Welfare Reform Bill

I shall try to respond quickly to these points. One of the central objectives of housing benefit reform is to match rights with responsibilities. Clause 36 provides for powers prescribing the manner in which housing benefit is to be paid to all types of tenant. While I recognise the positive intention of Amendment No. 108 that seeks to protect the interests of customers who may have a higher level of need, I can assure noble Lords that this amendment is not necessary. Under current legislation and regulations, housing benefit customers can be paid by way of rebate of their rent account, by payment to the customer—including someone on their behalf—or by a combination of both. Where the authority is not the landlord—that is, where the customer is in the private rented or housing association sector—it cannot rebate the customer and therefore has to pay the customer or someone on their behalf such as a landlord, or a third party. In the local housing allowance pathfinders, the proportion of payments made to tenants has increased from 50 per cent to 84 per cent after two years. The Pathfinder evaluation found customers to be, on the whole, good money managers who actively budget to ensure their finances are stable and take paying their rent very seriously. The minority who were initially daunted by the prospect of paying their own rent tended to be young people inexperienced in managing their finances or people who had pre-existing financial difficulties. With help and advice, many of these individuals developed the skills not only to manage their rent payments but also to improve their wider financial capability—an important step on the road to employment. We therefore believe that excluding individuals from the responsibility of managing their housing benefit payments on the basis that they meet a pre-determined set of criteria would not be the right way to proceed. This approach would constrain the flexibility of local authorities to act in the best interests of the customer and could deny many capable customers the benefits of managing their own housing benefit. However, we will not force this responsibility on to those who are genuinely unable to exercise it and will provide support to those who need it. Funding to support financial advice services has been set aside for the national rollout of local housing allowance. This is further supplemented by cross-government activity to increase financial inclusion, in particular to help individuals access appropriate banking services. To protect vulnerable customers, safeguards are in place for the national rollout of local housing allowance. Regulations will ensure that payments can be made to the landlord where the customer is likely to have difficulty managing their financial affairs, where it is improbable that they will pay their rent or where payment has been made to the landlord previously during the award due to arrears of eight weeks or more. Payment will always be made directly to the landlord, subject to limited exceptions, where there are eight weeks or more rent arrears. Customers can also elect to have their benefit paid to a third party other than their landlord. Guidance will be available to help local authorities apply these safeguards. It will be informed by lessons learned from the pathfinders and comments from the welfare organisations working with us. With regard to the social rented sector, which the noble Lord, Lord Taylor, highlighted, I feel very strongly that tenants of local authorities and housing associations should reap the benefits gained by private tenants in the pathfinders from managing their rent. Currently where the authority is the landlord, it effectively has a choice as to the manner of payment. Invariably tenants in these cases, that is council tenants, end up having their rent rebated. In addition, less than one in10 housing association tenants nationally are responsible for managing their housing benefit. In response to the welfare reform Green Paper consultation we decided not to introduce the local housing allowance to the social sector at this time; however, this clause supports the extension of payment of housing benefit to tenants and, therefore, the principle of tenants’ responsibility to all housing benefit customers. It is wrong to assume that social tenants are any less able to manage their housing benefit payments than their peers in the private sector. In fact, independent research from the Joseph Rowntree Foundation suggests that social tenants are just as likely to have the financial capability and the willingness to manage their housing benefit payments. At present, the rate of worklessness among social tenants is twice the national average. Encouraging more tenants to handle their own housing benefit payments is a step towards financial inclusion and greater readiness for employment. Not taking this responsibility risks undermining their self-reliance and could contribute to benefit dependency. Clause 36 provides for powers prescribing the manner in which housing benefit is to be paid to all types of tenants. This clause will enable us to require local authorities to make payments of housing benefit to their tenants so that the principle of tenant responsibility can be extended to all types of tenants. Of course, any change to the rules affecting social tenants would, as in the private rented sector, include safeguards to protect those who are unable to manage their own affairs, as has been described so eloquently by the noble Lord, Lord Addington. Support for those who are less experienced in managing their rent should be available. We will proceed cautiously in the social sector. We do not intend to make regulations under this power or under our existing powers that will affect social tenants until we are confident that we have the right approach and the right support mechanisms in place. I want to respond to a couple of points made during our discussion. I was asked how proactive local authorities will be in assessing a customer’s vulnerability when setting housing benefit. If a local authority receives notice that a claimant might be vulnerable, it must investigate whether that is the case. That notice could include, as has been suggested, the customer’s own representations. Further, the landlord will have the opportunity to be proactive and his representations would be accepted, as would representations from advocacy services such as a citizens advice bureaux, social services, the GP and other healthcare professionals, along with organisations that act as representatives on behalf of claimants. If agreed, the amendment would place a requirement on local authorities to assess every single claimant and potential claimant for vulnerability. Our approach allows for customers who have the potential to fall into arrears and who may be vulnerable to be picked up proactively through other means. I hope that the noble Lord will feel able to withdraw his amendment and that I have not rushed too quickly through this slightly more complicated issue.