those with learning disabilities. The Government will already be aware of concerns from the representations that have been made by Mencap -the noble Lord, Lord Rix, apologises that he cannot be here today. Numerous other organisations with an interest in this issue have also pressed the point that there is already a large shortage of suitably sized properties available to people who would under the new rules be deemed to be underoccupying their homes.

Furthermore, representations have also been made that there are around 100,000 properties that have been adapted specifically to suit the needs of the individuals living in them who would be affected by the new rules, meaning that should the occupiers have to move, new adaptations would have to be paid for, which seems a rather less than sensible outcome.

People with a learning disability regarded as underoccupying their home in the social rented sector will lose some of their housing benefit and have to make up the shortfall themselves. If they are unable to afford this, they will have no choice but to move to a different home. Very often, people with a learning disability will have established strong networks of friends locally, as well as family and support staff, and may not be in a position to adapt to the stress and anxiety of moving to a new home. The greater the distance from these networks, the greater the potential anxiety will be for them.

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I am concerned that some disabled people will either face a reduction in their income or have no choice but to move home as a consequence of the Bill's proposals. That is why I support the amendment.

Lord Newton of Braintree: My Lords, I apologise for once again coming in a bit late to the debate. On this occasion, I was at a meeting outside London and got badly held up by the demo currently taking place in Whitehall.

I should declare an indirect interest in that my wife, as I think most in the House know, is a cabinet member of Braintree District Council and has a strong interest in social housing matters. I nevertheless wish to speak because, had the right reverend Prelate the Bishop of Ripon and Leeds not pipped me at the post, my name would have been on this amendment. I strongly support it and agree particularly with the words that have been uttered by my noble friend Lord Kirkwood.

I am not in a position as a result of my lateness to repeat all the arguments of the noble Lord, Lord Best, because I have not heard them. I have no doubt that, had I heard them, I would have agreed with them, because I have discussed the matter with him on a number of occasions.

I simply want to bring a bit of information from the coalface, as opposed to the rarefied atmosphere of Whitehall policy discussions. I happen to have in my hand a note issued by Braintree District Council about the new rules on underoccupancy. It thinks that these have probably the most far-reaching policy impact of any of the changes in the Bill. It makes the point that it applies different, more generous rules than those that are nationally applied to tenants claiming housing benefit. It gives priority for a family to move when the oldest child is five years old or more, not 10, and it recognises that this policy of using the younger age of five will be wrecked by the Bill.

Similarly, it tries to rehouse people in advance of change, because of the delays that occur if they need a three-bedroom or four-bedroom house. I shall not quote the whole document, but it states that people are likely to wait for more than a year to move in the case of needing a four-bed property and a long time where they have children growing up. Let me quote just one sentence:

"We therefore felt that it was better that a family, for example, with a boy aged 8 and a girl aged 6 should move to a home with 3 bedrooms and not be allocated a 2 bed and have to move again shortly afterwards. We felt this was better for neighbourhoods, for children's schooling and so on, as well as reducing the pressure on our allocations process".

That makes complete social sense to me.

I say in passing, as another illustration of one of my concerns about government policy as a whole, that we have just passed a Localism Act purporting to give local authorities greater freedom to make this kind of choice, and we now seek to pass a Welfare Reform Act telling them that localism is neither here nor there-they will do what they are told by central government. Somebody might perhaps try to explain.

There are a number of other examples from the note that I could quote, but let me quote an additional note that should ring a bell at least on these Benches,

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about the rural effect. This was a subsequent note, which I happen to have in my hand, and it relates to a large village, which I shall not name, in the Braintree district. Greenfields-that is the housing association-gives details of what housing it has in this village and goes on to say:

"This is a good example of a location where potentially, people claiming benefit would be forced to leave if they could not afford the extra rent to stay in the family home. [The village] is interesting because it is a relatively big village with a high overall level of stock and yet the balance of homes makes this policy a real problem for people needing to downsize from a 3 bed to a 2 bed. Clearly, people in smaller villages"-

many rural-

The rural effects of this are not to be underestimated and my guess is that my noble friend's colleagues in the Commons will face a barrage if and when this comes into effect. Indeed, I would venture to say that if this comes into effect less than two years before an election, with the impact that could be involved in some of the figures that have been discussed, it will not last five minutes when it starts.

Lord Stoneham of Droxford: My Lords, I declare an interest as chair of First Wessex Housing Association and Housing 21. I am pleased to speak in this debate initiated by the noble Lord, Lord Best. I think everyone in the House today understands the extreme pressure of the need to reduce the housing benefit budget and to tackle the issue of underoccupancy at a time of housing shortages. We should not forget that underoccupancy of social housing is nearly matched by 50 per cent overoccupancy.

In Committee, the Minister set an objective for the changes he was proposing. He said:

"Housing benefit ... will become more balanced in a way that will restore fairness, encourage better use of our existing social housing stock and encourage more people into employment".-[Official Report, 18/11/11; col. GC 71.]

The problem is that the market for social housing is not flexible; it is quite rigid. It is a fight to get a home and, in severe shortages, requirements and needs are not easily matched. We wish we had a situation where people could have a better choice, but it is simply not possible. What we have available in any locality is way short of need, and often what is available cannot specifically match need. On the issue of underoccupancy, we know that there will be something like 180,000 under retirement age who want to move but that the annual available housing for them is about one-third of this.

Housing requirements change through life. In a rigid market where people cannot easily match their requirements to supply, some flexibility is required. Otherwise, allocations will be even more difficult. The Minister's objective-balance to restore fairness-will not be fair if an individual wants to move home and cannot. The person will have to find extra income and, in the current economic climate, as my noble friend Lord Kirkwood, said, it will be extremely dubious whether they will be able to find the significant extra

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income they need. Let us not forget that in this situation-my noble friend also referred to this-underoccupation is greater in the north, and so there is a regional dimension. Thirty pounds a week is a lot of money for people least able to afford it, and 150,000 households will have to find nearly twice that.

The Minister also said that one of the objectives is to provide balance to make better use of our existing stock, but the reality is that the existing rigidities will be distorted by this change. Available new housing stock will now have to be used to move people. The people who probably need the most encouragement to move are those who are retired-who are underoccupying-and we will not now have the facility to move them. They are the people whose household costs need to be reduced. Indeed, we improve the housing benefit bill by moving them. As the housing stock is re-let, we will be required under the Government's housing benefit reforms to let some of these houses at affordable rents. So for those people who take on that stock, we will probably be paying out a higher proportion in housing benefit.

The Minister gave us, in his Committee speech, figures from the future network. Under the claimants benefit research, he said that of the 670,000, 25 per cent want to move; 50 per cent will not move; 29 per cent are looking for increased work and income-which is going to be difficult; 15 per cent say that they will take in a lodger, and 35 per cent are said to be likely to go into arrears. Those are pretty dramatic figures. He also said that over the next couple of years we will look at putting strategies in place to make sure that this does not happen. The problem is we only have 15 months in which to do this, not a couple of years, as the measure comes in in April 2013. That is madness.

We have already heard this referred to as a room tax. In fact, in Committee, somebody referred to the window tax. It was not in the time of Queen Anne, as the Minister mentioned; it was William and Mary-1696. I looked it up; two shillings per window. That is interesting; £11.20 in real money-it is not much different. I am assured also by the research that the phrase "daylight robbery" did not originate from that time. We can imagine, however, the political campaign-and the slogans-should this room tax come in on a single day. I do not fancy the Chancellor-I hope my colleagues will remember this-standing up in March 2013 to give his Budget speech when in April 2013 this change will be coming in. I bet you he will have to move politically at that time, even if he does not move now.

We have to expect that 25 per cent of people will move. How is this to be organised in 15 months? There are not enough houses being built to do this. Housing associations do not even know how many and who will be affected. There is a lack of information. What are the strategies? What must the Government do in this situation? What do they need to say today?

The first proposal is that of the noble Lord, Lord Best: allow an extra room for flexibility. It is probably the best proposal, but-as we will be told-this will take £300 million of the £500 million savings. It is not actually a great deal of money. I just ask the House to think what the Chancellor will be thinking in March 2013. It is not clear that the £300 million in savings will come

14 Dec 2011 : Column 1300

through. I expect that a lot of children and other relatives will suddenly emerge in these houses. Re-lets, as I have already mentioned, would lead to higher housing benefit claims. There are also the costs of moving, plus the costs of discretionary housing grants, and so on. Retired people who we want to move into smaller accommodation-saving housing benefit and saving their household costs-will not be able to move.

The second proposal is to extend the transition so it coincides at a minimum with the anniversary of tenancies; that ideally, as the Minister has already said, we should spread this change over a couple of years so that people can adjust. If you are trying to take from the poorest people these sums of money, they need time to adjust. So do the housing associations and the housing providers. They need time to adjust to allow a better transition, to allow the adjustments in housing stock. We cannot expect everybody to simply change on day one in 15 months' time.

The third option is to extend discretionary housing grants. We hear this on each occasion, but we are not sure how that is going to be administered.

I urge the Government to move on this issue, for sensible housing requirements, for fairness and for assuring that the poorest and the least resourced will not assume a significant burden at a very difficult time. Above all, the providers also need time and flexibility to adjust the housing supply to the new demands and the new needs.

Lord German: My Lords, I have two groups of people to whom I want to refer. My noble friend Lady Thomas referred to them in Committee, and I referred to one of them. What does the Minister anticipate doing for foster carers? We have already been told that we have a shortage of foster caring in this country, and foster carers need to keep a bedroom to be able to host and look after children in foster care. It is very important indeed-and I think that the Minister acknowledged this in his response in Committee-that something needs to be done to accommodate the needs of that group of people.

The second group of people are those who have had adaptations to their properties. Those adaptations probably cost the public purse quite substantial sums of money, so it does not make sense, for example, to require people to move from one property that has a stair lift to another where a stair lift has to be put in place. Can my noble friend tell us what he anticipates doing for both those groups?

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): My Lords, I need to thank noble Lords to start with for a thoughtful and insightful debate.

The introduction of size criteria into the social rented sector from April 2013 is essential to reduce housing benefit expenditure, which without reform would reach £25 billion in cash terms by 2014-15. With savings from this measure estimated to be around £500 million per annum, it will play a key role in our efforts to control housing benefit expenditure and to tackle the budget deficit. In these difficult economic times, we cannot avoid having to make these choices. I assure noble Lords that these decisions have not been taken lightly.

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In case there is any doubt, let me remind noble Lords that the size criteria measure will affect only working-age housing benefit claimants living in the social rented sector who are underoccupying their accommodation. For a family of four, with two adults and a teenage boy and girl, we are proposing that they will be entitled to housing benefit for a three-bedroom property with a living room, kitchen, bathroom and possibly even other rooms, such as an extra bathroom and study. This is the same as we allow for people living in the private rented sector. Those in a property that has more bedrooms than the size criteria allow will receive a percentage reduction in their eligible rent, meaning, on average, a shortfall of around £14 per week.

It is only fair that everyone plays their part, but we will, of course, ensure that we maintain safeguards for those in the most vulnerable circumstances. However, even with the reforms that we have started making to housing benefit, we are still expecting to spend nearly £23 billion on housing benefit this year. By the end of the spending review, we expect to achieve £2 billion in annual savings from the package of housing benefit reform. That is £2 billion off the £25 billion that I referred to. The Government believe that it is right that those living in oversized properties in the social rented sector contribute to those savings. Claimants in this sector make up over two-thirds of all housing benefit claimants, although most of the £2 billion in annual savings will still come from claimants living in private rented accommodation.

In England, approximately 420,000 households in the social rented sector underoccupy their accommodation by two bedrooms or more, while over a quarter of million households are overcrowded. What is more, 1.8 million households are currently on the housing waiting list in England. Over 700,000 of these households belong to reasonable preference groups, which means that they are treated as having a higher priority on the waiting list. This includes the homeless, people living in insanitary or overcrowded housing, and those needing to move because of a medical condition.

This measure is necessary to control spending. It is necessary because spending was allowed to spiral out of control under the previous Government, but we also believe that it will encourage greater mobility among households living in the social rented sector. It will help local authorities and other social housing providers to make the best use of their existing housing stock. It runs alongside and in support of measures introduced as part of the Localism Act, such as increased flexibility for local authorities to manage their housing waiting lists and the development of the national home swap scheme.

We have discussed this measure in detail and I have listened to and thought at length about the important issues that have been raised. We have various amendments to get through, but it might be helpful if I first set out what conclusions the Government have arrived at and what we intend to do. Noble Lords will understand that there is limited scope for manoeuvre within such a tight fiscal context, but I am pleased to announce today an additional £30 million that we will add to the discretionary housing payment budget from 2013-14,

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in support of the introduction of the size criteria into the social rented sector from April 2013. We believe that the amount made available is reasonable, based on what we know about the numbers likely to be affected by the measure. We think that £30 million could assist around 40,000 cases. It could help even more if local authorities choose to use DHPs to make up some, but not all, of a claimant's shortfall.

My noble friend Lord German asked what that funding is for. It is specifically aimed at two groups. The first group is disabled people who live in significantly adapted accommodation, and the funding is to enable them to remain in their existing homes. I hope that goes some way to satisfying the noble Lord, Lord Wigley, as well on that matter. The second group, which a number of noble Lords mentioned, is that of foster carers. We have carefully assessed the number of foster carers who will need to keep an extra room for when they are in between fostering, and we have an amount for them. I hope that goes some way to satisfying my noble friends Lord German and Lord Kirkwood on that matter, and indeed the right reverend Prelate the Bishop of Ripon and Leeds, who I hope feels that there is some room at the inn for this very vulnerable and important group.

The case for providing some mitigation for these two groups is clear, but we have decided that the way to do it is through the discretionary housing payment route rather than through specific amendments. We need rules in the benefit system that do not increase administrative complexity. We need to be able to make and deliver effective legislation not just within housing benefit but within universal credit. Such exemptions might, for example, include those who would otherwise have met the shortfall themselves, and might miss others who would have had a stronger case for additional support. I am convinced that a more localised, discretionary approach is the best way forward. It means that the limited resources that we have can be efficiently targeted at those who need them most. Of course we would like to do more, but there is simply no more money available.

Discretionary housing payments can be paid only where there is a linked claim to housing or council tax benefit. This is in effect, therefore, ring-fenced funding, although we cannot tell local authorities precisely who they should spend it on or how much they should spend. That is for local authorities to decide. However, we provide further guidance for local authorities through the DHP good practice guide. We have an illustrative draft of that, which I can share with noble Lords this evening, and we look forward to refining that with the input both of noble Lords and key stakeholders.

Lord McKenzie of Luton: Would the Minister clarify whether that £30 million is a one-off figure or an annual figure, and from when does it commence?

Lord Freud: I am pleased to clarify that that is an annual figure that starts in the year 2013-14, when the actual provision comes in.

Next, I would like to clarify the rates of reduction to be applied under this measure. In setting the percentage reduction rates, we have considered the sorts of rent differentials seen in the social rented sector alongside

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the question of affordability for the taxpayer. We intend to set the percentage reduction rates at 14 per cent for underoccupiers with one additional bedroom, and 25 per cent for underoccupiers with two or more additional bedrooms.

We think that the average cost to affected claimants, in terms of reduced housing benefit entitlement, will be around £14 a week in 2013-14. The majority of claimants affected-just over three-quarters of the total-are underoccupying their accommodation by just one bedroom. For this group, the average reduction will be around £12 a week. For those underoccupying by two or more bedrooms, the average reduction will be around £22 a week.

I would like to assure noble Lords that discussions within the coalition Government in designing this measure were thorough and productive, and these will continue through implementation. My officials are working closely with the Department for Communities and Local Government, the Department for Education, and the devolved Administrations.

It is worth picking up the issue, which my noble friends Lord German and Lord Stoneham raised, of whether we can make the transition easier. It is technically possible to stagger implementation arrangements, based on the anniversary of the claimant's tenancy, but this move is not cost-neutral, and the planned savings will be reduced, albeit modestly.

I must be clear that, principally, I am more concerned about the ability to deliver the proposal because it might be very difficult to police and monitor. I am concerned that some landlords will offer new tenancy agreements to existing tenants, so that implementation of this change is delayed, and then the costs would spiral very substantially.

We are, however, determined to make maximum use of the time available between now and the measure coming into force to help prepare local authorities and social landlords for the changes, which in turn will benefit those who are affected. I am sorry if I rather loosely used the term "two years", on which my noble friend picked me up.

Amendments 14 and 49, from the noble Lord, Lord Best, would exempt claimants from the measure where they underoccupy by just one bedroom. Amendment 12 would appear to tie Amendment 14 in with the housing costs calculation for universal credit.

There is a tension here between the bedroom standard, which is a widely used standard which views underoccupation as having two or more extra bedrooms, and the local housing allowance size criteria, which we propose to use for housing benefit purposes and which we already use for the private rented sector.

Our size criteria take a more generous view on the age at which someone is entitled to their own bedroom. Since the deregulation of rents in 1989, we have been using 16 as the adult threshold in size criteria for housing benefit purposes. The bedroom standard, on the other hand, sets the threshold at 21. Against these stricter criteria, however, the English Housing Survey and other similar surveys then consider the household to be underoccupying their accommodation only if they have more than one additional bedroom above the bedroom standard, a point the noble Lord, Lord Best,

14 Dec 2011 : Column 1304

made. The size criteria that we propose to introduce into the social sector consider any number of spare bedrooms to be underoccupation. Neither approach is right or wrong. In some cases, the bedroom standard plus one will be more generous than the local housing allowance size criteria, in some they will work out the same and in a few cases the LHA size criteria would actually prove to be more generous.

On the point made by the noble Baroness, Lady Hollis, about the person who needs an overnight carer, I need to make it clear to the House that where someone needs an overnight carer we allow an additional bedroom for that non-resident carer, and we have done so from June this year.

Baroness Hollis of Heigham: My Lords, I said that she would "occasionally" need-in other words, the assumption is that she would not normally need an overnight carer but occasionally might. The Minister has not covered that.

Lord Freud: I suspect that we can look at the difference between "occasional" and "regular" in detail outside the House. Maybe we can exchange letters on the matter.

In Grand Committee, the noble Lord, Lord Best, spoke of the experience of owner-occupiers, explaining that 83.9 per cent would fail against our definition of underoccupation. I put it on record, however, that a similar proportion of working-age owner-occupiers, 86.7 per cent, are in work. We are not suggesting that households in the social rented sector should live differently. We all share the aspiration for a home in which our children can thrive, concentrate on their homework or leave to study or find work, but still have the option of returning home sometimes. To realise that, though, must the taxpayer be expected to pay in full for those extra rooms just because those people live in the social housing sector? The Government believe that it is reasonable to ask for a contribution toward the rent where there is, by definition, some degree of underoccupation. It is not a change to the allocation rules; it is a measure for housing benefit purposes only.

The research from the Housing Futures Network explores how those claimants affected by the measure might respond. As well as the 29 per cent who were likely to try to find work or increase their earnings, around 15 per cent thought that they would take in a lodger or ask another family member to move in. Another sizable group, perhaps 20 per cent to 25 per cent, thought that they were likely to seek help to pay the rent from someone within or outside the household-someone they know. Around 25 per cent thought that they were likely to downsize. There were also those, as some noble Lords have pointed out, who feared that they were likely to get into arrears; that figure was around 35 per cent. We will do our utmost between now and the measure coming into force to minimise that risk. This is what we are looking at as part of our work with the implementation group.

That said, we cannot ignore the financial position. I emphasised at the beginning of my response that the introduction of size criteria is fundamentally about savings. Without the inclusion of those who underoccupy by one bedroom, we would not achieve the £500 million savings expected from 2013.

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The noble Lord, Lord Best, challenges our savings estimate. As I have set out in the evidence, though, a majority of people will pay the additional amount for the larger property. The cost of renting in the private rented sector may generally be higher but those who choose to move out of the cheaper social housing into private housing because they are underoccupying will by definition free up accommodation in social housing that can be offered to those on the housing waiting list or those living in expensive temporary accommodation. That argument from the noble Lord simply does not stand. If we excluded one-bedroom underoccupiers, we would lose around £300 million of the estimated savings. The fiscal case driving this measure forward must not be underestimated.

5 pm

One other point made by the noble Lord, Lord Best, is about who is affected, and about concern for children. But by definition we are looking at people whose children have left, and so are underoccupying. The impact assessment shows that claimants with children are less likely to be affected by the measure than those without children. Only around a third of the claimants potentially affected have children living with them.

The other point raised by the noble Lord was about the difficulty of this working-age group pre-empting the room that pensioners might be transferred to. However, this measure will, over the longer term, help ensure that people are in suitably sized accommodation before they become pensioners. Our expectation is that the proportion of pensioners who need to or could downsize will in future be lower.

The other concern raised by the noble Lord, and indeed by the noble Baroness, Lady Hollis, is the implementation risk of costs to landlords. We are planning to work through these issues as part of our engagement with other departments, including the devolved Administrations, and with social landlords and local authorities. An implementation group has been set up which is already being used to explore the potential impact on landlords' costs as a result of this measure. We should bear in mind, however, that social landlords already collect rent from many claimants: for example, where the claimant has some income and only receives partial housing benefit, or where they have a non-dependent living with them.

The Government recognise that households are sometimes allocated properties with at least one extra bedroom by their landlord. This measure does not preclude them from continuing to do so. It is of course important that any household being allocated a larger property is aware of the implications in relation to housing benefit. We will work with stakeholders to ensure that communications are effective. Exempting this group is simply unaffordable. I beg the noble Lord, Lord Best, not to move Amendments 14 and 49.

Amendments 14ZZA and 49A would effectively modify that exemption to where there is no suitable alternative accommodation within the social rented sector, alongside Amendments 14 and 49. I will now explore that issue in relation to these amendments, and with regard to Amendment 17A.

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We have heard a great deal about the lack of housing supply, and therefore the lack of suitable alternative accommodation. I recognise that there is not the sufficient range of stock in many areas that would enable landlords always to suitably house people according to the size of their household. That was acknowledged in the impact assessment. Noble Lords have highlighted some clear examples of when an extra bedroom is not spare, but is actually being put to good use, such as in the case of teenagers under 16 of the same gender having their own room to do their homework.

As I have said, the LHA size criteria are more generous than the bedroom standard, in that they provide for an extra bedroom for every adult from the age of 16 rather than 21. However, these size criteria are for housing benefit purposes only. We are not insisting that everyone is housed according to those rules, but it is right to expect those who have that additional space-whether it is spare or not is not necessarily the point-to make a reasonable contribution to the rent. This puts those in the social rented sector on a more equal footing with those claimants living in the private rented sector where size criteria have always played a part in the housing benefit claim. Indeed, owner-occupiers also have to consider what they can afford.

This exemption is too broad, and would be complex and costly to administer. Suitability of accommodation will vary according to an individual's circumstances. If there is a smaller property in a location 60 miles away, where there happen to be jobs, is that suitable? It would not be possible to pin down through regulations unless they were so broad as to open the door to exempting almost everyone, thus significantly reducing the potential savings. It is not possible to predict the loss in savings, given the uncertainty surrounding this amendment, but it is not hard to see how the number of exemptions through this approach could spiral out of control.

In most cases where there is no suitable accommodation, we expect that claimants and their partners will find ways of meeting the shortfall-through employment, we hope, or through increased earnings. For those who are genuinely struggling to meet the shortfall and who have exhausted all possible options, the local authority might consider a discretionary housing payment. I beg the noble Lord, Lord McKenzie, not to move Amendments 17A, 14ZZA and 49A.

In summing up, I emphasise that this is not the end of the process. We have had to make some hard choices here to make the necessary savings as part of the deficit-reduction plan. We are balancing that by protecting those for whom being able to remain in their adapted homes and lead an independent life is rightly not something to be messed around with. Likewise, we recognise the vital work of foster carers and have in place additional funding to ensure that they are not discouraged. A watchful eye will be kept on the £30 million boost to the discretionary housing payment pot. A review will inform our evaluation of this measure. We have more than a year until implementation and we are using that time to explore the risks for landlords and claimants alike to minimise the potential for arrears and all the associated costs that can arise from them.

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We will continue to work closely with our stakeholders and draw on their expertise in this House. I ask for this amendment to be withdrawn.

Lord Best: My Lords, I am deeply grateful to Members from all parts of the House for their support. I am grateful to the noble Lord, Lord McKenzie, for the refinement to my amendment, which I fully accept. I hope noble Lords who have spoken will allow me not to summarise the excellent points that they have made and go straight to a few words about the Minister's very helpful remarks. I congratulate him on bringing an extra £30 million this evening to alleviate the problems created by this legislation. Perhaps I could just pick up on two key points that he made.

The first is the suggestion that the proposed new definition of underoccupancy would bring social housing into line with the private rented sector. Tenants in the private rented sector are unaffected by this measure. They operate within a quite different framework, whereby the maximum of the local housing allowance is calculated for them based on this tight definition of underoccupancy but with the opportunity for the tenant to use the cash-the benefit-for something smaller, perhaps in a better area, or larger, perhaps in a less popular neighbourhood. In any case, those in the much more expensive private rented sector are predominantly younger, single and childless households, more than half of which stay for less than two years, and a third for less than one year. Unlike those in social housing, they seldom comprise a family needing a long-term home in which to bring up their children.

Secondly, the concession that the Minister has brought to us this evening would allow discretionary housing payments to be made to people whose properties have been specially adapted for a disabled member of that household. The discretionary housing payments would also be available where a foster child is coming into the property. These are excellent exclusions, or opportunities, at any rate, for a discretionary payment to kick in. One could list a whole lot more. Indeed, as one gradually looks at this, one begins to do just that. Why not include people with other disabilities-perhaps a family where, as the noble Baroness, Lady Hollis, suggested, a carer comes to stay periodically to provide respite for a parent? Perhaps an exception could be made where an elderly person has a spouse aged only 60. As things stand, they would both have to move or pay up.

The Minister says that everyone must pay their part and, on average, £14 per week is the part that many households will have to pay as the penalty charge. Even if it is £12, or £22 at the other end, I suggest that these are serious sums of money for many people in very low-income households, if they stay put. The option of moving does not exist for a lot of them.

I think this is the moment at which I would like to test the opinion of the House.

5.09 pm

Division on Amendment 12

Contents 258; Not-Contents 190.

Amendment 12 agreed.

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Division No. 1


Aberdare, L.
Adams of Craigielea, B.
Adonis, L.
Ahmed, L.
Allenby of Megiddo, V.
Alton of Liverpool, L.
Anderson of Swansea, L.
Andrews, B.
Armstrong of Ilminster, L.
Avebury, L.
Bach, L.
Bakewell, B.
Bannside, L.
Barnett, L.
Bassam of Brighton, L.
Beecham, L.
Berkeley, L.
Best, L. [Teller]
Bew, L.
Bichard, L.
Billingham, B.
Bilston, L.
Blackstone, B.
Boateng, L.
Boothroyd, B.
Borrie, L.
Boyd of Duncansby, L.
Bradley, L.
Brooke of Alverthorpe, L.
Brookman, L.
Brooks of Tremorfa, L.
Browne of Belmont, L.
Browne of Madingley, L.
Butler of Brockwell, L.
Butler-Sloss, B.
Carter of Coles, L.
Chorley, L.
Christopher, L.
Clancarty, E.
Clarke of Hampstead, L.
Clinton-Davis, L.
Cobbold, L.
Cohen of Pimlico, B.
Collins of Highbury, L.
Condon, L.
Cotter, L.
Coussins, B.
Craigavon, V.
Crawley, B.
Davies of Oldham, L.
Davies of Stamford, L.
Dear, L.
Dixon, L.
Donaghy, B.
Donoughue, L.
Drake, B.
Dubs, L.
Eames, L.
Eatwell, L.
Elder, L.
Elystan-Morgan, L.
Emerton, B.
Evans of Parkside, L.
Evans of Temple Guiting, L.
Evans of Watford, L.
Falconer of Thoroton, L.
Falkland, V.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Filkin, L.
Finlay of Llandaff, B.
Flather, B.
Ford, B.
Foster of Bishop Auckland, L.
Foulkes of Cumnock, L.
Gale, B.
Gibson of Market Rasen, B.
Glasman, L.
Golding, B.
Gordon of Strathblane, L.
Goudie, B.
Gould of Potternewton, B.
Graham of Edmonton, L.
Grantchester, L.
Greengross, B.
Greenway, L.
Grenfell, L.
Grey-Thompson, B.
Grocott, L.
Guildford, Bp.
Hall of Birkenhead, L.
Hameed, L.
Harries of Pentregarth, L.
Harris of Haringey, L.
Harrison, L.
Hart of Chilton, L.
Haskel, L.
Haworth, L.
Hayman, B.
Hayter of Kentish Town, B.
Healy of Primrose Hill, B.
Henig, B.
Hennessy of Nympsfield, L.
Hilton of Eggardon, B.
Hollick, L.
Hollins, B.
Hollis of Heigham, B.
Howarth of Newport, L.
Howe of Idlicote, B.
Howells of St Davids, B.
Howie of Troon, L.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Hylton, L.
Jay of Ewelme, L.
Jones of Whitchurch, B.
Jordan, L.
Judd, L.
Kakkar, L.
Kennedy of Southwark, L.
Kennedy of The Shaws, B.
Kilclooney, L.
King of Bow, B.
King of West Bromwich, L.
Kinnock, L.
Kinnock of Holyhead, B.
Kirkwood of Kirkhope, L.
Knight of Weymouth, L.
Laming, L.
Layard, L.
Lea of Crondall, L.
Levy, L.
Liddell of Coatdyke, B.
Liddle, L.
Linklater of Butterstone, B.
Lipsey, L.
Lister of Burtersett, B.
Lloyd of Berwick, L.
Low of Dalston, L.
Luce, L.
McAvoy, L.
McCluskey, L.
McDonagh, B.
Macdonald of River Glaven, L.
McFall of Alcluith, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.

14 Dec 2011 : Column 1309

Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
Maginnis of Drumglass, L.
Mallalieu, B.
Mandelson, L.
Masham of Ilton, B.
Massey of Darwen, B.
Meacher, B.
Miller of Chilthorne Domer, B.
Mitchell, L.
Monks, L.
Montgomery of Alamein, V.
Morgan of Drefelin, B.
Morris of Aberavon, L.
Morris of Handsworth, L.
Morris of Manchester, L.
Morris of Yardley, B.
Morrow, L.
Neill of Bladen, L.
Neuberger, B.
Newton of Braintree, L.
Noon, L.
Nye, B.
O'Neill of Bengarve, B.
O'Neill of Clackmannan, L.
Paisley of St George's, B.
Palmer, L.
Pannick, L.
Parekh, L.
Patel, L.
Patel of Blackburn, L.
Patel of Bradford, L.
Pitkeathley, B.
Ponsonby of Shulbrede, L.
Prashar, B.
Prescott, L.
Prosser, B.
Quin, B.
Quirk, L.
Ramsay of Cartvale, B.
Ramsbotham, L.
Rea, L.
Rees of Ludlow, L.
Reid of Cardowan, L.
Rendell of Babergh, B.
Richard, L.
Richardson of Calow, B.
Ripon and Leeds, Bp.
Rix, L.
Roberts of Llandudno, L.
Rogan, L.
Rosser, L.
Rowlands, L.
Royall of Blaisdon, B.
St John of Bletso, L.
Saltoun of Abernethy, Ly.
Sandwich, E.
Sawyer, L.
Scotland of Asthal, B.
Scott of Needham Market, B.
Sewel, L.
Sherlock, B.
Shipley, L.
Simon, V.
Slim, V.
Smith of Basildon, B.
Smith of Clifton, L.
Smith of Finsbury, L.
Snape, L.
Soley, L.
Stern, B.
Stevenson of Balmacara, L.
Stoddart of Swindon, L.
Stone of Blackheath, L.
Sutherland of Houndwood, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Taylor of Bolton, B.
Taylor of Goss Moor, L.
Temple-Morris, L.
Tenby, V.
Thomas of Winchester, B.
Thornton, B.
Tonge, B.
Tordoff, L.
Touhig, L.
Triesman, L.
Tunnicliffe, L. [Teller]
Turnberg, L.
Turner of Camden, B.
Wakefield, Bp.
Walpole, L.
Walton of Detchant, L.
Warner, L.
Warnock, B.
Warwick of Undercliffe, B.
West of Spithead, L.
Wheeler, B.
Whitaker, B.
Whitty, L.
Wigley, L.
Wilkins, B.
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Wilson of Tillyorn, L.
Winston, L.
Wood of Anfield, L.
Woolmer of Leeds, L.
Young of Hornsey, B.
Young of Norwood Green, L.


Addington, L.
Ahmad of Wimbledon, L.
Alderdice, L.
Anelay of St Johns, B. [Teller]
Ashton of Hyde, L.
Attlee, E.
Baker of Dorking, L.
Bell, L.
Berridge, B.
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Blencathra, L.
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14 Dec 2011 : Column 1310

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5.25 pm

Amendment 13

Moved by Baroness Turner of Camden

13: Clause 11, page 5, line 21, at end insert-

"(3A) In the case of alleged under-occupancy regulations may provide-

(a) in the case of a disabled person, relocation shall not be required nor shall benefit be reduced, where adaptation has occurred and local services are provided, in order to deal with the disability;

(b) in the case of a person capable of work-related activity, reduction of benefit or relocation shall not be proposed unless suitable employment is available within easy access of alternative accommodation.

(3B) Relocations may only proceed on the basis of agreement with the claimants concerned."

Baroness Turner of Camden: My Lords, I have had a very large number of letters on the whole issue of underoccupancy. The vast majority of tenants simply do not recognise that they are underoccupying. Eight out of 10 believe that the size of their home is just right, and that probably applies to a lot of us. Of course, some people would welcome the opportunity to move to somewhere smaller. If children have left home, a smaller place might be less trouble, provided, of course, that it is available. But this does not apply to everyone, particularly the elderly and the disabled.

Take the case of a woman who is disabled and has recently been widowed. She has lived in the same accommodation for more than 15 years. She is now alone and on benefits. She has neighbours who give her support. She is told that she is underoccupying and must either relocate or pay more. She cannot afford to pay more and dreads the thought of moving. She needs the support that she is getting in the community that she has lived in for so long. This is an actual case that has been reported to me. It seems to me that it would be wrong to insist on relocation in such a case. It might even be more expensive if the woman became ill and had to be hospitalised.

There is also, as is the case with many disabled people, the question of adaptation. Homes are often adapted in a gradual way as people get older, perhaps starting with a change in the bathroom with a shower in place of the bath, perhaps then installing a stair lift, and then adding to these adaptations as the debility gets works. This is one of the areas that the Government are giving serious attention to, as the Minister indicated in his response this afternoon. I am glad to note that. The presence of adaptations is one of the two areas in which the Government are apparently ready to make some concessions, and I welcome that.

Other instances in my amendment relate to job opportunities. The Government want as many people as possible currently on benefits to go to work. Some of them are capable of light work and many actually want to work. One should not pay too much attention to media stories about people being only too willing not to work. Many people want to work, because work is a social function anyway. However, if someone is forced to relocate, it may be to an area where jobs do not exist, or, if they do exist, they are a long distance

14 Dec 2011 : Column 1312

from the relocated home. That may not be suitable for a person able only to do light work. There may also be additional travel costs.

The point of this amendment is to acknowledge that this is not an easy matter. We have noted that from some of the speeches made today. Compassion is required when dealing with people in this position. If the alternative is relocation, it should be by agreement. A home is extremely important to most of us. Homes, and the personal possessions they contain, represent lives. We have to be very careful about the way in which this situation is handled. If the Government proceed with their proposal unaltered, there are substantial risks that entire communities could be disrupted. Long-term tenants-45 per cent of the households have been tenants for 10 years-could be affected. People develop local connections and the disruption would be enormous.

If we do not handle this properly, human tragedies could come to pass. For that reason, I hope that there will be support for the suggestions made in my amendment. I should be grateful to learn from the Minister how exactly the Government intend to cope with the situation. I beg to move.

5.30 pm

Baroness Wilkins: My Lords, the Joint Committee on Human Rights has just published its legislative scrutiny of the Welfare Reform Bill in its 21st report of the Session. I quote from its recommendations:

"The National Housing Federation estimates that about 108,000 tenants in social rented properties adapted specifically for their needs are likely to be affected by the introduction of the size criteria to restrict housing benefit. If such tenants were forced to move into properties unsuited to their needs this might risk breaching their Article 8 rights to respect for private or family life as well as being potentially discriminatory.

The Government has indicated that it is prepared to look at exemptions for individuals who are disabled, where their homes have been subject to extensive adaptations. However, this would not address the disruption to patterns of caring and support networks which can be vital".

The JCHR concludes:

"We recommend allowing some additional discretion to exempt disabled people facing exceptional hardship from the under-occupation provisions".

I hope that the Minister will not only agree to the amendment but also agree to the JCHR's recommendations.

Baroness Thomas of Winchester: My Lords, I have a question for my noble friend about the disabled facilities grant, which I gather is rising to £180 million in the current fiscal year. However, as we know, this grant is not ring-fenced, although it is still a mandatory grant. I find that a slightly odd concept. I just want to make sure that this grant is quite separate from the discretionary housing payment. What redress will a citizen have if the local authority is being rather mean with the mandatory disabled facilities grant? I have not quite got my head round that matter. It may be entirely a matter for the local authority but I wonder whether my noble friend can help me regarding the disabled facilities grant in particular.

14 Dec 2011 : Column 1313

Lord Lester of Herne Hill: My Lords, as a member of the Joint Committee on Human Rights, I simply say how glad I am that the noble Baroness, Lady Wilkins, has drawn attention to that part of our report. I agree with her speech.

Lord McKenzie of Luton: My Lords, we have Amendment 14ZA in this group, which concerns foster carers seeking exemption from the underoccupancy penalties. We know-indeed, we heard a short while ago-that the Government are sympathetic. When we discussed this in Committee, the Minister told us that it was not possible both to disregard foster allowances as income and to include foster children in the assessment of housing need. However, the National Housing Federation has suggested that discussions between fostering organisations and DWP officials have not shed any light on why the trade-off would be inevitable and has suggested that it could be sorted out by legislation.

As we heard earlier, the Minister's solution to supporting foster carers was the use of discretionary housing payments and the additional funds that have been made available, and it would be churlish not to welcome that. However, it is hard to see how this can adequately address the problem, given the many other calls on these payments that are likely to be made. Of course, these payments are discretionary, so there would be no certainty for those looking to foster a child that their housing benefit would be covered. It is suggested that the Minister cannot possibly see the inclusion of foster carers within the underoccupancy penalties as a cost-saving measure. As the LGA has put it, if these penalties apply, foster carers could be forced to give up this role at a time when there is a national shortage of 10,000 foster families across the UK. I urge the Minister to give due consideration to this matter, but in doing so I welcome the announcement that he made earlier.

My noble friend Lady Turner introduced amendments that covered three issues. The first was about adaptations to properties, which has been fully covered. My noble friend Lady Wilkins made the important point that this is not just about the physical adaptations to properties but about the support that people need in their community.

My noble friend also referred to someone in the work-related activity group being exempt unless there was suitable employment within easy access of alternative accommodation. We need to know that someone in the WRAG would not necessarily need to be in employment but to be working closer to the labour market. Nevertheless, my noble friend makes a valid point.

My noble friend's third point was about claimants agreeing to any proposed relocation to alternative accommodation. In the debate on the last group of amendments, we debated a little the issue of suitable alternative accommodation for people, what "suitable" might mean and the complexity that might come with that. To the extent that it features in these arrangements, the opportunity for the claimant to be able to agree to what is reasonable is a fairly fundamental point as well, so I support my noble friend's contention.

Lord Freud: My Lords, Amendment 13-and Amendment 48, which is a repeat of Amendment 13 but relates to Clause 68-tabled by the noble Baroness, Lady Turner,

14 Dec 2011 : Column 1314

seeks to make a number of changes. I spoke earlier about how I propose to address the noble Baroness's valid concerns about those living in adapted accommodation, and I hope that that has satisfied that particular position. On the related point raised by my noble friend Lady Thomas, the disabled facilities grants are quite separate from this; they are administered by local authorities to meet those costs. It is a separate pot, if you like, run by local authorities and not by the DWP.

Amendment 13 would create a new Section (3A). Proposed new paragraph (b) deals with the availability of work in an area and seeks to exempt claimants from the underoccupation measure by their not being relocated to an area where there is no suitable employment, or from a reduction if there is no suitable employment near their current home. We are not in the business of dictating to people where they can or cannot live and we have no intention of doing so. We expect that most people will choose to stay where they are and meet the shortfall. This was supported in the research from the housing futures network, which we have already discussed.

Let me put into perspective the numbers of people who are looking to increase their hours of work. We are talking about between two and four hours per week at the national minimum wage to meet these shortfalls. The amendment links an exemption to the availability of suitable employment, which would be hugely complicated to administer. We would need to define suitable employment and easy access, and in our view those are decisions for the tenants themselves to make, just as those people who live in the private rented sector or who are buying their own properties make such decisions. The labour market is constantly evolving. From a practical point of view, the exemption would be unworkable.

Proposed new paragraph (b), which would be inserted by Amendment 13, would appear to ensure that claimants are not forced to downsize against their will. The amendment would achieve that, but in practice it would go even further. It would enable claimants to block relocations by their landlord regardless of the circumstances. It is unusual for a social landlord to relocate a tenant without their consent, but they can do so in some circumstances, such as where they plan to redevelop the area. We do not intend to interfere in the relationship between landlord and tenant, and nothing in our legislation would force a tenant to move against their will.

On the size criteria measure, we are not seeking to force people to move, but we are asking people to consider the affordability of their accommodation where it is larger than they require, and I beg the noble Baroness, Lady Turner, to withdraw her amendment.

On Amendment 14ZA, which was tabled by the noble Lord, Lord McKenzie, I have set out our intention to increase the DHP budget with the specific aim of helping foster carers as well as disabled people in adapted accommodation. We very much value the work done by foster carers who care for and welcome children into their homes. That is why the benefit system already treats them more favourably by not taking those children, and, as a result, any fostering allowances, into account in their assessment. However, we recognise that there might be circumstances in which a reduction in the

14 Dec 2011 : Column 1315

housing element of their benefit might act as a disincentive to fostering, and in such circumstances a local authority will have additional funds to award a DHP.

I should make the point here that local authorities will have a direct interest in applying those discretionary funds because they will make a saving by keeping the fostering market open. This is not one of the areas where one worries about discretionary funds being used in other ways; this is an incentive for the local authority. Just to reinforce that natural incentive, we are going to make sure that children's services within local authorities will be made aware of the availability of DHPs and will input locally on their priorities. I know there are many concerns in this area, but I really think that we have closed the circle.

This amendment seems to go further and would not allow any deduction to the housing element, thereby prohibiting deductions for other income or non-dependant deductions. It also does not cover foster carers who are between placements and who therefore have no income from fostering allowances. The flexibility of DHPs will allow for such circumstances, if it is felt necessary.

The noble Baroness, Lady Wilkins, raised a point on the JCHR. We have just received that report and will be considering it very closely.

I consider that we are meeting the needs of this group through the increase to DHPs, and I therefore beg the noble Lord, Lord McKenzie, not to move his amendment.

Baroness Turner of Camden: I thank the Minister for that response. He seems to have made a number of concessions in response to me. He outlined some of the practicalities, which I understand. I intended the amendment to acknowledge that this is a very complex and difficult area. I was seeking to give a certain amount of guidance to the Government about the way in which it should be handled; otherwise a number of people are going to be very badly hurt, and there could be a few human tragedies on the way, which one would not like to have. I accept that the Minister has made a number of concessions this afternoon. This is a very complex area, so I would like to have the opportunity to study it again. It is unlikely that I will come back with this at Third Reading because we have been over the ground fairly comprehensively. In the mean time, I thank the Minister for the concessions that he has made and beg leave to withdraw the amendment.

Amendment 13 withdrawn.

Amendment 14

Moved by Lord Best

14: Clause 11, page 5, line 21, at end insert-

"(3A) In relation to a dwelling of which the landlord is a local housing authority or a registered provider of social housing, regulations under this section shall not permit the housing cost element of the universal credit to be less than the actual amount of the liability in a case where a household has no more than one spare bedroom."

Amendment 14ZZA (to Amendment 14)

Moved by Lord McKenzie of Luton

14ZZA: Clause 11, line 3, after "provider of social housing" insert ", and no suitable alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available"

14 Dec 2011 : Column 1316

The Deputy Speaker (Lord Geddes): My Lords, since this is a manuscript amendment, it might be of assistance to the House if I read it.

"In Clause 11, line 3, after 'provider of social housing' insert ', and no suitable alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available'".

Amendment 14ZZA agreed.

Amendment 14, as amended, agreed.

5.45 pm

Amendment 14ZA not moved.

Amendment 14A

Moved by Lord McKenzie of Luton

14A: Clause 11, page 5, line 23, at end insert "including mortgage interest"

Lord McKenzie of Luton: My Lords, the amendment deals with mortgage interest relief. When we raised this issue in Committee, the Minister told us that it was actively under review. We have now had a chance to see the results of that review with the publication this month of a call for evidence on support with mortgage interest and we have some concerns about what it contains.

The main proposals outlined include placing a charge on the property of any long-term claimant of mortgage interest support, which, with an additional sum for interest and an administration fee, would be recouped on the sale of that property; paying the support directly to the claimant rather than to the lender as at present; introducing a zero-earnings rule for eligibility for mortgage interest support to prevent in-work claimants on universal credit from qualifying; and extending the current two-year restriction for JSA claimants on claiming support for mortgage interest to those previously entitled to some transitional protection.

The Government's stated rationale for the changes is, once again, to encourage claimants into work. The document states:

"A core aim of Universal Credit is that working age claimants have strong incentives to take up work in order to maintain their choice of housing tenure".

However, the proposals to place a charge on the property of MIS recipients at present apply only to those who are not expected to move back into work-those who, in the words of the call for evidence,

and whom, the document states, it is not fair for the taxpayer to support indefinitely. Perhaps the Minister in his response could outline the key rationale for these changes. Are they intended to ensure that anyone who wants to remain in their home must move into work? Or are they intended primarily as a cost-saving measure? What are the expected savings from the scheme to put a charge on the property, and how do these compare to the potential added expenditure on housing benefit if people decide that they would rather not pay this charge and move into the private rented sector?

14 Dec 2011 : Column 1317

On direct payments to lenders, we have had significant representations from landlords who are worried about the impact of direct payments to tenants of housing benefit-we discussed this in Committee on a number of occasions and will discuss it again shortly. The Council of Mortgage lenders seems similarly concerned about these proposals, with its director, Paul Smee, stating that,

Could the Minister let us know what discussions he has so far had with lenders about these proposals?

The Minister will doubtless say that the proposals in this document are out for consultation-that is, they are just that: proposals-and that he will consider views on them. Perhaps he could therefore let us know the expected timetable for any changes to support with mortgage interest payments. It would be particularly useful to know when he intends to make decisions about eligibility for this support under universal credit, as the level of support provided will make a significant difference to whether work pays for home owners.

We look forward to further detail on these measures, but it would be extremely helpful if the Minister could take a moment to outline the principles behind them and the expected timescale for their introduction. I beg to move.

Lord Freud: My Lords, I thank the noble Lord for this opportunity to debate the way in which we will provide help with mortgage costs alongside, or as part of, universal credit. As I have said previously, housing support is critical to the success of universal credit. It will recognise that people need support across a range of different tenure types whether they live in the private rented sector or the social sector, or whether they are owner-occupiers.

Noble Lords will have seen the illustrative regulations on the universal credit housing element which set out our broad approach to support for housing costs. The regulations will indeed make provision for help towards mortgage interest payments.

I also mentioned in Committee that we would be consulting on possible future reforms of the support for mortgage interest rules. As the noble Lord pointed out, we published not a consultation but a call for evidence on 6 December which contained a number of ideas on simplifying the help provided towards mortgage interest payments for working age and pensioner home owners. One of the reasons that it is a call for evidence and not a consultation is that there are much less backing data in terms of impact assessments around a call for evidence than a consultation. Therefore the noble Lord will forgive me if I do not supply the answers to some of the questions he asked me. That is the difference in the process.

We intend to provide support for owner-occupiers, as the call for evidence makes clear, whether this sits inside or outside of universal credit and pension credit. The call for evidence seeks views to help inform the appropriate way forward in determining how financial support towards mortgage interest costs should be changed in both the shorter term and longer term.

14 Dec 2011 : Column 1318

We are looking at a different model to deal with the longer-term costs of supporting home owners. Essentially, we are looking for a way in which we can keep people in their homes when it is long term, but not at an exorbitant, open-ended cost to the taxpayer. That is the point of exploring these issues: we want to make sure that it delivers fairness to taxpayers.

For support for mortgage interest, we intend to have a rule that provides that help with mortgage costs will stop once a claimant starts work, as is broadly the case now. We believe that the position of claimants with mortgages is different from that of tenants. Owner-occupier claimants have been in work-clearly lenders would not advance money for house purchase unless the borrower could service that debt through income from work. If owner-occupiers are to be able to service their mortgage debt in the future, then they need to return to full-time work and our proposals, or our evidence call, reflect this reality.

The call for evidence runs for 12 weeks until 27 February 2012 and we will of course consider carefully the responses, whether from the CML or anyone else-noble Lords are welcome to add their views, at which I shall look with great interest-and, based on those responses, we will then develop our detailed policy proposals. I can assure the House that we are continuing to provide help with mortgage interest costs. With that assurance, I hope the noble Lord will withdraw the amendment.

Lord McKenzie of Luton: I am grateful to the Minister for that reply. I certainly do not intend to press the amendment. As he explained, this is very much work in progress. Can he say a little more about the reactions to date-particularly from the Council of Mortgage Lenders-in respect of the direct payment issue.

Lord Freud: To be absolutely honest, I have talked to the CML about this matter but I have not had a direct conversation with it since we issued the call for evidence. One of the reasons we had that as one of the questions is specifically to get a considered view from it as to how that might work.

There are a number of issues. At the moment, we pay a fixed rate for everyone based on the average mortgage. The Council of Mortgage Lenders has said in the past that it prefers the actual amounts. So there are a lot of issues. It is administratively complex. I know I am telling the noble Lord things he already knows because he was in situ while some of this was being developed. There is a nest of complicated issues. We are trying to flesh this out in the next few months.

Lord McKenzie of Luton: I am grateful for that further clarification and beg leave to withdraw the amendment.

Amendment 14A withdrawn.

Amendment 15

Moved by Baroness Hollis of Heigham

15: Clause 11, page 5, line 23, at end insert-

"(4A) Regulations shall provide for a relevant change in circumstances to include a change in the claimant's actual rent."

14 Dec 2011 : Column 1319

Baroness Hollis of Heigham: Amendment 15 is a simple, genuinely probing amendment to get further clarity on the draft regs, given that they have now been published. Currently, a claimant's housing benefit entitlement is reviewed on the anniversary of the claim or when there has been a material change of circumstances. The normal review would be 1 April annually. At the moment, if the rent is raised by the landlord between these annual reviews, the tenant must report this to the local authority as a material change of circumstances. Usually, although not always, the housing benefit would be raised to cover it. Under the new system, if the claimant's tenancy is renewed and the rent increases at any point after April, then even though the rent would still be within the local housing allowance or the housing benefit cap, the claimant's housing benefit will not be adjusted until the following April. It means, in other words, that they could go for 11 months with not enough housing benefit to cover their rent, even though they are entitled to it, and even though they would have got the full year's increase in HB had the rent increase occurred a month before. Because of the timing of the accidents-of the rent increases, in other words-a tenant and his family could face real shortfalls and potential hardships: rent arrears and possible homelessness, with the usual problems that would result.

This amendment would require an increase in rent to be considered a relevant change in circumstance, which would be a simple way to avoid any potential hardship. It would ensure that housing benefit would continue to be reviewed in the light of a rent rise, as has occurred in the past. I am hoping that the noble Lord can give us that assurance.

Although Amendment 16 is on a different topic, I have grouped the two amendments to avoid going on for too long. In Committee, I ran an amendment because I was worried about the increased deduction that would come from housing benefit if a middle-aged couple had their adult son-a non-dependant adult, in the jargon-living at home with them. We noted then that the couple could face all of their housing benefit being wiped out because a son over the age of 18, who is perhaps on modest earnings, would be expected to contribute up to £90 a week. No deductions, of course, are made if he is in full-time education or on JSA. If he is in a minimum wage job, his parents could face losing virtually all their housing benefit, as he is expected to pay for his parents' rent himself, even though he is not the tenant and even though he has no security of tenure. We feared either that he would drop out of work for their mutual financial advantage or that his parents might propose that he leave home and find a small place of his own to save their housing benefit, while leaving his parents underoccupying and being fined with a cut in their HB in turn. Either way, the family is damaged. Obviously the most satisfactory option would be for him to live at home, make the best use of the housing space and contribute-though not unreasonably so-to their housing costs. But can he do so if that is the sensible choice?

I have some questions for the Minister. In future, will the son, as a non-dependant, be counted as part of the household when DWP works out the space that the family are entitled to have for their HB? I would love to think that the amendment we have just passed

14 Dec 2011 : Column 1320

has made that question redundant-touch wood that it has. As a couple, in future, will his parents be deemed to be underoccupying by one bedroom because of their adult son? Hopefully-touch wood-that question may now be redundant. However, there is a problem of the interplay of underoccupation and adult non-dependant deductions which the family could face. The Minister recognised this when we talked about it in Committee. He said:

"We need to look at the treatment of non-dependants ... Furthermore, we need to ensure that there is some sensible fit with the provisions for underoccupancy ... We want a scheme that provides incentives for tenant and non-dependants to work and at the same time preserve incentives for households to stay together".-[Official Report, 20/10/11; col. GC113.]

The Minister was absolutely right. Could he clarify what his intentions would be in that situation? I beg to move.

6 pm

Lord McKenzie of Luton: My Lords, I shall be brief, because it is very rarely possible to add to something that my noble friend has said in moving an amendment. However, I will try in two respects.

Amendment 15 deals with a relevant change in circumstances. How would that feed through into changes of circumstances that may impact on transitional relief for universal credit? Would a change in rent level support be a change of circumstance that would have to be taken into account?

As for non-dependant deductions, under existing arrangements there are a range of circumstances whereby people who might be treated as non-dependants are not and where some non-dependants do not generate a deduction under the provisions. For example, in respect of the latter, no deduction is made in respect of any non-dependant who is staying with someone but whose normal home is elsewhere, who is receiving a training allowance in connection with youth training under specific provisions or is a full-time student during his or her period of study or is in hospital for more than 52 weeks. There are those sorts of exemptions. Is it planned that those will be carried forward into the new world of universal credit?

Lord Freud: My Lords, local housing allowance rates are set each year at the anniversary date of the claim. In many cases, they coincide with claimants' annual rent increases, but as the noble Baroness, Lady Hollis, will recall, during the LHA pathfinder some landlords increased rents mid-year to take advantage of increasing LHA rates. That is why we will operate a common uprating date of 1 April.

I would like to consider this matter further. I do not believe that it is appropriate to provide regulations in the Bill, and we will have an opportunity to debate the regulations in this area. However, I can assure the noble Baroness that we will consider the implications of a common uprating date for this group of claimants as part of the continuing work on the treatment of change of circumstances in universal credit. I am not able to get to a conclusion on what we define as a change of circumstances. Again, it is an interconnected group of things. On the basis that I am working on it, I hope that the noble Baroness will agree to withdraw the amendment.

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The next area is on non-dependants. We debated a similar amendment in Committee, and I remember blushing with pride when the noble Baroness said that I made an intelligent response. It is a rare accolade that I get from some members of the opposite Benches, but not all.

Lord Brooke of Sutton Mandeville: The noble Baroness was even more generous. She actually described it as a "very intelligent response".

Lord Freud: I thought that I would be self-deprecating and leave the "very" out.

The noble Baroness asked me to keep the House briefed on the thinking here and return at Report. The best that I can do now is to say that we have not changed our views. There is a lot of active work, and I know that the noble Baroness, Lady Meacher, also took a great deal of interest in this issue. The universal credit will recognise the general principle that adults who live in the household of people getting help with their housing costs should expect to make a contribution towards those costs. Not to do so would, in effect, mean that taxpayers would subsidise non-dependants through the benefits system. I think that that is common ground around the House.

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