My Lords, as one would expect, this has been an interesting debate with some impassioned and important contributions, which I welcome. Let me start by reminding the House of the fiscal environment that led to this measure’s introduction. In the final year of the previous Government, borrowing had risen to £150 billion. In
cash terms, over the previous 10 years, expenditure on housing benefit had nearly doubled to £24 billion. Left unreformed, annual expenditure on housing benefit would have exceeded £26 billion per year by the end of this Parliament. Nearly four years on, the range of economic indicators are showing that our policies are working and have led to the number of workless households, the number of lone-parent workless households and the number of children in workless households all being the lowest since comparable records began in 1996.
I will not spend a huge amount of time responding to the policy issues raised because we have already spent a lot of time in this House dealing with the policy as a whole. I want to deal with the issues raised by the nature and form of this particular amendment.
The Housing Benefit (Amendment) Regulations 2006 are secondary legislation, which contain detailed provisions that set out how local authorities should administer housing benefit. It is very unusual to seek to amend secondary legislation through primary legislation in this way. The amendment itself is imprecise and ambiguous, unlike the rest of Regulation B13. For example, under proposed new paragraph (5A) it is unclear what “restriction to one bedroom” or the concept of,
“in the interests of the welfare of a child”,
means in this context. Because of this, the amendment may have unintended consequences that go far beyond those desired by the noble Baroness.
The effect of the amendment is potentially to allow local authorities to determine that the removal of the spare room subsidy does not apply where the household contains children, as it is not in the interests of their welfare. So this amendment is likely to add around £160 million a year to the housing benefit bill, reducing the savings from the policy to around £330 million a year. It would extend only to the social sector and so reintroduce the inequity in treatment between housing benefit claimants that we have sought to remove with the implementation of this change. Applying the spirit of the amendment to the local housing allowance to re-establish fairness is likely to more than double the cost of making this amendment to around £460 million a year. This amendment does not deliver the intended outcome. If accepted, we do not intend to amend it and it will be sent to the other place in its current defective state.
It may be helpful if I remind noble Lords that we have already taken account of the interests and welfare of children in developing this policy. In March, we amended the regulations to allow an additional bedroom for foster and kinship carers. We have also made £5 million of discretionary housing payment funding available specifically for foster carers who require further additional rooms to allow them to foster two or more children, including groups of siblings. The discretionary housing payment data for the first six months indicate that foster carers are applying for and receiving payments, as intended. In March, we also issued guidance to local authorities indicating that they should allow an additional bedroom for disabled children who would ordinarily be expected to share a room but are unable to do so because of their disability. This was put into a
regulatory framework in October. We have provided £180 million of discretionary housing payment funding for this year, and £165 million for next year, to enable local authorities to support the most vulnerable families affected by the reforms. This funding is already meeting the need that the noble Baroness seeks to address through this amendment.
Perhaps I might pick up on two of the vital points raised by the noble Baroness, Lady Meacher, on the costs and benefits for children who go into residential care as a result of the removal of the spare room subsidy. We have not looked at this specifically. The independent evaluation of the policy will look at the effects on families. We are not currently aware of any evidence to support the assumption that this would be an outcome of the policy.
Picking up the example that the noble Baroness raised about Mary Jane and focusing on the uncertainty that that family had with that poor girl, I am aware that some local authorities, following the introduction of the policy, have understandably taken a very cautious approach to awarding discretionary housing payments, as they assess the level of need in their area. I have instructed my officials to amend the guidance to local authorities to encourage them to make longer-term awards where the circumstances are unlikely to change. The revised guidance is being prepared and will be shared with the local authority associations in draft before being issued for the start of the financial year.
At this stage, we have not seen anything to suggest that this policy is having a detrimental impact on the welfare of children living in affected households. We are closely monitoring the effects of the policy and have commissioned an independent two-year evaluation which—among other things—will look at the effects on families. The interim findings are due to be published in spring this year.
I hope I have been clear. I have already reflected on the noble Baronesses’ amendment. I cannot undertake to reflect further between now and Third Reading. If the noble Baroness wishes to test the opinion of the House, she should do so now.