Welfare Reform Bill (Programme) (No. 2)

My hon. Friend is absolutely right. Without any question, we are seeing a growth in the private rented sector for all those reasons, including the affordability crisis and the lending pressures in the home ownership sector. That means that the private rented sector, which we all applaud and support—we want a healthy private rented sector—can draw from an increased pool of potential tenants who are not on housing allowance. There will be competition for those properties between tenants who do not require housing allowance and those who do and are on the transitional protection path through the caps and reductions in the 30th percentile on which we have already agreed—I shall turn in a second to the further ratcheting down that is intrinsic to the future use of the consumer prices index rather than a local housing allowance determination—and that pressure will mean that a larger pool of people are frozen out of such accommodation. As we have frequently said, that will not affect every area of the country evenly. There are areas, as we know, where 80% of all private rented accommodation is underpinned by a local housing allowance, but almost all the authorities in that situation are in the north of England, in relatively low-cost areas, in places such as Blackpool. Fine-tuning local housing allowance levels potentially has a market lever effect, as Ministers have argued. Of course, the difference between a local housing allowance and actual rents is relatively small, so the cash saving in such situations is not likely to be great. However, in areas where the share of the private rented sector that is made up of housing allowance claimants is small—the case in London and the south-east, for example—that market pressure will not have the same impact. In most cases, it is unlikely to have any meaningful impact at all in bringing down rents. That is when a very difficult situation is likely to arise, with the potential for increased homelessness and increased costs. We discussed all these issues at length in Committee. Amendment 31 would create a statutory requirement for annual reviews to be conducted to assess how far housing support payments are keeping track of rents in the private rented sector in the future, to ensure that adjustment is made accordingly. There is deep concern in the housing sector that uprating future local housing allowance by the CPI will break the link with actual rent costs, a long-standing link which has ensured that a reasonable supply of private rented accommodation is available to low-income households. We know that although the cost of rent is included in the CPI, it accounts for only 5.4% of the basket of goods used to measure inflation, and that historically CPI has not increased at the same rate as average rents. Between 1997-98 and 2007-08, average rents increased by 70%, whereas over the same period the CPI increased by only 20%. The Government's own impact assessment indicates that the pattern is expected to continue into the future, with CPI expected to rise by around 2% and rental costs by 4%. What that means, and the reason that the housing sector is so concerned about it, is that it is a relatively fast process for large areas of the country to become completely unaffordable to tenants on housing benefit. Cambridge university research that was commissioned by Shelter takes a longer perspective and is particularly dramatic over a period of 10 or 15 years, but even over the course of the current spending review, it is marked how large parts of London and the south-east in particular, but also Cambridge, Oxford, Manchester and other cities, become unaffordable to people on local housing allowance. Why does that matter? One reason is the proportion of people on local housing allowance who are in work. The Opposition keep stressing that, and I worry that we do not get enough recognition from Ministers of this point. During the recession years, an increasing number of those people turned to the local housing allowance to keep a roof over their head while they were in work and while their wages were frozen or perhaps their hours were cut. The local housing allowance fulfilled its function extremely well as an in-work benefit. The one thing that we do not want to do, which I am sure the Government do not want to do either, is to create a crisis of affordability when someone hits hard times—if their income dips or is frozen, or even if they have a temporary period of unemployment—that tips them into homelessness, which is expensive and catastrophic, while we push a larger and larger proportion of them further and further away from the labour market. The disparity is at its most striking between the north and the south, but it can even be within cities such as London and Manchester. The affordability of private rented accommodation can take people so far out that, once they factor in travel costs, they are simply unable to work, particularly given the Government's belief in the mini-job as the means of bringing people out of unemployment, which we have just heard expressed passionately from their Front Bench. People will be unable to take up mini-jobs of 10 or 12 hours a week because as their homes become increasingly unaffordable, their travel costs will make it impossible to take a job and they will be pushed further from the labour market. Somewhere along the line, we have to find a way of squaring that circle. We all agree about the importance of the private rented sector in our menu of housing options, but it should be a way of cushioning the impact of unemployment or a drop in wages, and, in parallel, be a means of ensuring that we do not return to the nightmare years of the early 1990s, when the level of homelessness went through the roof. The soaring level of homelessness in those years resulted in the large-scale placement by London local authorities of their homeless households from central London to Birmingham, Coventry and Liverpool, an experience from which many of those households did not recover.