‘(1A) Section 19 does not apply in relation to social housing that consists of or is included in a property if, where the property is subject to a mortgage or other arrangement under which it is security for the payment of a sum or sums—
(a) the mortgagee, or a person entitled under the arrangement to be in possession of the property, is in possession of the property,
(b) a receiver has been appointed by the mortgagee, by a person entitled under the arrangement to do so or by the court to receive the rents and profits of that property and that appointment is in force, or
(c) a person has been appointed under or because of the mortgage or the arrangement to administer or sell or otherwise dispose of the property and that appointment is in force.’
This amendment expands the exception from the rent reduction requirements in clause 19 so that it includes, as well as cases of a mortgagee in possession or a receiver appointed under a mortgage, cases where steps are taken under a different form of security to realise the security. See also amendment 177.
The amendments relate to clause 20, which provides for an exception from the rent reduction requirements when a mortgagee takes possession of a property, or when a receiver is appointed by the mortgagee or the court, or where a property is sold by a mortgagee in possession or the receiver. This exception is intended to protect the value of stock held by all private registered provider landlords, to ensure that they can continue to use their assets as security for borrowing in the same way that applies in similar circumstances under the existing rent policy.
Our intention is that the rent reduction measures should be aligned as far as possible with existing policy on social housing, currently set out in the regulator of social housing’s rent standard guidance and the Government’s guidance for local authorities. Amendment 176 expands the exception from the rent reduction requirements in clause 19 so that it also includes cases where steps are taken to realise security under a different form of security, and where any person is appointed under a mortgage or different form of security arrangement to administer or sell the property.
Amendment 177 provides that the exception applicable to a sale by a mortgagee in possession or a receiver is not limited to the first person or body becoming successor in title of the registered provider on the sale or transfer of the property by a mortgagee or receiver, but extends to all subsequent purchasers or owners. It also expands the exception to cases in which the property is sold under a different form of security arrangement.
Amendment 149 clarifies that events for which the regulations may provide may include periods when the rent payable by a social tenant is temporarily reduced or waived. Such provision could be used to clarify how the rent reduction should apply when a registered provider has temporarily reduced or waived a tenant’s rent—for example, because they are making repairs to the property.
The details will be set out in the regulations. Without these amendments, there would be an impact on the private registered provider sector, potentially reducing the value of all social housing assets currently being used for security for borrowing, which would lead to a need for more security, and preventing them from borrowing more to build the homes that we need.
Amendment made: 177, in clause 20, page 19, line 47, leave out paragraph (d) and insert—
‘( ) If a registered provider’s interest in property that consists of or includes social housing—
(a) was mortgaged or made subject to an arrangement other than a mortgage under which the interest in property was security for the payment of a sum or sums, and
(b) is sold or otherwise disposed of after the coming into force of section19 by—
(i) the mortgagee or a person entitled under the arrangement to do so,
(ii) a receiver appointed by the mortgagee, by a person entitled under the arrangement to do so or by the court to receive the rents and profits of the interest in property, or
(iii) a person appointed under or because of the mortgage or the arrangement to exercise powers that consist of or include the sale or other disposal of the interest in property,
section 19 ceases at that time to apply in relation to that social housing.”—(Guy Opperman.)
This amendment expands the exception so that, where there is a sale of a registered provider’s property by a mortgagee or receiver, the purchaser and all subsequent purchasers are excepted from the rent reduction requirements in clause 19. It also expands the exception to cases where the property is sold or otherwise disposed of under a different form of security.
To provide that the mandatory 1% annual reduction in social housing rents will not apply to the tenants of “specified accommodation”.
I apologise for the confusion earlier, Mr Owen. Clause 20 sets out certain exemptions to the 1% reduction in rent for social housing providers, but the Opposition believe that there has been a major omission, which amendment 109 would address. It would include “specified accommodation” as defined in the Housing Benefit and Universal Credit (Supported Accommodation) (Amendment) Regulations 2014. I am grateful to Women’s Aid, Homeless Link, Sitra, Unison, St Mungo’s, the National Housing Federation, the Housing and Support Alliance, YMCA, Crisis, the Salvation Army and Centrepoint, which have all made a compelling case for the amendment.
Many people will be aware of what supported housing does. It caters for a wide range of tenants with specific needs that require a varying degree of support. That type of housing is already subject to very tight margins across the board. It relies on contracts for care and support services, and there are no alternative models for such housing provision. Between 2011 and 2015, funding for housing-related support reduced by 45%, according to the National Audit Office report. At the same time, because of demographic changes, demand increased, particularly from people with complex needs. It is a part of the housing sector that is particularly vulnerable to any reduction in income. It deserves to be considered a special case and should be one of the organisations that is exempt.
Supported housing is specifically designed to help disadvantaged people to be or remain as independent as possible and live healthy lives. It is unclear what would happen to the people currently living in supported housing, those waiting for supported homes, or the increasing number of people needing supported homes in the future. We talked about the impact on health conditions and the knock-on impact on NHS demand. That is what is predicted if we again threaten the viability of that very important group of housing providers that give support to very vulnerable people. I would be grateful if the Minister considered the change.
As it stands, the rent reduction could lead to a loss of existing supported housing for disadvantage people, such as older people, homeless people, people with mental health problems, people fleeing domestic violence and people with learning disabilities, among others. The number of schemes for that range of clients would also reduce, and demographic changes mean that the size of that group has increased.
We talked about the issues that the modelling shows housing associations face due to the reduction in income. Supported housing providers are vulnerable. They provide supported housing on a scheme-by-scheme basis.
Does my hon. Friend agree that Government policy on parity of esteem for people with mental health problems, which is trumpeted in relation to health, is not only about health, but about a range of social services, including housing? The Government proposal potentially directly affects parity of esteem for people with mental health problems.
Absolutely. My hon. Friend makes a powerful point. Those housing providers provide housing and support to a very vulnerable group, including people with mental health conditions. The measure will affect their opportunity and ability to live independently and well.
The impact on accommodation for homeless people with support needs demonstrates how damaging the change would be for supported housing as a whole. One homeless organisation in the north-east of England has modelled the impact of the change on the 300 beds of supported accommodation that it provides, which accommodate 1,400 disadvantaged people a year. The impact of the 1% rent reduction, assuming that other costs increase by 2% or 3% a year, is that 50% of its accommodation projects will be financially unviable in 2016-17. It is absolutely imminent. That is key. The pace of the clause’s implementation means that we will be facing problems in the next few months and I hope the Minister responds appropriately. It gets worse, I am afraid: the organisation has mentioned 100% financial unviability by 2017-18. What will happen to that vulnerable group of people?
A second organisation, St Mungo’s Broadway, provides accommodation support to 3,800 people each year across London and the south-east of England. I have visited the project here and in the midlands. St Mungo’s estimates that the 1% annual rent reduction requirement will result in it losing £1.25 million in rental income by year 4—between £250,000 and £300,000 each year. Taking into account the rental income that the organisation anticipates over that period, the overall impact on its finances over the four-year period is a loss of £4 million. That loss of income will force some projects to close, resulting in the loss of accommodation for homeless and disadvantaged people.
Mr Owen, I expect that you have experienced an increase in rough sleeping in your constituency. I was shocked recently, in the last month or so, when I arrived back in Manchester from Parliament late one night. Every 50 metres there was somebody sleeping rough. The fact that the measures will affect organisations such as St Mungo’s is serious. I have mentioned the groups of people supported by those housing providers. The providers have estimated who will be affected in percentage terms. They expect that people with learning disabilities and physical health problems, people who have slept rough and people with a history of offending, and people with alcohol, drug and mental health problems who have been accessing their services for support needs, will be affected.
As has been mentioned, the measures will have an enormous impact on services working with other disadvantaged people. A large national provider of supported housing has estimated that the change will lead to the loss of 104 schemes, removing 1,969 support spaces for clients, including 228 spaces for people experiencing domestic violence. A small specialist learning disability provider will have its operating margins reduced to 0.2% and will be forced to cancel all proposed development of learning difficulty schemes. A large national organisation will be forced to reduce planned development of extra care by 400 units, including units specifically to help people home from hospital. Such organisations reduce the pressures that our beleaguered NHS is experiencing—the measures will have a direct impact on the NHS.
There is a precedent. The principle of treating supported housing separately from other social housing for welfare reform purposes was recognised in the previous Government’s proactive decision to keep housing costs for specified accommodation out of universal credit and the benefit cap calculations.
Does my hon. Friend want to pay credit to Ministers for removing specified accommodation during the previous Government? It most certainly meant that, at the refuge where I worked at the time, we could maintain operations exactly as they were, and in fact develop some others. The Minister spoke earlier about listening. Perhaps we should pay credit to the Government for listening on that occasion.
In rising to speak to the amendment, I just want to say that I welcome the Minister’s commitment this morning to write to me so I can find out a bit more information. He suggested that I was trying to make a name for myself—I believe that was the term he used. I certainly do not intend to upset him in any way, not least because I understand he has a black belt in martial arts.
Let me assure the hon. Gentleman that I have been here for 10 years and what he says will in no way upset me. He will very soon become a seasoned politician with a thick skin.
The commitment to providing information was linked to the amendment because we were talking about housing associations, representations and the discussions that the Department is having. It would be useful if the Minister, when answering in writing, could provide information on the number of housing associations that have been met; the numbers that indicated that they support the policy, especially those providing specified and supported accommodation; those that specifically outlined the risk to their business case of the policy going ahead; and any representations to the Department from organisations suggesting that they would be unable to provide specified accommodation. I would be grateful to receive that information. I do not expect an answer today.
We heard about specified accommodation in great detail from my hon. Friend the Member for Oldham East and Saddleworth, and from all the organisations that made representations—I am particularly grateful to Homeless Link, St Mungo’s Broadway, Shelter and Crisis. The amendment is designed to cover shared houses, hostels, refuges and self-contained accommodation owned by registered providers, and instances where housing-related support, including financial management, is provided.
St Mungo’s Broadway operates in my constituency. Of its residents—the people that it provides support to—52% have previously been rough sleepers, 72% have mental health needs, 44% have significant physical health problems and more than one in five have experienced violence or abuse from a family member or partner. That is the client group, to use the Department’s language, that we are talking about. The total number of units provided at the moment is around 105,000. My hon. Friend the Member for Bootle mentioned Riverside, which estimates that it provides about 4,600 units of that kind of accommodation. We are not talking about a huge number, but the measure would make the provision of the services and housing more difficult for those organisations.
The Homes and Communities Agency was mentioned earlier. It has estimated that investment in supported housing results in a net cost-benefit to the public purse of £640 million per year. Does the Minister have any information about how that cost-benefit analysis has been undertaken or about the risk to that cost-benefit if housing is put at risk? The cost to local authorities of rough sleeping is roughly £8,600 per person. That does not include any cost to the Department of Health, the Ministry of Justice or the Home Office—it is just the cost to local authorities. Getting this wrong and putting accommodation for vulnerable people at risk could have knock-on costs for all taxpayers.
The Department for Work and Pensions and the Department for Communities and Local Government have commissioned a review into supported accommodation to establish a better evidence base for future funding decisions. Would the Minister give an indication of where that review is at and why the Government are not prepared to wait for the outcome of that review before pressing on with the policy?
Riverside estimates that the cumulative cost of the policy to it would be about £100 million. It has said that
“a year on year reduction in rental income would make this element”— the specified accommodation—
“of our business loss making”.
It would either have to subsidise from elsewhere or stop providing that accommodation.
St Mungo’s Broadway has said that
“the requirement to reduce rents in social housing in England by one per cent per year for four years will result in the loss of supported housing schemes for homeless and vulnerable people.”
It is saying categorically that it will be unable to provide some of the accommodation that it currently provides, and that there is a knock-on cost that the Government have not taken into account. As my hon. Friend the Member for Oldham East and Saddleworth has mentioned, St Mungo’s Broadway has said that it will lose £1.25 million by the end of this Parliament as a result of the annual rent reduction. The four housing associations that I have spoken to, which provide some of their accommodation in Bermondsey and Old Southwark, have said that collectively, the cost to them of the proposed policy would be more than £180 million during the lifetime of this Parliament alone.
The amendment is in line with the Government’s attempts to simplify the welfare and social security system. The Government talk a lot about simplification, but on this policy there is a risk of confusion because specified accommodation is exempt from universal credit and benefit cap calculations. The amendment would help to align Government policy.
The status of “specified accommodation” came into law in 2014 through the Housing Benefit and Universal Credit (Supported Accommodation) (Amendment) Regulations 2014—I do not think we need the statutory instrument number. Specified accommodation serves a different purpose from general needs accommodation; it is defined as housing where “care, support or supervision” is provided. People who live in specified accommodation have support needs that generally mean that they would find it difficult to sustain accommodation in which support was not provided. Those support needs might be related to homelessness, mental health issues, offending, domestic violence, substance abuse or any combination of those. The rationale for treating supporting housing separately from other social housing has been recognised in the Government’s decision to keep housing costs for specified accommodation out of universal credit and benefit cap calculations. There is a practical precedent, and it would be wrong to undo the steps that the Government have already taken to protect vulnerable people from those policies, which is why the amendment is much needed.
May I initially address the hon. Gentleman’s points, although I will of course write to him? As a caveat, I must say that we have lots of meetings with lots of organisations, and many have asked whether we could look at something differently. Policy is not reached purely on the basis of asking, “Do you agree with this, or don’t you?”. Instead, we make it clear that we propose to do something and that we have a Government mandate to do so, and we ask how we can do that so that we best accommodate others’ views. Matters are not clearcut, but I will certainly write to the hon. Gentleman.
The hon. Gentleman referred to the evidence review that the Government have commissioned on the specified accommodation and supported housing sectors to understand better the scale, shape and cost of the sector in England, Scotland and Wales. We hope that the findings will be available sometime next year.
I welcome the contributions to the debate, all of which have been heartfelt. I commend the hon. Member for Oldham East and Saddleworth for the measured way in which she put forward her arguments, and I have taken her points on board. I am very grateful that the amendment was selected, because it gives me the opportunity to set out what is in the Bill, and to explain why we cannot support the amendment. However, I hope that the hon. Lady will take comfort from my remarks.
We recognise that the rent reduction measures introduce a significant change to existing rent policy. We have listened to comments and concerns about the housing of vulnerable groups, and I can offer the hon. Lady a number of assurances that mean that her amendment is unnecessary. First, in the light of this new policy, we will look to align as far as possible exceptions under the new policy with those that apply under the existing rent policy for social housing. That means that we intend to except from the rent reduction requirement the types of housing that are excepted from the rent standard. Those include specialised supported accommodation, which provides support for the most vulnerable people and which is developed in partnership with councils or the health service. Also excepted will be residential care homes and nursing homes. Clause 22 gives the Secretary of State for Communities and Local Government a power to set further exceptions should they be needed, to except that accommodation from rent reductions.
Clause 23 further clarifies the cases and circumstances that regulations may provide for, which include groups of tenants and types of accommodation.
I acknowledge what the Minister is saying, but I would ask him to cast the net more widely. For example, does he recognise that, under section 117 of the Mental Health Act 1983, if accommodation cannot be continued, provision becomes much more expensive because of a statutory requirement, notwithstanding the forthcoming amendments? That provision would be much more expensive if organisations could no longer provide it. The Government are taking money from Peter to pay Paul, but Paul is much more expensive.
I take on board what the hon. Gentleman says, some of which I will address later when I talk about other forms of help, assistance and funding.
We have tabled amendments that provide the Secretary of State with powers to allow, by regulation, rent setting for new tenancies in supported housing at up to 10% above the formula. That is similar to the existing rent policy and standard practice. We believe that should help providers of supported accommodation for vulnerable people to continue to provide that important housing. We also acknowledge that there might be some circumstances in which the financial viability of a private registered provider or a local authority could be jeopardised—something the hon. Member for Bermondsey and Old Southwark mentioned. In those cases, the providers could apply to be exempt from rent reductions.
It sounds like some of what the Minister is saying is likely to be welcome. Let me reiterate that the borough of Southwark is the biggest landlord in London. In bringing forward other exemptions, would the Minister be willing to meet my local authority to ensure that the most appropriate accommodation is exempted to best effect?
I would of course be happy to meet the hon. Gentleman and anyone he wishes to bring to the meeting. What I would say is that we have been mindful of the fact that we cannot judge the situation as it is now. Where local authorities or housing associations find themselves in financial difficulty and their viability may be an issue, there are processes in place to ensure that the regulator works with them to make sure that things can be worked out. If it is felt necessary, then with the consent of the Secretary of State there can be alterations through a rent reduction, and organisations can make their case. However, we hope to set out in regulations the criteria that would be applied.
We intend to work with organisations—housing associations and local authorities—because we want to make this work. The change is not simply being imposed; we are consulting widely. The hon. Member for Oldham East and Saddleworth was right to say that there have been a number of amendments, and I repeat that that is a direct consequence of lots of organisations coming to us and saying, “Well, how about this?” We have taken what I think is a commendable decision, in that we have genuinely listened and tried to clarify what we thought we were aiming for. It was not clear enough for the people concerned, so we sought to clarify it.
It is important to get the balance right between reducing the burden on taxpayers and supporting the provision of housing for vulnerable people, as well as the balance between supporting the provision of that housing and treating fairly those older or disabled tenants who pay their own rent and who should benefit from the rent reductions, but will not do so if there is a blanket exemption.
When it comes to dealing with vulnerable older and disabled people, it is important to look at the wider context. As a Government, we are determined to protect the most vulnerable in society and help them to live independent lives, and assistance goes beyond what we are discussing today. Funding for supported housing is included in the wider settlement to councils. The Government continue to support local areas to meet their local needs by maximising funding flexibility. For example, in 2015-16, we are investing £5.3 billion in the better care fund to deliver faster and deeper integration of health and social care. This will enable councils to invest in early action to help people to live in their own homes for longer and help to prevent crisis, as well as supporting councils to work together more effectively, deliver better outcomes for less money and drive integration across all services.
The Government are also investing in specialised housing for older and disabled people through the £315 million care and support specialised housing fund. Phase 1 is expected to deliver over 4,000 homes by 2018; phase 2 was announced in February and will set aside up to £155 million in capital funding for the development of specialist housing to meet the needs of older people and adults with disabilities or known mental health issues.
My understanding is that the better care fund is entirely restricted to new projects, so it cannot help towards councils’ existing accommodation costs. Given that we know the waiting lists that councils across the country have, I am not convinced that the better care fund is the solution to the specific problem before us. At the same time, the Government are ending the independent living fund, leaving councils potentially significant new costs for providing residential care accommodation for disabled people who had previously been able to be supported in their own homes.
I repeat that we should not look at this solely in the context of what we are discussing today; there is a wider picture here, and I have given details of the other moneys available alongside the 1% reduction we are discussing.
I repeat that the Government are committed to ensuring that the most vulnerable people are protected. Statutory homelessness is lower now than in 26 of the past 30 years, at less than half the peak it reached in 2004. This Government have increased spending further to prevent homelessness, making over £500 million available to help the most vulnerable in society. That has resulted in local authorities preventing 935,000 households from becoming homeless since 2010.
There is a brilliant charity in Bermondsey called UK Homes 4 Heroes, which supports former members of the armed forces. We have seen a dramatic rise in the number of former members of our armed forces sleeping rough in London. How will this specific policy help councils and others to better support those coming out of the armed forces, to prevent them from ending up sleeping rough, given what the Minister has just said?
That issue commands huge respect across Government and on both sides of the political argument. There is discussion and debate across Government to make sure that brave men and women who are prepared to put their lives on the line for our safety and security get the best possible treatment. There are clearly still issues that need to be resolved. It is an ongoing debate. I am very aware of the situation to which the hon. Gentleman refers; there are RAF bases in my constituency, and I am only too aware of how we need to look after those people a lot better. We have made progress in the past five years, but we need to do more and should remain vigilant.
I believe that there are sufficient safeguards in place to ensure the continued financial viability of housing providers while balancing the need to support tenants who should benefit from a reduction in their rent. I urge the Opposition to withdraw the amendment.
I am grateful to the Minister for that positive response and look forward to the regulations he mentioned setting out the criteria on requests for exemptions that providers of supported housing may put to the regulator. I believe that the Minister recognises the dire situation those providers are in. I also thank my hon. Friend the Member for Bermondsey and Old Southwark, who provided us with the wider context about, for example, how the end of the independent living fund will affect local authorities’ provision for supported accommodation; that is very relevant.
I differ from the Minister in my interpretation of the homelessness situation at the moment. We can trade off figures, which I do not think is helpful. We need to move beyond that. I have the Government figures here, and in the past five years, for example, there has been an 840% increase in the number of families with children who have been declared homeless and are living in bed-and-breakfast accommodation. The situation is certainly not rosy. We have anecdotal evidence of that ourselves. However, I beg to ask leave to withdraw the amendment.