Welfare Reform Bill

My Lords, we support these amendments in the names of the noble Lord, Lord Best, and the noble Baroness, Lady Hollis, for the reasons that have been very clearly set out. Indeed, these are modest amendments; they do not carry a major price tag. Certainly, the commitment to a review of what is happening to housing costs in relation to uprating amounts is absolutely crucial. There is the concern that there will be a growing mismatch between levels of housing support and rent. If that is the case, inevitably arrears will grow, personal debt will increase and homelessness will rise. Our briefing on this issue suggests that as many as 1.4 million local housing allowance claimants could be affected, with an average reduction in entitlement of just under £300 a year. As we have heard, a particular concern is that the use of CPI for uprating the local housing allowance, which is planned to be carried forward into the universal credit, will lead to ever-widening disparities between the level of rents and that of housing support allowance. The debate is not intrinsically about whether CPI is a better measure of inflation than RPI, although there is an argument about that generally in relation to benefit uprating. On housing, the debate is about whether it reflects what is actually happening to rent levels in the private sector. Currently, levels of support are generally determined by what is happening in each broad rental market area. There are disputes or arguments at the moment about whether those areas are properly drawn; indeed, there were two earlier housing benefit rent restriction regimes—the local reference rent rules and the pre-January 1966 rules—but I understand that those are going to be subsumed into the general uprating under universal credit. We have heard from my noble friend Lady Hollis that between 1997-98 and 2007-08 average rents increased by 70 per cent, while over the same period CPI increased by only 20 per cent. The point has already been made that the Government are looking to score significant savings from the proposed link with CPI, and there is a question about whether the cost of that will fall on landlords, as we have heard, or on tenants. Is not the evidence to date that it will to fall on tenants? The evidence of downward pressure on rents that these changes generally to housing benefit would cause is simply not coming through. I reinforce the question posed by the noble Lord, Lord Best: if as a matter of fact it is demonstrated in due course that private sector rents are not responding to downward pressure as the Government anticipate, and if the Government can be convinced that there is a growing disparity between the basis of uprating and what is actually happening to rents, will they change course on this? Part of the Government’s argument, as I understand it, is that simply uprating by one factor adds to simplicity and sits easily alongside the uprating of other benefits. Of course, that does not take account of the fact that we are not dealing here with one single housing market. There is a whole range of housing markets in different parts of the country; even within different parts of the country, there are different pressures and considerations on what is driving rent changes. I want to ask the Minister about another issue. As we have discussed, housing allowance levels are currently set on a monthly basis. Once the system of uprating by a single index is in place, what will happen to the valuation office capacity that is currently engaged in that task? If in due course it were agreed that we should return to some basis of evaluating local housing allowance support on the basis as computed at the moment, with valuation offices looking at what is happening in individual markets, will the capacity be there in future to do it if you have already moved down the path of eschewing that process and simply use a CPI uprating? What would the relevance of the 30th percentile be in future for new claimants? Is it proposed that they would look at the original 30th percentile figure that was subsequently uprated, irrespective of any changes that may have taken in the broad market area that generated those figures initially, and ignore what regeneration development there has been in those areas? Is it proposed that monthly percentile figures will still be produced? It is inevitable, if we go down the path of a single factor applied across the board to changes and uprating in local housing allowance support, that we are going to drive uncertainties, concerns and disparities in the market, particularly a growing gap between local housing allowance levels of support that people get and their actual costs. This is in the context of a whole raft of other measures which are applied before we deal with the uprating: the move from median to 30th percentile and the caps on overall levels of benefit and individual levels of rent depending on the size of property. Those have all been applied first, yet on top of them is the real risk that the CPI uprating will impose even greater restrictions than those individual, supposedly carefully crafted ones introduce to bear down on housing benefit levels. The key question for the Minister is: in the event that the evidence shows that the levels of support generated by CPI uprating or any other means is moving significantly away from the changes in cost that people actually having to bear, will the Government move back from that approach? Will they adopt a changed stance?