Housing Benefit — Question

– in the House of Lords at 2:36 pm on 20 January 2009.

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Photo of Baroness Gardner of Parkes Baroness Gardner of Parkes Conservative 2:36, 20 January 2009

To ask Her Majesty's Government whether they will review eligibility criteria for housing benefit and the amounts available to assess whether the criteria meet public expectations of value for money.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, we are currently undertaking a comprehensive review of the housing benefit system jointly with HM Treasury. The review was announced at Budget 2008 and is examining the effectiveness of housing benefit, particularly in promoting work incentives, efficiency and fairness and to ensure that it represents value for money for the taxpayer. The December welfare reform White Paper, Raising Expectations and Increasing Support: Reforming Welfare for the Future, provided an update on this review and signalled our intention to launch a consultation on possible housing benefit reforms early in 2009.

Photo of Baroness Gardner of Parkes Baroness Gardner of Parkes Conservative

My Lords, I thank the Minister for that reply. Certainly, many people are very unhappy to see such high rents; the highest are in Ealing, where just under £150,000 a year is paid for one family, and in Kensington and Chelsea there is that widely publicised rent of £97,500 a year. Although people would like to see help for the homeless, many think that it is ridiculous that the properties that are provided are places that they could not dream of living in themselves, and they are struggling to pay their mortgages. Will the new scheme bring flexibility for local authorities to allow them to use this money with greater discretion and not to have to tell the landlord in advance the maximum that they can pay, which seems absurd?

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, the noble Baroness makes an important point about making sure that the system produces fairness between those in work, and what those families can afford, and those on benefits. Last October, the Secretary of State announced that the local housing allowance levels will be capped at the five-bedroom rate from next April, so that any new claimants in respect of properties larger than that will have a cap on their benefit. We have already identified that, in a handful of cases at the margins, the scheme provides for very high rents in some parts of London. That is what we are seeking to address.

Photo of Baroness Thomas of Winchester Baroness Thomas of Winchester Spokesperson for Work and Pensions

My Lords, does the Minister agree that there are too many disincentives in the housing benefit system for those who want to move from benefits into work, particularly if they want to undertake temporary work or work with fluctuating hours, which may be the only work that is available in the present climate? Does he further agree that it might be a good idea for housing benefit awards to be fixed for certain periods, to ensure that entitlement for that person, so that they are not put off taking a temporary job or one with erratic hours?

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, one of the purposes of the review is to look at issues around work incentives and work disincentives. There is always a balance in these things between making sure that support is properly targeted at those people who need it and not extending that support up the income chain to increase the area over which it might operate as a disincentive.

Photo of Lord Best Lord Best Crossbench

My Lords, does the Minister agree that the problems of high rents and high benefits not only apply in the rather extreme cases that the noble Baroness, Lady Gardner of Parkes, mentioned, but more generally mean that people have work disincentives, as we have heard? Would it not be better—I hope that the Minister can assure us that the review will take this into account—to use some of the same money to acquire properties, so that housing associations, charities and arm's-length council organisations can rent at lower rates, which would mean that the housing benefit paid was less and work incentives were much greater? For example, Westminster City Council has been buying back some of the properties sold under the right to buy and letting them at rents that are within the reach of people, rather than at rents that are so high that dependency on housing benefit and staying out of work are inevitable.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, I certainly agree that it is important that councils or RSLs provide a good supply of good-quality housing. Housing benefit is paid to more than 4 million tenants, 23 per cent of whom live in the private rented sector. An increase in the supply of available accommodation, particularly through the public sector, will impact on rents and therefore on housing benefit levels.

Photo of Lord Campbell-Savours Lord Campbell-Savours Labour

My Lords, what is the new central London five-bedroom capped rate?

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, the rate is set by reference to broad rental market areas. I cannot, off the top of my head, notify my noble friend of the boundaries of those areas in London, but I will follow that up and write to him.

Photo of Lord Skelmersdale Lord Skelmersdale Shadow Minister, Work & Pensions

My Lords, the Minister mentioned fairness, first, in his primary Answer and, secondly, in answer to the supplementary question from my noble friend Lady Gardner. Can he therefore explain why a pensioner couple can get housing benefit to pay for two bedrooms but the rules of the local housing allowance insist that only one bedroom is allowable?

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, the criteria by which the local housing allowance is paid—or, indeed, for the previous arrangements that remain for past claimants—look at the accommodation that people need. Under the local housing allowance, it is assumed that a couple would have one bedroom, as is the case for an individual, so I am not quite sure of the proposition that the noble Lord is advancing. He may have identified a difference between how the old system and the new system work.

Photo of Lord Northbourne Lord Northbourne Crossbench

My Lords, some years ago, housing benefit fraud in this country was estimated to be some £2 billion a year. Has the noble Lord any idea of the estimate today?

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, if the noble Lord is asking about the level of housing benefit fraud, I can tell him that it has reduced significantly since the peak of 2006. I do not have the detailed figures, but I would be happy to write to him. There has been a lot of focus on reducing fraud as well as increasing the efficiency of the system by working with local authorities.

Photo of Lord Whitty Lord Whitty Labour

My Lords, does the Minister accept that some of the reasons for the soaring housing benefit bill are the unintended consequences of the rent restructuring programme, which has also had an effect on the disincentive to work, to which the noble Baroness referred? Also, will the review cover the issue of payment to the tenant, rather than payment to the landlord? For a lot of families, in terms of managing their budget, it is actually better to pay the landlord directly, which can also deal with fraud and arrears.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

My Lords, on the last point, the change in the local housing allowance, under which payment was generally made to the tenant, was a very important development. The pathfinders that preceded the introduction of the allowance demonstrated that there was a very high take-up of that allowance. It was part of broadening financial inclusion, as was demonstrated by the take-up of bank accounts by those who availed themselves of that facility. Under the current system, people who are vulnerable can still make arrangements, or arrangements can be made for them by the local authority, for payments to be made directly to the landlord, but overwhelmingly they are made to the tenant, which I believe is a good thing.