Welfare Reform Bill

My Lords, I want to add one or two further points to those already made by your Lordships on Part 2 on housing benefit. This is a subject of such complexity and, dare I say it, for those not directly affected, of such tedium, that it has defied reform and improvement for many years. I congratulate the Government on working up a revised housing benefit scheme with a new simpler system for calculating benefit—the local housing allowance scheme. Over the past five years I have chaired a housing benefit reform group with representation from landlord and tenant bodies and from government departments, which has followed the progress of the new measures. In this instance the pathfinder schemes in pilot local authority areas have been the subject of impressive evaluation for the Government, not least at the University of York. This has involved a thorough appraisal of the concept and has shown that it is sensible to roll out the arrangements from the initial 18 areas to all local authority areas. The scheme involves greater clarity and simplicity and will make the administration of housing benefit, which, frankly, has been a nightmare for the 408 local authorities handling housing benefit as well as for both landlords and tenants, infinitely better. However, perhaps unsurprisingly, it is not the case that the new arrangements are perfect. The worst aspect of the current housing benefit regime is that many tenants have to pay out more in rent than they receive in benefit. This means that the tenant must cover the balance from their other income. But income support and other benefits do not have any leeway to pay the rent. Other benefits are calculated on the assumption that housing costs are fully covered. The new regime has led to smaller shortfalls in many cases, which is of considerable importance, but shortfalls remain in many other cases. The Catholic Housing Aid Society Kirklees carried out a survey of 37 landlords with 2,756 properties and found that the people who had a benefit shortfall went without meals on a regular basis: 50 per cent missed three main meals a week; 50 per cent were behind with other bills, and 15 per cent faced court action for debt; 50 per cent were behind with their rent, unsurprisingly, and 20 per cent faced eviction as a result. Why the shortfall, the gap, between the rent and the housing benefit intended to cover it? It occurs because the rent officer sets a rent level which is lower than the landlord charges the tenant. The new system involves rent officers setting the rates for the flat rate local housing allowances. The problems of fixing maximum levels, which in many cases leave tenants trying to make up the balance, need to be minimised. A problem can arise if the geographical area covered by the so-called broad rental market areas includes such an unbalanced portfolio of properties of different prices that the median rent is too low in relation to the actual availability of properties for rent. The boundaries for these broad rental market areas need an input from the local authority and its own housing experts. At the moment the rent officer service is quite separate and independent of the local authority. It also seems important for there to be a system of appeal against rent officers’ decisions—an external, independent appeal mechanism, not just the unwieldy processes of judicial review. The existing rent assessment committees might perform this function. More technically, there is an intention to move from the use of the mean rent in the calculation to the median rent. I am advised by Professor Steve Wilcox, acting for Citizens Advice, that this innocuous-sounding change could mean a lower level of maximum housing benefit for all concerned. Will the Minister look at this technical issue and see whether his officials can do some sums in advance of implementing it, just in case this advice is correct and we are unwittingly coming up with a formula that will mean more of these dreaded shortfalls? A specific aspect of rent-setting which has caused particular controversy is the single room rent for under-25 year-olds. This caps housing benefit at a level deemed to cover the rent of a room in a shared home, not a self-contained flat for these tenants. The Minister referred to this in his opening remarks. The requirement is now to be called the ““shared room rate””. The Minister pointed out that a large number—I think that the figure is 40 per cent—of younger people who pay their own rent live in shared accommodation. Is it fair, goes the argument, to seek a self-contained flat if you are on housing benefit when those who are not on benefit often must share their house or flat? This misunderstands the realities facing many young people who need accommodation in the real market place. Life is quite different for vulnerable, ex-homeless young people—people coming out of prison; people moving from a hostel or supported accommodation into their first home—from what it is for young, upwardly mobile young people, down from university, or students who share, and enjoy sharing, perhaps with help from their parents. There are many areas in which there are practically no shared apartments on the market for that young person to go out and find. Houses in multiple occupation are closing in a number of places—there are fewer of them than there were. The huge phenomenon of buy-to-let, with lots of new landlords coming into the market place, is entirely in self-contained accommodation: one-bedroom and two-bedroom flats. The Department for Work and Pensions has discovered that the average shortfall for young people in these circumstances is £35 per week. This is a very large sum of money to find if you really do not have any other source of income to sustain you. You have your income support to cover your food, your fuel and your clothing; there is nothing left to contribute to your rent. So, very soon, these young people, who are not able to move into shared accommodation, will find themselves, as they have in the past, in serious difficulty. The YMCA, Crisis, Centrepoint and Shelter have all sent us evidence on the problems which the old single room rent, which is to be perpetuated in the new system, has caused for young people in these circumstances. I hope that the Minister will be able to offer some reassurance that this real defect in the old, and now in the new, housing benefit scheme will be remedied.