John Penrose (Weston-Super-Mare, Conservative)

I begto move amendment No. 267, in clause 36, page 29,line 40, leave out ‘may’ and insert ‘must’.

I welcome you back to the Chair, Mr. Hood, following our brief break. It is hard to resist the temptation to begin by saying, “As I was just saying”, after two or three weeks away for the Queen’s Speech, but I shall try.

The amendment is aimed at preserving the option of making direct payment of housing benefit to landlords without going via claimants, should that be necessary. The Committee had a useful and informative discussion—I think that there was cross-party agreement on this point—about the importance of trying to expand financial literacy and of deepening the level of bank account penetration among claimants of benefits in general and of housing benefit in particular. There is still great support for that proposition.

However, there are occasions when it would not necessarily be appropriate for some groups of claimants to receive housing benefit directly, and when it would be appropriate to pay the benefit directly to the landlord instead. Examples of those to whom it might be dangerous to make direct payments include drug addicts who are not yet recovered, who may be in the process of recovery from their addiction. For such people, the difficulty of dealing with financial affairs and, to them, comparatively large amounts of money, which arrive in one lump every week or so, will create an impossible degree of temptation that would be impossible to manage, given the chaotic lifestyle of people who are in the depths of addiction. Clearly, there are some groups of people for whom direct payment may not be appropriate. The amendment seeks to ensure that there will be a guaranteed facility to preserve the option of direct payments of housing benefit to landlords if necessary.

A number of landlords are very concerned about losing such an option as a way of receiving the benefit. They regard it as an essential piece of certainty and of  protection of the rent stream. Many have said that they are concerned enough to consider getting out of the sector and stopping providing accommodation if the option of direct payment ceased.

The Opposition are therefore not asking that the proposed measure should apply to everybody. We completely support the notion that there should be an extension of bank accounts and financial literacy to the majority of people claiming housing benefit, but we feel that for some groups, at some stages, it will be important to maintain direct payment. We therefore hope that the Under-Secretary can give us some reassurance on the matter.

Danny Alexander (Shadow Minister and Disability Spokesperson, Work & Pensions; Inverness, Nairn, Badenoch & Strathspey, Liberal Democrat)

May I also welcome you back to the Chair, Mr. Hood, and say what a pleasure it is to be back here under your guidance for the final sittings of the Committee? I shall pass up the chance of making a meteorological reference at this stage—perhaps I will do so on Thursday for the Committee’s pleasure.

I would like to question the Under-Secretary on a further point that relates directly to the provisions that assist those who until now would have been likely to have their housing benefit paid directly to their landlord, but who might well be required under the new system to take responsibility for paying rent themselves, for all the reasons that the hon. Member for Weston-super-Mare has rightly outlined. That is an idea that I would support, subject to the caveats that he has entered.

In the pathfinder areas, significant resources have been provided to give financial advice, such as support from citizens advice bureaux, to enable people who are going through that transition, and are perhaps paying their rent directly for the first time, to cope with it. Advice and support will be provided to them, for example in the process of opening a bank account or taking advantage of other such payment mechanisms. As the local housing allowance is rolled out throughout the country, it is important that provisions for that sort of advice and support are made as intensively in the areas where the new benefit is being rolled out, as in the pathfinder areas.

Having talked to claimants and administrators in the pathfinder areas, I know that the provision of that advice and support, principally through Citizens Advice, has been a valuable part of the package to ensure a smooth transition from the old to the new benefit. There are also those claimants who are not vulnerable according to the new vulnerability assessment but none the less need a bit of help to get started in paying rent for themselves. I would be grateful if the Under-Secretary outlined the plans that the Government have to provide that sort of support and advice when the new local housing allowance is rolled out.

Anne McGuire (Parliamentary Under-Secretary (Disabled People), Department for Work and Pensions; Stirling, Labour)

Thank you, Mr. Hood. It is a delight to be back here this morning. I have suffered withdrawal symptoms for the past two weeks when we have not been here, as I am sure all my colleagues have done. I missed the weather forecast from the highlands and islands—so much so, that I  have been forced to listen to the shipping forecast at10 minutes to 1 in the morning on Radio 4, before hearing the in-shore forecast for fishermen. Anyway, that is enough of that. Those of us who were in the highlands and islands at the weekend know that when a force 10 gale blows, it can fair blow. We have great understanding and sympathy for those who are in the margins, in the more fragile areas, in terms of the weather, in the United Kingdom.

The hon. Members for Weston-super-Mare and for Inverness, Nairn, Badenoch and Strathspey have raised some positive points on financial inclusion. They have also highlighted the issue of those who are not able to manage their own funds. We agree that direct payment is not appropriate for all claimants. In the pathfinder areas, we put in place safeguards to ensure that, if a claimant could not manage their own affairs, payment went to the landlord. Having built that in in pathfinder areas, we would have the same intention when rolling out the programme, because it has worked well.

On funding during the roll-out, I am not sure whether we have yet received recommendations from the Select Committee on the Treasury, but I understand that it is looking at the issue of financial inclusion. I can confirm that we will provide funding alongside the local housing allowance roll-out to support local authorities in the provision of money advice. The pathfinder evaluation has demonstrated that the take-up of such advice was lower than we anticipated, so it may well be that people are more able and willing than expected to take responsibility, although the system has never given them that responsibility. Limiting the roll-out to new claimants and those moving house will help to ensure that the provision of advice is manageable. We recognise the operational issue that exists.

We need to continue to explore more coherent approaches to provide generic financial advice. It is not just a matter of rent or rates when people have serious financial difficulties: they are caused by a cocktail of financial pressures. Having said that, we ask the hon. Member for Weston-super-Mare to withdraw the amendment because it would restrict the Secretary of State’s flexibility in such matters. The issue that he raised is important, but we have built it into the system and the amendment would not add anything to the Bill. I am happy to put on the record the fact that we recognise that some vulnerable people are unable to manage their finances in quite the way that we would want them to. We have built in such support and, having highlighted such issues, I believe that the amendment could be withdrawn.

John Penrose (Weston-Super-Mare, Conservative)

On the basis that the Under-Secretary has put on the record the fact that she envisages that an element of direct payment will be retained, particularly for vulnerable people, I beg to ask leave to withdraw the amendment.