Welfare Reform Bill

My Lords, one of the key principles of our welfare reforms is to make the whole experience of claiming benefits as close as possible to the experience of receiving a wage or salary. The choices available to working households do not include opting for their employer to pay the landlord directly. I am not convinced by the argument that so-called tenant choice is genuine choice. Effective choice exists only when the balance of power is equal between tenants and landlords. When power is in the hands of landlords, tenant choice becomes landlord choice, and that, of course, leads to the situation we have at the moment where 95 per cent of claimants reputedly choose to have their housing benefit paid direct to the landlord. A gulf has opened up in the social rented sector between the experience of being unemployed and the experience of being in work. That is why this Government are absolutely committed to making a single universal credit payment per household, wherever possible. I repeat the statement that I made to the National Housing Federation last month. I am determined that the introduction of universal credit, and therefore direct payments to tenants, does not undermine the financial stability of the housing sector. I assure noble Lords that we have been in constant and regular dialogue with the DCLG to make sure that we are proceeding along a path that does not undermine the financial stability of the housing sector. The switch to direct payments to tenants will be completely new for around 20 per cent of tenants. The remaining 80 per cent of tenants will see no change at all or are already partially managing their rent payments themselves. Landlords can continue to rent to them without a problem. Vulnerable people, around 10 per cent of social sector tenants, will continue to have their rent paid direct to the landlord. This can include those with significant debts. I know that noble Lords are concerned about what will happen to people in this position. The noble Baroness, Lady Meacher, asked me how they would be selected and identified. Clearly, we will develop procedures to identify these people and take steps to carry on paying the landlords. I announced last month our intention to commission a set of demonstration projects which we hope to launch in June next year. They will test some of the key elements of how direct payment of their housing costs to working-age tenants will work across all tenure types. They will help gather the information needed to get the final design of any safeguards in universal credit right. The noble Lord, Lord McKenzie, asked a series of questions on how it will work. We will trial things such as escrow accounts, detailed budgeting support and so on, how one would switch payments and arrears and how one would recover those arrears. We would look at how one protects the interests of both tenant and landlord so that we do not have a question over the security of the cash flow of the housing associations. I am absolutely conscious of the importance of this. I monitor closely the attitudes of the rating agencies and banks, and I am absolutely conscious of the need to maintain confidence. These demonstration projects are designed to find the way through between getting the vital work incentives structures in position without undermining the sector.