Report (2nd Day) (Continued)

Part of Welfare Reform and Work Bill – in the House of Lords at 9:15 pm on 27th January 2016.

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Photo of Lord Best Lord Best Chair, Communications and Digital Committee, Chair, Communications and Digital Committee 9:15 pm, 27th January 2016

My Lords, I rise to speak to Amendments 50 and 51, the first two amendments in the group, in my name and those of the noble Lords, Lord McKenzie of Luton, Lord Shipley and Lord Kerslake, and to support the other amendments in the group that follow in the names of the noble Lords, Lord Ramsbotham and Lord Kerslake, and the noble Baroness, Lady Meacher.

We return to the rent cuts of 12% over four years for the housing associations and councils. This will achieve savings for the Treasury in housing benefit of approaching £2 billion per annum by 2020 and every year thereafter. The problem is that, although the major developing housing providers can absorb this unwelcome loss of income by reducing the extra services they supply, and/or doing a bit less new building, and/or running down their reserves, some housing bodies cannot take the hit. The aim of Amendments 50 and 51 is to prevent the rent cuts impeding the vital work of these organisations.

There is no margin for a rent cut where the organisation, or the specialist part of a larger housing provider, does not currently make any surplus to set aside, either because rents are carefully kept at a level that covers only loan costs and management and maintenance costs—as with the co-ops and community land trusts covered by Amendment 50—or because the provision of extra services means that existing rents are barely enough, as with the supported housing and extra care housing for older people covered by Amendment 51. The 12% rent cut would clobber the housing associations in these categories for very slim pickings for the Treasury.

I couple my comments on these proposed rent cuts with an equal concern about the proposal that housing benefits for all social housing tenants should be capped at the level for private sector tenants—that is, at the local housing allowance ceilings. Again, the tenants of the major housing providers, whose rents are mostly way below those in the private sector, should not be too hard hit—although, as an aside, I am very worried about some of those aged under 35 who would suddenly get only the shared accommodation rate. But, the biggest problem of the LHA rent cap is, again, supported housing and extra care schemes for older people, where the rents are much higher than for a similar home let by a private landlord because, of course, the work of the provider of supported housing goes far beyond simple property management and maintenance. The LHA private sector cap is clearly entirely inappropriate for supported housing. Applying it in April 2018 for all those who become tenants after 1 April 2016 would mean that very few of the residents who move in just two months from now could continue to stay in this specialist accommodation in two years’ time. Where would they all go if the projects have to close or the supported accommodation has to be switched to general needs housing?

In response to these points on rent cuts and benefit caps, and following representations from many charities working in this field, including Riverside, St Mungo’s Broadway, YMCA, Crisis, Homeless Link and the National Housing Federation, the Minister has taken some very constructive decisions that he will, no doubt, spell out tonight. I am delighted that the noble Lord has determined that housing under all the categories in my amendments—including the housing co-operatives, community land trusts and almshouses, which were of special concern to the noble Lord, Lord Ramsbotham—are to be taken out of the rent cuts while better arrangements are determined, with increases in rent permitted in line with the existing regulations for the time being.

I welcome the Minister’s decision to work in close collaboration with the relevant specialist providers to use a one-year moratorium on rent cuts to devise a satisfactory basis for determining the funding arrangements for supported housing. This is entirely sensible and the Minister will be able to take into account the findings from an important supported housing review by Ipsos MORI, which he has instigated. I am grateful to him for the care and attention he has given to this matter and for today’s important announcement.

On the intertwined issue of the benefits payable to those in supported housing, the Minister has undertaken to ensure that there is appropriate protection from the totally unsuitable private sector standard LHA benefit cap. This is indeed at least as important as the protection from the rent cuts. As I understand it, protection for supported housing will be effected within exactly the same exercise as for protection from the rent cuts.

There will be a pause while the overarching review sorts out the best system for assisting supported housing over the months ahead. I hope the Minister will forgive me for seeking just a little more clarity in this respect.

As currently planned, no tenant will be hit by a reduction in their housing financial support as a result of the introduction of the LHA cap until 2018, but anyone who moves into a property after 1 April 2016 who needs housing benefit would face a disastrous reduction in help within two years. A housing association with lettings to make from April this year—just two months away, and offers need to be sent out now—must hold back until it is possible to accept people who are likely to remain there for two years or more, as would nearly always be the case for housing for older people moving into extra care schemes, for example. If the Minister can tell us tonight that the year-long exception for supported housing while a long-term solution is found will apply equally to the imposition of the LHA rent cap for benefits and to the rent cuts, then all these organisations can continue to let their property in the mean time. Even then, some will feel it necessary to keep projects in the pipeline on hold until the new system is known, so urgency in concluding the exercise is still badly needed.

I believe that moving back the April 2016 LHA deadline for a year while the new arrangements are hammered out is precisely what the Minister meant in his words of comfort and reassurance on the protection for supported housing from the LHA cap. But the many people in organisations who are working hard for those in need of supported housing, and the many people who need those homes, will sleep much easier tonight if he can confirm that the one-year pause he has so helpfully decided upon for the rent cut will also apply to the LHA cap, and will ease the problem. I am pleased to move my amendment but have every intention of withdrawing it shortly.