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With the national introduction of the local housing allowance, the rates and the broad rental market areas relating to a local authority will be published—and this is key—to allow customers to see in advance what the maximum level of housing benefit, for a certain size of accommodation, will be. This transparency is one of the key advantages of the local housing allowance.
As the Minister for Disabled People stated in the other place, we also want to take this opportunity to ensure that the way these rates and areas are set is as clear as possible. I give a firm commitment that rent officers will consult local authorities, both the housing benefit departments which noble Lords asked about and the wider housing strategy departments, when they are setting broad rental market areas to ensure that the areas accurately reflect the local housing markets and communities. The Rent Service in England will also put this into guidance for rent officers that will be published on the internet. We will work with rent officers to ensure that their role is aligned with wider government aims of encouraging mixed and sustainable communities, and that they deliver a consistent approach for all local communities. The planned two-year review of the local housing allowance will provide us with the opportunity to check that these processes are working effectively.
The noble Lord, Lord Skelmersdale, asked whether the £20 earnings disregard would remain following the introduction of local housing allowance. As I have said, the answer is “yes”.
I hope that I have picked up on the important concerns that were expressed about the need for transparency, the need for rent officers to work closely with local authorities, and the need for fairness and openness. I hope that the noble Lord will therefore feel able to withdraw his amendment.
Lord Taylor of Holbeach: I am happy to withdraw my amendment, because I was much reassured by the noble Baroness’s comments about the transparency of the process, which the amendment was seeking to establish. When the two-year review takes place, we should have the opportunity to see the demographic influence that the process may have had. Perhaps the biggest danger in setting this rent level is the possibility of our upsetting the mixed demographics of substantial communities. I hope that that will be part and parcel of the review. It should not look just at the efficacy of the system in providing rental cover.
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Baroness Morgan of Drefelin: I am not sure that I made it clear enough. The duty for rent officers to consult local authorities is important. Many stakeholders have argued that local authorities have a wealth of information and experience which is not being tapped into. Rent officers will be expected to have regard for the views of the local authority in setting the geographical area. That is an important development.
Lord Taylor of Holbeach: May I assume that this is on the basis of continual consultation?
Baroness Morgan of Drefelin: Absolutely.
Lord Oakeshott of Seagrove Bay: The direction of travel which the Minister has outlined is good. I still do not see why the amendment is unnecessary, but given that she has said that transparency will be improved, I am happy to support her.
Lord Taylor of Holbeach: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 36 [Payment of housing benefit]:
Lord Addington moved Amendment No. 108:
(a) a requirement by the authority administering the benefit to establish arrangements to offer referrals to free money management advice and support for any person entitled to housing benefit and receiving direct payments of that benefit who requires such help, (b) a requirement for the authority to take steps to proactively identify claimants who are unlikely to have sufficient money management skills for accepting direct payment of housing benefit; and to make arrangements for the payments of benefit to be made direct to the landlord in such circumstances, (c) in respect of paragraph (b) the authority will take such steps as are necessary to determine that the claimant is not a person at risk, (d) for the purposes of paragraph (c) a claimant is a “person at risk” if he— (i) has a learning disability; (ii) suffers a medical condition that seriously impairs his ability to manage on a day to day basis; (iii) is illiterate or unable to speak English; (iv) has an addiction to drugs, alcohol or gambling; (v) is fleeing domestic violence; (vi) is a care leaver; (vii) is someone who has recently left prison; or (viii) presents himself to the authority as someone otherwise at risk.””The noble Lord said: The amendment stems from Citizens Advice’s experience of the Pathfinders project, as well as from the proposal to pay the new local housing allowance directly to the claimants, as opposed to the current situation where much housing benefit is paid directly to the landlord.
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Paragraph (d) of the proposed new subsection states that,
(i) has a learning difficulty; (ii) suffers a mental condition that seriously impairs his ability to manage on a day to day basis; (iii) is illiterate or unable to speak English”—I would have worded that differently—
“(iv) has an addiction to drugs, alcohol or gambling;(v) is fleeing domestic violence;(vi) is a care leaver;(vii) is someone who has recently left prison; or(viii) presents himself to the authority as someone at risk”.Primarily, these are people who will have trouble coping with or organising their financial situation. At the moment, they do not have to worry about the temptations of money going through their hands or through bank accounts. Many of them will not have bank accounts, or will have terminated them. These people will be at risk of severely mismanaging funds. It is well established that not only lack of money but also handling money incorrectly leads to a great deal of poverty. In this case—and we are talking about somebody losing his home and all the consequences that flow from that—I ask the Minister whether the Government can find some way to accept this amendment or something very like it. If it is to become the norm for people falling into these groups—for example, someone with a drugs, alcohol or gambling addiction, or who is just out of prison—to have access to the money, why do we not simply straightaway hand the money to the suppliers? It is literally that simple. My noble friend used the term “no-brainer”. I do not know if that is parliamentary language, but this is roughly getting towards it. I beg to move.
5.45 pm
Lord Taylor of Holbeach: I have great sympathy with the concerns raised by the amendment of the noble Lord, Lord Addington. I have added my name to it. On these Benches, we have serious concerns over the Government’s intention to encourage customer claimants to handle their housing benefit rather than opting to have it paid directly to their landlord. Although we understand their aim of encouraging financial responsibility and are pleased that they are attempting to give recipients more freedom to manage their income as they see fit, we think that doing these things by this method is dangerous and is likely to lead to more harm than good. As a result, we want to have a stand part debate for the whole clause.
Currently, only 40 per cent of private housing tenants receiving housing benefits handle the money. Under the Pathfinders, we understand that the number has doubled to 80 per cent. Will the Minister reassure me that these figures are not being achieved by setting targets for local authorities but are really a reflection of the conditions on the ground?
As the amendment suggests, we are very concerned by the expectation that people unable to handle their own money must draw their vulnerability or unsuitability to the attention of the housing authority. It is unlikely
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We understand from Citizens Advice that the Government have removed the specific lack of an obligation to be proactive from the guidance. Is that the case? Will the Government therefore actively encourage housing officials to identify vulnerable claimants?
These measures are also likely to have knock-on effects on the housing market. The secure knowledge that their rent will arrive on time, and in full, is an important reason private landlords rent to benefit recipients. I am aware that recipients do not need to declare that they are receiving housing benefit to their landlord, but it is not in anyone’s interest to see the supply of private housing shrink to those who do. With greater uncertainty over the security of their rents, it is likely that private housing will become more expensive, more limited or both.
Finally, I would like to revisit a point made at Second Reading by my noble friend Lord Skelmersdale. If the Government are so sure that these steps will be beneficial for housing benefit recipients, why are they not extending the option to tenants of social sector housing?
Baroness Morgan of Drefelin: I shall try to respond quickly to these points. One of the central objectives of housing benefit reform is to match rights with responsibilities. Clause 36 provides for powers prescribing the manner in which housing benefit is to be paid to all types of tenant. While I recognise the positive intention of Amendment No. 108 that seeks to protect the interests of customers who may have a higher level of need, I can assure noble Lords that this amendment is not necessary.
Under current legislation and regulations, housing benefit customers can be paid by way of rebate of their rent account, by payment to the customer—including someone on their behalf—or by a combination of both. Where the authority is not the landlord—that is, where the customer is in the private rented or housing association sector—it cannot rebate the customer and therefore has to pay the customer or someone on their behalf such as a landlord, or a third party.
In the local housing allowance Pathfinders, the proportion of payments made to tenants has increased from 50 per cent to 84 per cent after two years. The Pathfinder evaluation found customers to be, on the whole, good money managers who actively budget to ensure their finances are stable and take paying their rent very seriously. The minority who were initially daunted by the prospect of paying their own rent tended to be young people inexperienced in managing their finances or people who had pre-existing financial difficulties. With help and advice, many of these individuals developed the skills not only to manage their rent payments but also to improve their wider financial capability—an important step on the road to employment.
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We therefore believe that excluding individuals from the responsibility of managing their housing benefit payments on the basis that they meet a pre-determined set of criteria would not be the right way to proceed. This approach would constrain the flexibility of local authorities to act in the best interests of the customer and could deny many capable customers the benefits of managing their own housing benefit.
However, we will not force this responsibility on to those who are genuinely unable to exercise it and will provide support to those who need it. Funding to support financial advice services has been set aside for the national rollout of local housing allowance. This is further supplemented by cross-government activity to increase financial inclusion, in particular to help individuals access appropriate banking services.
To protect vulnerable customers, safeguards are in place for the national rollout of local housing allowance. Regulations will ensure that payments can be made to the landlord where the customer is likely to have difficulty managing their financial affairs, where it is improbable that they will pay their rent or where payment has been made to the landlord previously during the award due to arrears of eight weeks or more. Payment will always be made directly to the landlord, subject to limited exceptions, where there are eight weeks or more rent arrears. Customers can also elect to have their benefit paid to a third party other than their landlord. Guidance will be available to help local authorities apply these safeguards. It will be informed by lessons learned from the Pathfinders and comments from the welfare organisations working with us.
With regard to the social rented sector, which the noble Lord, Lord Taylor, highlighted, I feel very strongly that tenants of local authorities and housing associations should reap the benefits gained by private tenants in the Pathfinders from managing their rent. Currently where the authority is the landlord, it effectively has a choice as to the manner of payment. Invariably tenants in these cases—that is, council tenants—end up having their rent rebated. In addition, fewer than one in 10 housing association tenants nationally are responsible for managing their housing benefit. In response to the welfare reform Green Paper consultation, we decided not to introduce the local housing allowance to the social sector at this time; however, this clause supports the extension of payment of housing benefit to tenants and, therefore, the principle of tenants’ responsibility to all housing benefit customers.
It is wrong to assume that social tenants are any less able to manage their housing benefit payments than their peers in the private sector. In fact, independent research from the Joseph Rowntree Foundation suggests that social tenants are just as likely to have the financial capability and the willingness to manage their housing benefit payments. At present, the rate of worklessness among social tenants is twice the national average. Encouraging more tenants to handle their own housing benefit payments is a step towards financial inclusion and greater readiness for employment. Not taking this responsibility risks undermining their self-reliance and could contribute to benefit dependency. Clause 36 provides for powers prescribing the manner in which
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Of course, any change to the rules affecting social tenants would, as in the private rented sector, include safeguards to protect those who are unable to manage their own affairs, as has been described so eloquently by the noble Lord, Lord Addington. Support for those who are less experienced in managing their rent should be available. We will proceed cautiously in the social sector. We do not intend to make regulations under this power or under our existing powers that will affect social tenants until we are confident that we have the right approach and the right support mechanisms in place.
I want to respond to a couple of points made during our discussion. I was asked how proactive local authorities will be in assessing a customer’s vulnerability when setting housing benefit. If a local authority receives notice that a claimant might be vulnerable, it must investigate whether that is the case. That notice could include, as has been suggested, the customer’s own representations. Further, the landlord will have the opportunity to be proactive and his representations would be accepted, as would representations from advocacy services such as a citizens advice bureau, social services, the GP and other healthcare professionals, along with organisations that act as representatives on behalf of claimants. If agreed, the amendment would place a requirement on local authorities to assess every single claimant and potential claimant for vulnerability. Our approach allows for customers who have the potential to fall into arrears and who may be vulnerable to be picked up proactively through other means.
I hope that the noble Lord will feel able to withdraw his amendment and that I have not rushed too quickly through this slightly more complicated issue.
Lord Taylor of Holbeach: Can the noble Baroness clarify the position regarding the period of time that must elapse before intervention would begin? She spoke of an eight-week period. However, my assessment is that many people would be out of their home within that time if they fell into arrears. Have I heard her correctly? I am concerned about the delay that may occur between people getting into difficulties and interventions to support them.
Baroness Morgan of Drefelin: The point I tried to make was that, if a tenant falls into arrears of eight weeks or more, payments should be made direct to the landlord, subject to exceptions where eight weeks or more of the rent arrears are owed, in order to help customers to avoid eviction action. It would be sensible if I wrote to the noble Lord and set out the timings in clear detail.
Lord Taylor of Holbeach: I accept that offer and I am grateful to the noble Baroness for it. It is another example of something that runs throughout this Bill.
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6 pm
Lord Addington: The Minister gave us a helpful answer. Am I right to assume that the type of support that is called for in this amendment—the advice and the financial planning—or something like it will be available? That is the implication that I took from her answer. Is it the case that it will not become a hard-and-fast rule that you will have to handle the payments yourself? If the noble Baroness could nod vigorously—
Baroness Morgan of Drefelin: I could nod, but I should make it clear that we are building on the experience of the Pathways areas, which is where this approach has been very successful. I hope that I can offer the noble Lord reassurance that his concerns will be met by the regulations and guidance that will go with the Bill.
Lord Addington: That is about as good an answer as you can get at this point, although you are always a little worried that you cannot see it. All we can say is that we hope the support comes forward, but this, once again, shows the weakness of relying on regulations. However, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 40 [Social security information]:
Baroness Morgan of Drefelin moved Amendment No. 108A:
Clause 40 , page 33, line 16, leave out “any prescribed purpose which relates” and insert “anything which is done in relation”
The noble Baroness said: Government Amendments Nos. 108A and 108B address concerns raised by the Delegated Powers and Regulatory Reform Committee and the Joint Committee on Human Rights on one aspect of Clause 40, which deals with the use of social security information.
One area where the Government are keen to make further progress is encouraging more people to claim the social security benefits to which they may be entitled. In doing so, we want to make the most of the social security information that local and national government agencies collect and hold. Currently, DWP can use any social security information it holds to promote the take-up of any benefit, but local authorities administering housing benefit and council tax benefit can use information only to promote the take-up of those two benefits.
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Among other things, Clause 40 aims to enable local authorities, which through this clause now includes English county councils, to use the social security information that they hold to promote the take-up of a range of benefits, including those administered by DWP and which are to be specified in regulations, the draft of which will be available to the House.
This would be achieved by the insertion of a new Section 7B into the Social Security Administration Act 1992, which was originally worded to enable the prescription of benefit take-up activity through regulations. The Joint Committee on Human Rights felt that the original wording was too wide and would enable other unspecified purposes to be prescribed. The Delegated Powers Committee considered that if the clause were not amended then regulations made under it should be subject to the affirmative procedure.
The Government are happy to accept that changes should be made and to make it explicit that the powers in subsections (1) and (3) of new Section 7B are to be used solely to encourage people to claim the benefits to which they may be entitled. We touched on the importance of that earlier.
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