Welfare Reform Bill

My Lords, the amendment in lieu of the noble Lord, Lord Best, seeks to exempt certain categories where the tenant underoccupies by one bedroom and no suitable alternative accommodation is available, those not required to seek work, carers, disabled people, war widows and foster carers. Our estimate of the cost of this amendment is slightly lower than that of the noble Lord. He suggested that it was £150 million. We estimate that it would cost up to around £100 million in 2013-14. We have already announced an increase of £30 million in the discretionary housing payments aimed at some of these categories—those living in adapted properties and foster carers. Others in vulnerable situations can also apply to the fund where they have difficulty meeting the shortfall. I say to my noble friend Lord Kirkwood that that £30 million is an ongoing rate. The amount will be kept under review to see whether it is meeting the level of demand in different areas. We set the amount at £30 million based on the numbers likely to be affected by the measures. We think that the £30 million could help about 40,000 cases based on the average reduction of £14 a week. That figure is based on the group of 35,000 potentially affected claimants who are wheelchair users and live in accommodation that has been adapted to suit their needs, although, of course, not all of these would need to apply for a discretionary housing payment. We estimate that around 5,000 foster carers, including those in between assignments, could be affected by the measure. My noble friend Lord German referred to the type of housing that would be affected by the measure. We decided to tackle this matter through discretionary housing payments, as introducing exemptions and classification is very difficult in practice. Therefore, we are leaving it to local authorities to make some very tough judgments on where it makes sense to offer that support as they have a lot of local knowledge. Regrettably, £100 million is a lot of money in the present climate, even though it is less than the £150 million figure estimated by the noble Lord, Lord Best. Clearly, it is difficult to agree amendments and send them to another place when they have such significant costs attached to them. In summary, we believe it is right and fair to proceed with the measure as it is in the Bill. We will apply a percentage reduction of 14 per cent for those underoccupying by one bedroom and 25 per cent for those underoccupying by two or more bedrooms. That comes in in April 2013. The noble Lord, Lord McKenzie, asked me to disavow any cynical recycling. I am in a position to do that, as we announced a range of these reductions of between 10 and 15 per cent for one room and 20 to 25 per cent for two rooms. When I fixed the rates in December, I was able to do that within the bands that we had set.