Not having expertise in housing, my attention was drawn to the housing benefit pathfinders for three reasons when they were announced in 2002. First, housing benefit issues featured in my Redcar constituency surgeries. The system appeared to be complex and administered slowly, and people were getting into trouble because things were taking so long. However, there is no particular reason to think that Redcar council is poor at dealing with such matters.
Secondly, I thought of what I shall call the impact of the system on South Bank—a wonderful community in the old-fashioned sense in my constituency. Everyone knows each other and, although they might not all love each other, there is a strong sense of belonging to the town. Victorian terraces were built adjacent to a nearby steelworks, which has long since closed down and been demolished, although I am happy to say that we still have a strong steel industry in the constituency. When someone dies or a void occurs for one reason or another in those Victorian terraces—people might move out of South Bank to get off-street parking and a garden, which, one guesses, are major features missing from such areas—that void is hard to fill. There is no obvious market for those houses.
As the voids increase in number, the houses are bought in job lots by absent landlords. People in Redcar always say that the landlords live in London, from where all evil emanates. The houses are let on the sole condition that those who rent them are on housing benefit. The landlords have never seen the houses, let alone ever been to South Bank. They have no intention of maintaining the property and no interest in the conduct of the tenant, who often, since he is lives in a hard-to-fill area, has probably made himself less than welcome elsewhere. No good from that syndrome comes to the people of that good old-fashioned community in South Bank.
It is slightly ironic and very odd that the remoteness of the method of paying for rented accommodation—in housing benefit—seems to contribute to that. The money is paid by Redcar council and goes to London, many miles away, and neither the landlord nor the tenant has any interest in or connection with the community. I accept that the argument is slightly overextended, but I began to perceive housing benefit and how it is paid as capable of damaging such a community.
The third reason for my attention being drawn to the project is that Middlesbrough was invited to be a pathfinder. Although hon. Members might think that it is famous for its football club, its real claim to fame is that it is next door to Redcar. Middlesbrough declined that opportunity, because the same voids exist on both sides of the border between Redcar and Middlesbrough, and it was feared that, if people in Middlesbrough received generous amounts of money in their hands, the effect on the rented market in Redcar could be damaging. There would have been a flight of tenants to the pathfinder area, so, for that reason, Middlesbrough—and, for all I know, others—declined that opportunity.
Although I followed that argument, I was sorry that I had no closer prospect of seeing how such a pilot scheme would work. However, others have been monitoring these schemes and it is possible to see some emerging passions. [Interruption.] I apologise, I mean patterns. There is not much passion on a wintry December morning in Westminster Hall.
I should say for the sake of clarity that I am not a housing expert, but let me explain how the new local housing allowances work. Instead of an individual valuation being done on each property, the allowances are paid on the basis of the average rent in a broad rental market area. The average rent is calculated by the Rent Service—as I understand it, on the basis that each broad rental market area has at least two distinct residential areas. It takes off the lowest and the highest rents, and averages out the remaining rents. That is reviewed monthly and, in greater depth, quarterly.
My hon. and learned Friend is right to explain the notional way of calculating the rent for an area, but is she surprised to know that in a good number of areas fewer than 10 per cent. of available houses are available at the standard rent or lower? Sometimes the calculations are clearly adrift of what is happening in the local housing market.
I imagine that my hon. Friend says that from his experience of his own locality, which he may be going to tell us more about. From the reports that I have had an opportunity to read, I think that the picture is variable. Sometimes the local housing allowance is generous and people can move up or pocket some of it; sometimes it is insufficient. I accept that it is a function of averaging that that is likely to happen, but it is important that there is sufficient fine tuning so that no one is disadvantaged.
The next characteristic of the local housing allowance is that it is paid to the tenant, not the landlord. As I have just said, if it is higher than the rent, the tenant can either keep it or move to a better property; if it is lower, he either has to make the rent up or move to what I suppose one would have to call a more appropriate property. The other point about the local housing allowance is that the amount is published, so people know what they will get in a particular area.
The primary point of the scheme is to try to drive personal responsibility and financial inclusion. That must be said to have worked in the pilot areas. According to Citizens Advice, 93 per cent. of people have now opened bank accounts, although not without some difficulties in the first instance and some continuing difficulties. A further purpose is to remove any stigma attached to being a recipient of housing benefit, whose rent was paid for as a sort of welfare case. Now individuals have their own money in their pocket. The scheme also must enhance flexibility in the sense that if a person were offered a job somewhere, historically they would have had more difficulty in moving than will be permitted by having the local housing allowance in their pocket.
Mine is not a pathfinder area, but I observe what is happening elsewhere. My hon. and learned Friend will acknowledge that, despite the successes, there are a fair number of occasions and examples involving people on a low income using housing benefit payments to cover other bills, instead of prioritising rent payments. As a consequence, some landlords—corporate landlords of the sort that she may be suggesting operate in South Bank—are withdrawing from this market.
Yes, I am aware that there have been some withdrawals and that there might be some potential withdrawals. I imagine that the situation with vulnerable tenants would be worse if we were considering this system in the social rented sector, which I will come to in due course. I acknowledge that what my hon. Friend refers to has been something of a feature, although things have not been as bad as was expected at first. The point is that if the money is no longer paid directly to the landlord, the landlord has less guarantee of its receipt and less certainty that his income stream will continue uninterrupted.
The pilot schemes have been observed by the Department for Work and Pensions, Shelter, to which I am indebted for its report "On the right path?", and Citizens Advice—I have had a chance to read its report, "Early days". I am also indebted to the National Landlords Association, with which I had a conversation earlier this week. It represents about 7,500, mainly smaller, landlords. Of course, we are considering the pilot schemes about half way through the two years—they have been running for a year.
The first thing that drew my attention to the schemes was the issue of complexity in processing and the delays in getting housing benefit. It appears that, broadly speaking, that has improved, although there are some staggering figures. In Edinburgh, it takes 38 days less to process a local housing allowance application than it took to process a housing benefit application before the pilots. In Leeds, however, processing seems to be taking 35 days more.
There are some extraordinary results, but, by and large, it seems that the processing is being done more quickly. That is significant because delay can lead to debt and bank charges. It is important to have a bank account so that the money can be paid in and the direct debit can go out. That complexity needs addressing. For example, Post Office card accounts cannot have direct debits, so one has to get a proper bank account, although identification is sometimes a difficulty. It is a key point that the administration of that benefit should be done quickly, and there are signs that it has improved.
I am told by the National Landlords Association that landlords tend to make a business decision about whether to rent in the housing benefit sector. If they decide to do so, they accept that they will get the rent monthly in arrears, not up front. However, they think it will be paid steadily once they have started to receive it. Clearly, therefore, processing delays will now become more of a factor in blocking landlords' willingness to go along with housing benefit tenants, because landlords have no ultimate guarantee. That guarantee was their payback for waiting for processing delays to work their way through in the first place.
There is a default position: if a tenant is eight weeks in arrears with their local housing allowance paying the rent, it is resolved back to being paid into the hands of the landlord rather than those of the tenant. I have referred to the extent to which Leeds has increased the processing time—on average, it takes 69 days. That is very nearly 10 weeks, which means that, theoretically, anyone who applies for local housing allowance in Leeds will, by not having paid their eight weeks' rent, default before they even start. That is not a good way to start a new relationship with a landlord. That is worrying and it points up the fact that delays in administration must be conquered, although they are going in the right direction.
Next year, as a consequence of the Housing Act 2004, there will be one or more tenancy deposit schemes, which I imagine will become more important, granted that payment is not so easily guaranteed under local housing allowances. My understanding from Shelter is that the demand for tenancy deposits has increased from 66 to 75 per cent., presumably so that landlords might feel more reassured that at least that money is available. If the fear is of a flight of landlords—granted the lack of guarantee in the local housing allowance—it is important that tenancy deposit schemes are up and running quickly to reassure landlords and forestall any flight from the housing benefit sector.
A tenancy deposit scheme does not make it any easier for a person who does not have any money to find the deposit, but I am clear about the fact that the homelessness directorate of the Office of the Deputy Prime Minister is encouraging local authorities to fund deposit guarantee schemes. They will be important in giving people the flexibility to move, following their local housing allowance. That will also give some support and encouragement to landlords. It is important to process quicker, and that the guarantees from a deposit scheme come into play fairly quickly.
There is already some evidence of flight by landlords from renting to the housing benefit sector. Shelter noted a slight upward trend in landlords advertising, "No tenants on housing benefit." Its deeper research showed that there are more landlords who, although they do not advertise that they will not have people on housing benefit, do not take on such applicants. One landlord in four is not happy to take someone on housing benefit, apparently, but Shelter did not register that as representing a significant increase in the rate of refusal of housing benefit tenants as compared with the situation before the introduction of the local housing allowance.
The National Landlords Association says that there has been no flight from letting to housing benefit tenants within the organisation. However, Department for Work and Pensions research, published on
I want to discuss another element of that. Something that might help to resist further flight by landlords is the injection of better choice into how local housing allowance can be used. At the moment, it must be paid to the tenant and there is no real choice of having it paid direct to the landlord, although there is the default position that I mentioned: if someone has not paid their rent for eight weeks, it is automatically redirected to the landlord.
There is a test of vulnerability, however, and if someone is vulnerable due to some external factor, or has a history of not paying rent or already has debt, the money can be paid direct to the landlord if the local authority so certifies. However, that removes an element of choice, and because part of the point of the scheme is to give people choice and to make them exercise responsibility over their finances, it seems incompatible that tenants do not have the choice of having money paid direct from the local authority to the landlord. Perhaps that should be looked at.
Of course, tenants must be protected from there being conditions in the leasing agreement requiring their rent to be paid direct, and we must resist any prospect of landlords pressurising tenants into having the rent paid direct, but it is likely that that could be achieved, perhaps through a balancing mechanism established with the local authority. We picture landlords as dreadful people, but that is often completely false, and tenants and landlords have a close relationship and are on good terms. The ability to guarantee the landlord the rent on the basis of personal choice, sanctioned by the local authority, might further empower tenants and, in addition, give landlords some guarantee and perhaps impede any further flight.
I understand that a growing sector of landlordism these days consists of relatively young people who buy a property to let, considering it their security, rather than paying into a pension fund. In such circumstances, if there is no guarantee under the local housing allowance that the rental income will be paid regularly, the landlord's mortgage may be undermined and they might be put in real difficulty.
At the moment, if someone cannot pay rent regularly because they are vulnerable, it can be paid direct. If someone will not pay, or just does not want to pay, there is no way of having rent paid direct to the landlord. I am indebted to the Library for putting together a press pack for this debate, which contains a good deal of information. It refers in particular to the Grimsby area, where some people allegedly spent their local housing allowance on drugs, beer or holidays in Spain, although I do not know why there is a reference to Spain in particular. Such things will happen from time to time, and tenants are more vulnerable if they are susceptible to temptation of that sort, but if payments were made direct, at least they would not be without a roof when they returned from Spain. The element of choice needs to be looked at and perhaps adjusted in the mutual interest of tenants and landlords.
Rent can be paid direct now if someone proves their own vulnerability, which is a curious notion. It is self-evident that the most vulnerable people will be least able to demonstrate their vulnerability. Requiring someone who is vulnerable but completely compos mentis and together to go to their local authority to try to prove that they are sufficient of a fool that they cannot manage their own rent is also curious. The test of vulnerability is odd and needs to be reconfigured.
There is a report in the Citizens Advice research on the project of someone who wanted to have her rent paid direct and to admit that she was vulnerable because, historically, she had been unable to manage her finances well. However, she was too afraid to do that because she thought that social services might use it as leverage and a reason to take her child away. One can imagine how such concern could arise. That shows that better criteria are necessary if rent is to be paid direct, if that is what people want and it is in everybody's interest.
The new system does not appear to have caused significant rent inflation, although it seems fairly rational to say that there should be some rent inflation if the local housing allowance is worked out as the average rental and is higher than rents that are being demanded. Some landlords have increased their rents to local housing allowance level, but there do not seem to have been significant affordability issues for tenants—although I hear what my hon. Friend David Taylor says about a pathfinder he observed—and, according to the reports, homelessness does not appear to have increased. There has been a 93 per cent. take-up of bank accounts, which must be a good step towards financial inclusion for a lot of formerly excluded people.
This scheme has been well resourced. The local housing allowances have been decent and, in many cases, the pathfinders have also involved contracts with advice agencies such as citizens advice bureaux—smoothing the way with landlords, explaining why there are delays, and helping applicants to get their processing done and to get a bank account. Without that, it seems highly likely that the scheme would have been significantly less successful.
With those few adjustments, the scheme is broadly to be welcomed. I am interested to know what the Minister and other hon. Members think of such possible ways of preventing a disastrous flight from the supply of housing. Over time, I hope, people will become more responsible with their money due to this mechanism, although I do not know how the problem will evolve.
The sector involves some 500,000 people on housing benefit; the social rented sector involves another 3.5 million people. I understand that there is an intention at least to consult on, or perhaps to pilot, rolling out local housing allowances in the social rented sector. I am interested to hear what the Minister has to say, because there is a much higher proportion of vulnerable people in the social rented sector. Pensioners, for example, are vulnerable for a range of reasons—it is not that they are profligate, particularly—and as people age and become weaker and less able to manage their affairs, it is key that they should not fall into debt for any such reason.
There are a lot of vulnerable people generally in the social rented sector, and major landlords in it fear that the lack of a guarantee could compromise rental income streams for registered social landlords, which would increase borrowing costs over the long term and perhaps cause difficulty. There may be stronger reservations about rolling out the scheme into the social rented sector, and I would be pleased to know what others think.
In my much-loved South Bank in the Redcar constituency, a lot of people who own houses are poor none the less, but they get no significant support with their housing costs. They certainly do not get such a benefit. Is not that an anomaly, particularly in such a setting, where people do not have a great deal of capital value protecting them? In derelict housing market areas such as the one I have described, capital values just collapse, so it is not as if people have property that they could realise in order to support themselves.
I broadly welcome the local housing allowances. I hope that they will be rolled out soon, and that Middlesbrough and Redcar will be included. For the reason that Middlesbrough chose not to become a participant in a pathfinder, it is important that there is a systematic way of rolling the schemes out so that availability in one local authority does not damage the housing market in an adjacent authority.
We are grateful to Vera Baird for raising this subject this morning. She said that she is not a housing expert, but, if I may say so, she did jolly well. I am not a housing expert, but as I was a Minister with responsibility for housing for 10 years, I was one—or I certainly hope that I was. It is residual memories of that experience that prompted my interest in this morning's debate.
The hon. and learned Member for Redcar is right to raise this subject, because many in this Chamber know that, in the early 1990s, an apparently innocuous change to housing benefit was passed and was implemented on
This debate is being responded to by a Minister from the Department for Work and Pensions, whose presence I welcome. There is inevitably some tension between the DWP's view and that of Housing Ministers when it comes to housing policy, particularly when the payment for housing policy comes not from the Housing Minister's budget but from someone else's. I hope that the Minister will be able to say that he speaks as one with his colleagues in the Office of the Deputy Prime Minister, who have responsibilities for housing policy. There have been tensions in the past.
I want to pick up a point that the hon. and learned Lady raised at the end of her remarks about the Government's intention to roll this scheme out to registered social landlords. The arguments for doing so are weaker than they are in relation to the private rented sector, because extortionate rents are not being underpinned and there is no need to require people to shop around.
I hope that the Minister will consult those who provide the funding for housing associations—the Council of Mortgage Lenders and other institutions. They are interested in the cash flow of housing associations, to whom they advance funds. If, for the sake of argument, there was evidence that the scheme might slow down the cash flow and have some impact on bad debts, that would not stop them lending to housing associations, but it would affect the rate at which that lending was made. That would in turn have an impact on the output of social housing.
The Joseph Rowntree Foundation pointed out last week that fewer new social houses are currently being built than at any time since the 1920s. I do not think anybody would want to introduce a policy that further reduced the supply of social rented housing. I hope that the Minister will give an assurance that if the Government are to roll out the scheme to the RSLs, they will consult mortgage lenders and others to ensure that it does not damage the supply of such private rented housing.
I have had informal consultations with the housing association in my constituency, Testway, which is a large-scale voluntary transfer organisation. I discussed the matter with tenants and the housing association. They are concerned about the impact if the policy were to be rolled out to social landlords. I agree with what the hon. and learned Lady just said about the potential disadvantages if that were to be carried out.
I mentioned a moment ago that the policy had something in common with the community charge. Before the community charge was rolled out in England, which, I hasten to say, I voted against, those on low incomes had 100 per cent. of their rates paid direct to the local authority. They were not troubled by the rates. When the community charge was introduced, they were asked to pay roughly 10 per cent. They got that through their benefit and what they received was based on the average.
The theory was that that would act as an incentive to vote for prudent local authorities, so that the average that they received left them in pocket if they had a prudent local authority. The policy was not a thundering success. It failed mainly because it was regressive. People should not forget the administrative chaos that accompanied the introduction of the community charge. The money was paid through their benefit to people on low incomes—they got their 10 per cent.—but it did not find its way to the local authority, because it had other priorities and there were lots of bad debts. There is a risk of that particular feature of the community charge being replicated in this particular social policy unless precautions are taken.
Another point I want to make is that if one listens to the policy of the Government, one would think they were keen on choice. In their education and health policies, parents' choice and patients' choice are key elements. However, this policy removes choice, as the hon. and learned Lady said. People will have no choice. Instead of people opting to have their rent paid directly to their landlord, the money will be given to them, unless they can prove that they are vulnerable. To that extent, this sits uneasily with the vocabulary of the Government, which is pro-choice, because this is a social reform that removes choice.
The hon. and learned Lady also mentioned the potential impact on the supply of private rented housing. One of the housing policy successes of the past 15 years has been the revival in private renting. There has been all-party agreement on the tenure form—the assured tenancy. The percentage of housing stock that is privately rented has shot up; speaking from memory, I would say that it has risen from about 5 per cent. to well into double figures. It would be sad if that revival were arrested because a change in the way housing benefit was paid led to private landlords withdrawing from the market, particularly in respect of the supply of houses to those on low incomes who for whatever reason are not a priority with local authorities, but who can currently get good quality accommodation from the private rented sector.
The community charge ended with the downfall of the then Prime Minister. I do not know whether the Secretary of State for Work and Pensions is hatching a sinister plot to bring forward the departure of the present Prime Minister by steaming ahead with a social policy that will have the same outcome, but he and his colleagues would be well advised to think it through before they steam ahead.
My final point comes from helpful analysis by the citizens advice bureaux. They made a clear recommendation about the rate for the under-25s, who have a lower rate in respect of entitlement. Is the Minister minded to accept that recommendation? Does he smile sympathetically on it?
To pick up a point of the hon. and learned Lady, a lot of resources went into the pathfinders. I expect that that helped to minimise the damaging fallout from the policy. Unless the same amount of resources is invested in the roll-out of this scheme, and unless the allowances are pitched at a fairly generous rate, the outcome now will be worse than in the pathfinders. If the Treasury has anything to do with this—I am sure it will—it will be anxious that the average rate is not pitched at too high a level. There will also be some drift, as the hon. and learned Lady said, and in respect of local rents what is the average will become the floor. What is the Minister's reaction to the CABs' sensible recommendations? Will he give an assurance that if and when this scheme is rolled out, the CABs' recommendations will be an integral part of the roll-out policy?
I thank my hon. and learned Friend Vera Baird for securing the debate, and I am grateful for being allowed to speak briefly in it. Her constituency is next door but one to mine—just a brief hop over the Tees—and the experiences of her constituents in Redcar are similar to those of mine in Hartlepool. I want to touch on two areas that she mentioned—the scheme's effect on antisocial behaviour, and the need for financial inclusion and the subsequent education of people to help to promote that—although I will not be able to deal with them with her assurance and eloquence.
The housing benefit pathfinder scheme promotes fairness, simplicity and transparency in the benefit system. It promotes financial responsibility for the tenant on housing benefit, but—this is crucial—also imposes a degree of responsibility on the landlord, which the traditional housing benefit does not. There is a requirement under the pathfinder scheme to make the landlord, for his or her own financial gain, ensure that the housing benefit has been received from the tenant and to chase the matter up if the rent has not been paid.
In my constituency, as in Redcar and many other northern industrial towns, decent areas have been destroyed by absentee landlords who do not know where Hartlepool is, let alone where in the town their particular property is located. Those landlords could not care less about the social repercussions of putting—let me be frank—antisocial scum in an area, thereby blighting the lives of decent residents.
I hold weekly constituency surgeries. Last Friday, a couple came to see me. They had lived in their property for some 40 years; they had raised their children there, and they now enjoyed their grandchildren coming to visit. In the past two years, private absentee landlords—from where, I am not certain, although I am tempted to say "that there London"—have bought the properties on either side of the couple's house. Now, day after day and night after night, this decent man and woman have to put up with 24-hour drug-dealing, noise and threats of violence. Accompanying that is the terrifying ordeal of their neighbour banging the walls all night and threatening to kill them, although they have not even met.
This couple now want to move out of their home of 40 years, because they are frightened of possible repercussions should they complain about these antisocial tenants. They are not the only ones. I could mention a range of areas in the centre of Hartlepool, populated by good people who wish to improve their community by participating in such groups as the West End and Hartwell residents' associations, but whose areas are being damaged when a thoughtless and often absentee landlord puts—again, let me be frank—all manner of yobs into their property. That is not right.
I passionately believe that landlords have a responsibility to ensure that their tenants respect their neighbours and the community in which their property is rented. I want the pathfinder scheme to be extended to my constituency, so that those committing criminal and antisocial behaviour get it into their heads that they cannot go around taking the mick out of decent people—or worse, making those people fear for their personal safety—but that if they do, they stand a good chance of being evicted.
Should the landlord be forced to take a greater role and assume more responsibility for getting the rent, that will have a positive impact. I know that residents in those areas of Hartlepool that I mentioned would like the landlord to be required to visit their property to receive rent, checking that the property is in good repair and that no antisocial behaviour is taking place. I accept that that may be impractical in many cases, but I see benefits to the community even when a direct debit or standing order is used. The tenant can stop that payment if financial resources are tight. The landlord therefore needs to maintain some awareness of the tenant and his or her behaviour, which has not previously been the case.
I want to convey that main point, but will finish by saying that we need to provide additional financial education for tenants participating in the pathfinder scheme. The aims of the local housing allowance, as outlined by the Government, are generally to be supported. The scheme simplifies complex housing benefit regulations and, importantly, provides an element of fairness, which had hitherto been lacking.
Tenants in the same area and in similar circumstances, for example, receive the same amount of housing benefit based on a set amount, rather than the amount of rent paid. Crucially, the tenant in receipt of the reformed local housing allowance is also provided with some personal responsibility. It should be made clear that the payment that enables a person to live in a property is not plucked out of fresh air, but comes with a degree of financial control and responsibility. That should help the person, where applicable, to make the transition away from benefits altogether and into employment, which is good for the individual and good for the community.
I am gladdened by the findings in the DWP evaluation, which show that most pathfinder claimants have a bank account or have been able to open one. Overall, six in 10 claimants who are paid housing benefit directly under the local housing allowance are paid via an automatic system of some sort. The pathfinder evaluation also demonstrates impressive financial control from tenants: across all pathfinder schemes, nine out of 10 remained up to date with their rent for about 10 months.
Nevertheless, I wonder whether the evaluation findings contradict all other known evidence regarding financial inclusion. As my hon. and learned Friend pointed out, being out of work and on benefits enormously increases the risk of financial exclusion. Some 25 per cent. of those people—at the poorest end of society—have no access to a current account. I was a member of the Consumer Credit Bill Standing Committee, and I am aware that the poorest in society are, for example, excluded from discounts for direct debit payments because they have no bank account, while affordable short-term credit is replaced by money sharks offering interest rates of 100 or even 1,000 per cent.
Being financially excluded can cost, and the most deprived pay the price. That is why there is a genuine need for substantial financial education for those tenants participating in the pathfinder scheme to ensure that the risk of financial exclusion and deprivation is minimised. In general, I welcome the pathfinder scheme. It is fair, it simplifies the system, and it promotes responsibility on the part of the landlord and the tenant. Despite the teething troubles that my hon. and learned Friend so eloquently pointed out, I am keen for the scheme to be implemented in Hartlepool as soon as possible.
I congratulate Vera Baird on securing this debate on such an important subject. This is a good time to have this debate, given that at one stage we had expected the Government by now to have published in the form of a Bill proposals for the roll-out of housing benefit reform. Perhaps it is as well that that has been delayed, as it gives a chance for greater reflection on the results from the pathfinder areas and on the issues that Members have raised. However, I would like the Minister to give us some idea as to when the Government might expect to introduce proposals for reform of housing benefit to be rolled out on a national basis. Can we expect a Bill in the near future? I also hope that the Minister will assure the House that the views expressed in the debate will be taken into account in the drafting of any future Bill.
As Members have said, the proposal to roll out the local housing allowance is based on a number of perceived problems with the current system of housing benefit. The LHA is intended to tackle lack of fairness and choice, complexity, disincentives to work and the issue of encouraging claimants to take more personal responsibility—as Mr. Wright mentioned. They are aims that are worth considering in more detail.
The first of them is fairness and choice. The Department for Work and Pensions suggests that paying different amounts to different people in the same area is unfair. The LHA allows choice in terms of both the quality and the price of accommodation. However, a Shelter report found that one of the major barriers to claimants finding good, affordable accommodation is the shortage of suitable housing overall—that is certainly the experience in my constituency. In areas with a large and liquid housing market where there is plenty of supply and choice, the shopping around benefit might prove to be significant.
A couple of months ago, I visited the pathfinder pilot area in Lewisham to talk to the people who had been involved in rolling that out there, in order to find out how well it had worked. In Lewisham, there seemed to be some evidence that the shopping around benefit was being maintained. However, I am concerned that in rural areas and small communities that benefit might prove to be more of an illusion than a reality. Therefore, greater scrutiny of results, especially from the Argyll and Bute pathfinder area, would be useful. The LHA might be fair and allow greater choice in principle, but that will not happen in many areas without a greater supply of good, affordable housing.
Another fairness issue is the single room rent for young people. Shelter has reported that the SRR is a factor in homelessness among young people. I concur with that. The Minister recently answered a parliamentary question on the matter. On the most recent figures, approximately 12,000 people receive the SRR, so the costs of providing the full housing benefit—or the LHA, in the future—to claimants of all ages would not be too great, and that would enable younger people in particular to be dealt with fairly. I would be interested to hear the Minister's reflections on that point.
The hon. Gentleman mentioned Shelter with regard to this restriction. He will also know that the CAB has said that it is regrettable that the research evaluating the impact of the LHA to date has not said anything about the impact on under-25s. It would be useful if the Department published research on that. Does he agree with that view, which is evidently a sensible one?
I agree with that point. Publication of more research on the impact of the single room rent on under-25s and how it has worked in the pathfinder areas would be useful. It is an important part of the debate and one that the Bill on reforming housing benefit should take forward, to provide greater fairness for under-25s.
The hon. and learned Member for Redcar also referred to deposit schemes—schemes to support people making deposits. Raising a deposit can be a major barrier to people moving into rented accommodation. I suppose that part of the idea behind the LHA is that the landlord need not necessarily know that someone is on housing benefit, but if they are not able to raise a deposit, that is clearly impossible. Supporting or encouraging rent deposit schemes is a sensible way forward, and I was pleased to hear the hon. and learned Lady's comments about the ODPM encouraging such schemes. I would be grateful if the Minister would reinforce or amplify that point.
On complexity, it seems that the LHA can speed up the processing time for private tenant claims. However, it is also the case—this seemed to be confirmed by the evidence that we heard in Lewisham—that the time taken to make checks on vulnerability can, for those people who seem to have the status of being vulnerable or who suggest that they are vulnerable, counteract the savings in assessment time.
The DWP evaluation found no significant improvement on error and fraud as a result of the change to the LHA. Rent-based fraud seems the most likely to be tackled, but claimants keep the difference between the LHA and their rent if there is any. Savings, in that sense, are unlikely. We welcome the announcement in this week's pre-Budget report that more funding will be provided to reduce housing benefit fraud by reviewing or visiting at least 50 per cent. of claimants each year. Will the Minister tell us what the overall funds are? When will benefit authorities find out how much they are likely to get in future years so that they can start planning how to undertake this work?
A further question concerns how difficult it is for claimants to understand what they will receive. The LHA should make that simpler, although there is still a degree of complexity to do with the number of rooms, which particular broad market area someone lives in and so on. I welcome reports from the pathfinder authorities suggesting that claimants find understanding their likely entitlement much easier.
The question of the incentives to work or otherwise is an important one. It crosses the whole gamut of welfare and benefit reform that the Government are proposing. Removing disincentives to work and increasing incentives to work through the benefits system is an important and worthwhile objective. The DWP website suggests:
"Greater certainty about what in-work benefit they could receive is expected to help tenants bridge the gap between being out of work and taking a job."
So far, there is little evidence in support of the DWP's claim in the evaluation from the pathfinder areas.
One of the major disincentives in the housing benefit and council tax benefit system is the tapers: there is a 65 per cent. taper for housing benefit and a 20 per cent. taper for council tax benefit, leading to an overall benefit withdrawal rate of 85 per cent. In my experience, from people coming to my surgeries, the rate at which those benefits are withdrawn acts as a significant disincentive to work. Will the Minister be addressing that issue in any proposals to be introduced?
Encouraging people to take more personal responsibility for their own finances and for paying their own rent is a laudable objective. Clearly, as has been said, the ending of direct payments to landlords in the vast majority of cases, except where vulnerability is an issue, is perhaps the most controversial part of the reforms. It is opposed by several organisations. In Lewisham, there has been a 20 per cent. increase in the amount of unrecovered overpayments due to direct payments to landlords. Although increasing responsibility and financial management skills is an excellent aim, which we support, it is still unclear whether the pros outweigh the cons in this scheme.
Some pathfinder boroughs are accepting any vulnerability requests without making checks, as a way of speeding up the processing of vulnerability claims. That may well be the best approach for authorities to adopt in practice, but I would be grateful if the Minister could describe the rules for the best way of dealing with vulnerability claims in practice.
I want to raise one or two other issues, first with regard to the broad rental market areas. There are concerns in some areas that it is still a blunt tool, and that more account must be taken of local variations. So far in the pathfinder areas, we have not seen any sudden increase in rents to match local housing allowance levels, which was one of the fears. However, there is evidence that some stakeholders see signs of it happening through a creeping effect. Given that the LHA is based on market rents, the effect could be to push rents and the LHA higher over time. I hope that that will be carefully monitored. The Minister may want to say something about it.
As the hon. and learned Member for Redcar said, a number of private landlords were reported in the Department's evaluation as saying that they should take on fewer housing benefit claimants, believing that payments to tenants under the LHA would lead to rent arrears. It is worth noting that that is the landlords' perception; there is not a great deal of evidence to support it. However, following a national roll-out of the LHA, what action does the Minister propose to take to prevent that response from landlords?
There is an issue about the high level of failure by local authorities to make interim payments within 14 days. That failure is unfair on claimants, and it can lead to debt and homelessness. The Government must ensure that there is sufficient sanction in place for those authorities that fail to make interim payments, so that people are not left for a long period—perhaps while a vulnerability claim is being assessed—without any payment whatever.
The question of the funding of the roll-out of the LHA has also been raised. Shelter suggested that the £180 million allocated by the Treasury for national roll-out is not enough. Will the Minister confirm that that figure is correct? Will he also describe how that funding will compare with that received by the pathfinder authorities, once it is shared throughout the country? Was the figure derived from the DWP's evaluation of costs required by pathfinder authorities, or was it just what could be squeezed out of the Treasury?
Sir George Young made the point about the conflicting priorities of the Treasury and the Department. If the roll-out happens nationally, it will be important to ensure that funding is made available to deal with some of the problems that have arisen, and not least to continue the funding for advice services. They have been running with citizens advice bureaux and so on in pathfinder areas, and in Lewisham and in other areas they have been valuable.
Will the Minister confirm that although there are no firm plans to roll-out the LHA to the social rented sector throughout the country, consideration is being given to a pilot? Will he confirm that there will be no roll-out to the social rented sector throughout the country without further primary legislation or a debate and a vote in the House of Commons? That is clearly a matter of concern to housing associations and other landlords in the social rented sector.
I understand what the hon. Gentleman is saying, but what would be the point in piloting the scheme unless there was a plan to roll it out?
The purpose of a pilot is to evaluate a proposal to see whether it works. My point is not that the scheme should not be rolled out, but that there should be no automatic provision for its roll-out without a further debate and vote in the House of Commons. Only in that way can those authorities and the many thousands of tenants in the social rented sector be assured that the scheme will not be rolled out for cost-cutting purposes—for reasons to do with the Treasury, which the right hon. Gentleman described—when the pilot showed that in that sector the scheme was not sufficiently beneficial, given the greater level of vulnerability that is often found among tenants in the social rented sector.
In conclusion, it is clear that the system of housing benefit needs reform, but the assessment of the pathfinder areas shows some pros and cons. It must be clear how a housing benefit reform Bill will improve on the pathfinder pilots so that a national roll-out is worth the cost and disruption that will be caused to local authorities. I hope that it will also address problems such as the single room rent, which I have referred to, the work disincentives in the current housing benefit system and the failure to issue interim payments. I look forward to the Minister's response.
Mr. Gale, it is a pleasure to see you in the Chair. The House owes a debt to Vera Baird for introducing this timely debate on the pathfinders. She said at the start that she was not an expert and my right hon. Friend Sir George Young said that he was not either, but, in a positive way, they both touched on many key points that I want to return to. Mr. Wright made a point that we will all sympathise with about antisocial tenants. Given that the pathfinder scheme has not been extended to the social sector so far, I am not clear exactly what the pathfinders do or have done to address that problem. Perhaps the Minister could be helpful and tell us the Department's thinking on the Prime Minister's scheme to, as I understand it, withdraw housing benefit from antisocial tenants, which we heard a great deal about in the previous Parliament.
The hon. and learned Member for Redcar began by drawing attention to a kind of irony in that Middlesbrough is best known for being on the doorstep of Redcar and she was on the doorstep of a pathfinder that collapsed. I think that she said that for all she knew there may be others. As far as I know, Middlesbrough is the only pilot that collapsed.
It did not collapse. Middlesbrough council decided that it did not want to have a pathfinder because of the knock-on damaging effect that it might have on rented accommodation in Redcar next door, where people did not have as much money in their pockets.
It sounds pretty much like a collapse to me, and the reason for it is the one that the hon. and learned Lady gave. There were worries that tenants would come in from outside to take advantage of the relatively favourable terms of the scheme. That alerts us to a point that was made by my right hon. Friend the Member for North-West Hampshire, which is that, in all areas of legislation, as many of us know from other areas, there is such a thing as the law of unintended consequences. The pathfinders must be examined extremely carefully because—I do not say this in an unhelpful spirit—they may bring about unexpected consequences.
It seems reasonable in practice to try to simplify the system by paying a standard allowance that will allow tenants to shop around in search of rents. That is certainly the view that we expressed when the pilots were first announced. As the Minister knows, Beveridge called a chapter of his report "The Problem of Rent" and debated whether rents should be subsidised individually or whether there should be standard allowances. In fact, he came down in favour of standard allowances, so the Government are trying to get back to the original spirit of Beveridge. However, theory is only theory. What really matters is the practice and that is where the evidence from the pathfinders is a bit ambiguous.
The Minister will have read the Citizens Advice report, "Early days: CAB evidence on the Local Housing Allowance", which the hon. and learned Member for Redcar and others alluded to. Citizens Advice states that the
"report raises a number of concerns which must be addressed before the reforms are rolled out nationally".
Shelter is concerned about aspects of the new scheme and the National Landlords Association has specific reservations. Many of those reservations have been aired this morning, but perhaps only one is overwhelming. It falls into two interlocking parts.
First, if the scheme were rolled out nationally, some vulnerable tenants would spend some of the money that is paid up front, as the hon. and learned Member for Redcar said. Landlords would not get their money, legal action and homelessness would follow, and landlords would withdraw property from the market.
Secondly, that outcome could be avoided if the Government were to replicate the apparently favourable terms of the local housing allowances: generous standard rates and the provision of, for example, money advice services, which have been a feature of local housing allowances. The problem for the Department and the Minister is that that might be too expensive for the Treasury to bear. That is the dilemma with which the Minister is wrestling.
The Citizens Advice report states:
"We question whether the procedure is sufficiently robust to cope with a national roll out", and a previous Secretary of State, Mr. Blunkett, was sceptical about the practicality of rolling out the pathfinders for broadly those reasons.
We were promised in the Queen's Speech in May
"legislation to reform support for housing costs."—[Hansard, House of Lords, 17 May 2005; Vol. 672, c. 5.]
We need to step back for a moment and look at what is in the Department's in-tray. There is the debate about the Turner report. Clearly, there is disagreement between Turner and the Department, and the Treasury. There is the debate about incapacity benefit. The Prime Minister's office put forward eyebrow-raising proposals about vouchers, which, apparently, are being resisted by the Department. There is the debate about the Child Support Agency, which the Prime Minister has said is unsustainable in its present form. The Department has a lot in its in-tray.
How big a priority for the Department is rolling out pathfinders, and to what degree does it think that such a roll-out is practicable? I hope that the Minister can give some guidance about that. Do the Government plan to introduce a Bill shortly after the Christmas recess, or have they concluded that more evidence from the pathfinders is necessary? One point that it would be helpful for the Minister to clear up is whether any research will be done on the second wave of pathfinders, or whether results from the first wave will continue to be evaluated.
The Department's initial research on the impact of the LHA in the pathfinder authorities was overwhelmingly positive, but Shelter's monitoring of the impact suggests that the evidence is more mixed. Does the Minister agree with that assessment? Can he guarantee, if the scheme is rolled out nationally, that tenants who receive standard allowances will receive the same assistance that has been available in pathfinder areas, such as the advice services that were referred to earlier? What implications does that have for cost? When will the promised consultation on applying the pathfinder model to social housing be published? There have been reports that it will be issued at the same time as the Bill. Can the Minister give us some guidance on that and rule out the possibility that the Bill will apply to social housing as well as to the private rented sector? Clearly, that would clearly be premature.
"housing benefit regulations consist of 967 pages, five parts, six schedules and 40 statutory instruments."—[Official Report, House of Commons,
The right hon. Member for Sheffield, Brightside described housing benefit as "a nightmare". The cost of administering appeals has risen in each of the past three years, as I found out recently from a written answer, and is now more than £2.3 billion. The number of appeals has risen in each year since the appeals service assumed responsibility in 2001.
The Department has a target to reduce fraud and error from its 2002–03 levels by 25 per cent. by March 2006. When I asked the Minister during a recent debate on fraud and error whether he was confident that the Government would hit that target, he was unable to confirm that they would. Perhaps he will say something about that today.
Choice is one of the key words of this debate. The Government argue correctly that the pathfinders extend choice, because paying the allowance at a certain rate enables recipients of housing benefit to shop around. Clearly, that is what is meant by "choice". However, as the hon. and learned Member for Redcar and my right hon. Friend the Member for North-West Hampshire said, the pathfinders do not give choice in one crucial respect, which is that the tenant does not have the choice to receive housing benefit direct or have it paid to the landlord. As other hon. Members have said, if the Government want to build on the choice principle, they could go in that direction, particularly since passing the vulnerability test, to which the hon. and learned Member for Redcar referred, is rather complex.
The Government want to simplify the system, which they are doing by looking to pay the flat rate, but they are building in other complexities by making special arrangements to assess vulnerability. As the hon. and learned Lady said, many tenants will not want to approach the authorities and say, "Hey! I'm vulnerable. I can't manage my own finances."
Perhaps the Minister will say whether it is possible that, rather than introducing a Bill, he will want to see a further roll-out of pathfinders.
The Minister is shaking his head, so I do not think that that is so. We will see in a moment.
Be that as it may, it would be helpful if the Minister gave some indication of how the Government view the way forward. If he thinks that more research is needed before a Bill is introduced, it would be helpful for him to say so. If he thinks that a national roll-out would be too great a financial obstacle for the Treasury to bear, he might want to say something about that. We would be grateful if he gave some indication about the progress of the Bill.
This has been a good and informed debate, prompted by the excellent contribution by my hon. and learned Friend Vera Baird, who does not describe herself as an expert but who sounded perilously close to being one. The subsequent contributions were also of a high calibre and rightly so, because this is an important subject.
It might be helpful if I clarified where we are with the proposal, because almost everyone who has spoken has touched on that. Pathfinders have been running for a couple of years in some cases, although some were initiated much more recently, and we are regularly evaluating their experiences. To date, my Department has published seven documents covering different aspects of that evaluation. We are doing this with a high degree of transparency. A lot of people are closely following the policy as it evolves.
We have said many times that the evaluation of the pathfinders' experience will continue into next year, so we will be issuing further information as we go forward, learning from their experience. We also made it clear in the Queen's Speech that during this Session we would introduce legislation to deal with the reform of housing benefit. The context of where we are should be pretty clear.
As well as doing our own independent evaluation of the pathfinders, we are listening carefully to the representations coming to us from all other interested bodies and organisations. I pay careful attention to publications issued by Shelter and the citizens advice bureaux. We are listening carefully to the landlords organisations, too. As well as my listening to those representations and taking on board what is being said, the pathfinders are receiving information from the organisations in their localities. Extensive information and assessments are coming to us and it is important that we consider everything that we learn. Before moving to a national scheme, we must be sure that we have made the most of the pathfinders.
I say on behalf of the Department that I am extremely grateful to the authorities that agreed to do the pathfinder work for us. It is invaluable. I meet them regularly and visit the areas in which they operate. They are doing a high-quality job and it is proving informative for us as Ministers as we move towards setting up a scheme for wider implementation.
Many points have been made in the debate. I shall respond to some specific issues that have been raised, after which I shall deal with a few others more substantively because they were common to all contributions. My hon. and learned Friend the Member for Redcar was right to emphasise the problems with housing benefit. None of us would start from here if we wanted to come up with a scheme to support people in meeting their housing costs. The system is incredibly complicated and we must move towards simplification.
My hon. and learned Friend asked whether there was a risk of a flight of landlords. The evidence from the pathfinders showed that that was not the case. Many landlords organisations were concerned about such matters at the outset and we have monitored the position carefully as the pathfinders have been rolled out. I wish to share with her the views that have been expressed recently by Blackpool, a pathfinder authority, about potential landlord flight to which she and other hon. Members have referred. A few weeks ago, its newsletter stated:
"After the initial procedural changes at the point of going live with the LHA, we are content that our current practices are working well, and we even received praise by a number of landlords at a recent landlord training event. This is a massive turnaround as these same landlords were very sceptical about LHA when we first started talking to them in the summer of 2003. We have proved, that if you listen to landlord concerns and put procedures in place to reassure them then landlord confidence can be maintained."
That is an encouraging response. It has been echoed by other pathfinder authorities.
My hon. and learned Friend then referred to worries about the element of the local housing allowance that concentrates on paying the benefit direct to the tenants, not the landlords. She encouraged us to return to the position that pertains whereby housing benefit is paid directly to the landlord. We want to get away from that because we are encouraging personal responsibility. It is part of the welfare reform programme, and another aspect of the reform that I have been monitoring carefully is its impact on those who had their housing benefit paid directly to their landlord, but who now, having switched to an LHA, receive it themselves. They are now responsible for ensuring that the rent is paid.
We hoped that the system would have a beneficial impact, and evidence has shown that it has. We have published some research that merits careful examination. We asked people who were not in work, but whose housing benefit was being paid direct to the landlord, about their expectation of an eventual return to work. We found a low level of anticipation that they would return to work within the next year or so. We took a similar group with a similar period of unemployment who lived in an area where we were piloting the LHA. They were receiving that allowance and had taken on the responsibility for managing their own finances and for making sure that their rent was paid. We asked them the same question: what was their expectation of seeking a return to work in the near future? A very substantially higher number said that they were seeking such a return.
If there is to be this welfare effect of the reform, we must welcome it. It has been suggested that we should switch back to a situation in which the tenants' relationship is entirely passive, and where they are not involved in handling the money or in taking responsibility for the payment of the rent. If we were to return to that situation, we might pay a price in terms of their not making the move of coming out of welfare and thinking of returning to the world of work. That is an important aspect of the reform, and I do not want us to lose it. I am trying to reassure my hon. and learned Friend that the early indications are that the impact of the reform is beneficial.
I was not suggesting that that element should be forgone. I see it as a very real benefit. Additionally, there is the impact on the kind of community in South Bank which I talked about. If an individual has chosen to live there and is paying their own rent, they are far more likely to be engaged in the community than if the rent is simply paid anonymously from the authority to the landlord. Therefore, I can see many benefits in having that responsibility imposed on people. However, I wonder whether there is scope for widening the criteria for having the payment made direct to the landlord, in order to get away from the awkward situation of vulnerability having to be proved, which seems to me to be a difficult thing to do. I also wonder whether it might be possible to widen the element of choice—to give more responsibility, rather than to take it away. Opposition Members spoke about that.
I am grateful to my hon. and learned Friend for those comments, because I see that she is tying this matter to the issue of vulnerability, and to the current provision whereby we can switch back to making the payment direct to the landlord in instances of vulnerability. Let me reassure her and other Members who spoke on the matter that we are looking at this aspect very carefully in the evaluations, and I am receiving reports from the pathfinder areas specifically on how the vulnerability test is working. We are learning about that matter from our experience in the pathfinder areas. I will try to deal with the other points that my hon. and learned Friend raised more substantively, because other Members also raised them.
Sir George Young took us on a trip back down memory lane to the great poll tax disaster. That is not easily forgotten. He also asked if my Department was in sync with the Office of the Deputy Prime Minister. It is of course true that responsibility for housing issues crosses the two Departments—that is certainly the case when the element of supporting the cost of housing is included. Some housing responsibilities lie with the ODPM and others lie with my Department. I assure the right hon. Gentleman that the two Departments are working closely together.
My hon. Friend Mr. Wright raised the issue of tackling antisocial behaviour, and our two Departments work jointly on that all the time. Other points raised were to do with choice, which I have already touched on, and with the single room rent, which I want to deal with more substantively in a moment.
Danny Alexander—it would be helpful if we could think of a shorter version of that constituency name—raised a series of points, some of which I want to pick up on in detail because other Members also raised them. He asked in particular about tackling fraud in respect of housing benefit, as he has done before. He asked about funding for local authorities to help with that, and he will be pleased to hear that, in consultation with local authority representatives, we have agreed changes to the way that money is allocated for anti-fraud activities. Local authorities will now get an all-in sum for administration and fraud that is notified up front each year. This week, we issued a circular on that which I hope he and local authorities will find helpful. The hon. Gentleman said that he thought there was no evidence of an impact on work-readiness from the pilot authorities. As I have just said in response to my hon. and learned Friend the Member for Redcar, we have some encouraging evidence that there is a positive impact and are certainly looking carefully at that aspect of reform.
Mr. Goodman rightly asked about the advice services at the time of roll-out. We have put some funding into the pathfinder experience to support financial advice services. I have been looking carefully at how that has been working, and it has been very effective. We have taken on board the point that there needs to be some element of continuing support for financial advice, both for vulnerable tenants and perhaps for others at the time of national roll-out. It tends to be an initial need and does, of course, tail off. The more progress we make in broadening financial inclusion, the less need there is for such support. What we have seen in the pathfinder areas was a quick, high-level demand for that support, but it very quickly tailed off. Once those who needed support to get through the transition had done it, the issue was largely dealt with. So it is an important point, but one which we have taken on board.
In the remaining time, I want to deal with some points that were common to all contributions. I return first to the views expressed by Shelter. I continue to be grateful for its close interest in the matter; Shelter's submissions are indeed helpful to us. Overall, the feedback from Shelter on the LHA has been quite positive, supporting the objectives of the new scheme. In its interim research report "On the right path?", which has been referred to in our debate, Shelter concludes that
"many of the concerns expressed when the HB Pathfinders were set up have not materialised. The evidence reveals that removing the choice of direct payments to landlords has not led to an increase in homelessness . . . Likewise, the reforms have not, so far, lead to a widespread increase in rents".
Shelter thus has reasons to be broadly supportive of the reform.
While visiting Brighton recently to talk to Shelter about its experiences there, I was struck by the fact that one officer told me that if she was drawing up a wish-list of things that the Government should do to reduce homelessness, she would have put the LHA at the top of the list. We need to consider the effects, and Shelter rightly keeps testing us there. I can certainly assure hon. Members that, on this issue, we want to be confident of being right at the time of national roll-out.
We also take seriously the response from the National Association of Citizens Advice Bureaux; it too has recently published reports on the LHA, which I have studied. I am heartened that NACAB is also generally supportive of the LHA and reporting that implementation is going relatively smoothly. I note the concerns that it has raised: difficulties for some tenants in accessing bank accounts, some concerns over direct payments and, again, the need for continued money advice. However, the evaluation is interesting in putting into context the issues around access to bank accounts. It showed that 95 per cent. of tenants now have a bank account—with a quarter of those tenants having opened their account specifically to receive the LHA—while there are no significant reports of tenants complaining about encashment charges.
I now return to the issue of private landlord reaction, which I have already touched on briefly. First, I should make it clear that landlords have generally been supportive of the concept of local housing allowance. What they have objected to is the removal of automatic direct payment to landlords, which saves them having to collect the rent and reduces any risk of non-payment. Again, the findings coming out of the pathfinders are quite encouraging there. Secondly, the experience is that landlords have raised concerns and continue to do so. However, resistance has reduced markedly in the pathfinder areas now that the scheme is running smoothly. As I have said, many of the concerns raised now come from those not yet involved in the LHA. I assure hon. Members that we continue to listen carefully to the views expressed by landlords.
A couple of hon. Members raised the issue of the single room rent. I recognise that its abolition is a top priority for many stakeholders and hon. Members present. However, there is a fundamental principle of fairness and equity to uphold. Young single people under 25 have earnings prospects well below those of older people, and 60 per cent. of those who rent in the private sector who are not in receipt of housing benefit rent shared accommodation. It is not unreasonable to expect young people in receipt of housing benefit to share accommodation.
I am aware that in some areas young people may have difficulty accessing shared housing, and that for them choice is limited. Extra help is available in the form of discretionary housing payments and flexible support from local authorities on a case-by-case basis. In LHA areas we have implemented a more generous shared room rate that more accurately reflects the accommodation available in the area. As we move forward with housing benefit reform we will continue to review the single room rent, to ensure that young people can access appropriate accommodation.
A number of colleagues asked about rolling out the reform into the social sector. I appreciate that conditions in the social housing sector are very different from those in the private sector. We understand that. For example, we cannot pretend that social sector tenants always have the same degree of choice as those in the private sector, because they clearly do not. Differences such as those will need to be taken seriously in developing any proposals for reform.
We should not shy away from reform in that sector just because it will be difficult and because the sector is so different. We need to address issues such as choice and fairness and we need to ensure that housing benefit keeps pace with our wider welfare reform agenda—for example, by ensuring that it supports our 80 per cent. employment target and does not act as a barrier to people returning to work. We are going to do this in discussion with the experts on social housing, which is why we will continue to proceed cautiously in developing this reform in respect of the social rented sector.
Everyone who has contributed to the debate appreciates the immense complexity of the world of housing benefit. Local authorities who administer it also find it complex. While we are working on a more substantive and quite radical reform, certainly in respect of private sector accommodation, our eye is not off what we need to do in the meantime to improve the administration of housing benefit.
The Department is engaged closely with local authorities, trying to assist them in improving the processing of the benefit. We are supporting them with additional financial assistance; in fact, we have allocated £180 million to support that. The vast majority of local authorities have taken up some of that support. Overall, the processing times on housing benefit are coming down.
As my hon. and learned Friend and others have said, the performance is patchy. The average performance is markedly better; a couple of weeks have been taken off the average processing time for housing benefit. The Department asks authorities to achieve 34 or 35-day processing. The majority of local authorities have reached that. The laggards have caught up to some extent, but there are still many whose processing times are unacceptably long. I assure all hon. Members that we continue to concentrate heavily on that issue. It is not acceptable that processing times should be of that length; it creates problems for people trying to secure rented accommodation and support for it. We concentrate on that area at the same time as we are concluding our thoughts on the future roll-out of a reform to housing benefit in the private rented sector.