Housing Benefit (General) Amendment Regulations 1996

HL Deb 14 May 1996 vol 572 cc432-48

5.37 p.m.

Earl Russell rose to move to resolve, That the Housing Benefit (General) Amendment Regulations 1996 (S.I. 1996 No. 965) be not proceeded with and that this House invites Her Majesty's Government to lay amended regulations in place of Part 1 when they can show that it will significantly help to alleviate the problem of over-payment of housing benefit and in place of Part 2 when they can show that the supply of shared accommodation is sufficient to carry the burden which would be placed on it.

The noble Earl said: My Lords, before beginning any other argument, I should like to offer my thanks to the noble Viscount the Lord Privy Seal and to the usual channels for their courtesy and kindness in passing the business Motion to enable this Motion to be taken before the Prayer which follows it.

The regulations to which I draw the House's attention are divided into two parts. The first provides that housing benefit shall be paid in arrears instead of in advance. The second provides that young people under 25 shall receive housing benefit only at the rate appropriate to shared accommodation which is defined, for some reason which I have not fathomed, as accommodation not including use of their own sitting room.

My concerns about the regulations are, first, that they will tend to shut out the unemployed from the housing market, secondly, that they will drive large numbers of landlords either out of business or out of the housing benefit market, and, thirdly, that they will create considerable homelessness among those under 25 years old.

However, those are not the points I am making in my Motion. In my Motion I give the Minister the benefit of the doubt on all those points. We are all wrong sometimes. What I complain of—it is the subject of my Motion—is that the Department of Social Security has not done enough work on the regulations to be able to tell me whether or not I am mistaken. If I am, the department will not know it. Therefore, the point of the Motion is to ask the department to go back and do its homework.

I have said in the past that the Department of Social Security, left to itself, is the most competent in Whitehall. I do not withdraw that phrase; but the operative words are "left to itself". If I should describe the regulations as "a pesky proposal", I should not be returning—greatly though I might like to—to old-fashioned 16th century abuse. I should say it originated from the public spending round. With apologies to Gilbert and Sullivan, we will never get social security right until Exchequer spokesmen, do not itch to interfere in matters which they do not understand". I can see the Minister already thinking out his reply and I have a fair idea what it will be.

We all agree with the argument put by Mr. Chris Smith in his excellent lecture on Social Justice in the Modern World that one should aim to get the social security budget lower. That is no excuse for measures which are more likely to have the effect of increasing the social security budget. Also, while we are in dialogue with Exchequer spokesmen, we should remind them that a large part of the social security budget is the result of their errors. It is their responsibility to put it right.

I am also concerned that the Government are showing a considerable degree of discourtesy to the Social Security Advisory Committee, to which we are, as usual, much indebted. The Government say that they welcome the recognition and support for the proposals provided by the committee in its report. However, from the committee's conclusions we see what kind of recognition and support it is. Paragraph 47 states: We do not believe that, as presented to us, the potential effects of the proposals for paying Housing Benefit in arrears and for cutting Housing Benefit for people under 25 are sufficiently well understood to make it responsible to proceed with them. There needs to be a more thorough assessment of costs and benefits before any change is implemented".

On the first part, the committee recommends that the department takes more time to consider the implications for claimants and the private rented sector. On the second part, it recommends that the proposal be not implemented in the form presented to the committee. If that is support, one can do without it. To describe it as the Social Security Advisory Committee's "recognition and support" I am tempted to regard as cocking a snook at the committee. I do not believe that it is a courteous response.

In Part I, the Government show considerable concern about tenants taking housing benefit and absconding without paying the rent. I know that that happens. Once in my bachelor days it was done by my next-door neighbour who was known as "Mr. Lawless". But we have no evidence before us on the extent of the problem. The Government admit that the abuse may not be widespread. Noble Lords will note from the "may", that the Government have no figures available to them whatever.

There we have one mischief which may not be widespread, but if the regulations go through they will create other mischiefs which may be more widespread. In the first place, it is an incentive to breach of contract. The almost invariable landlord's contract is for rent in advance. The citizens' advice bureaux comment that they have never heard of a landlord willing to take his rent in arrears. So tenants who do not have the money will be put into a position of breaking their contract. The National Federation of Housing Associations is surely right that that will discourage landlords from renting to people on housing benefit or will encourage those of them who go on doing so to do what one always does in response to late payment: increase one's charges. Of course, the Government will pay for that in housing benefit too.

The delay may be much longer than the two months envisaged. The idea that all local authorities settle housing benefit claims within two weeks is not in the real world, especially since the two weeks only run from when the local authority has all the relevant information. Local authorities are often in no hurry to obtain it. In the London Borough of Brent, from which I come, delays of three months are by no means unusual. Add another couple and the landlord is waiting for a long time.

Delay is often caused by notification of change of circumstances, to which the local authority does not react with the requisite speed. One case which the citizens' advice bureaux have found is of notification in June, reaction on 5th September; overpayment of £172. That is not abuse by the tenant, it is a grave hardship to the tenant. Before the Government use overpayments of housing benefit as a justification for the regulations they need to know a great deal more than they do at present about why there are such overpayments: which are error by the local authority; which are error by the Department of Social Security (and that happens too); which are honest error by the claimant and which are fraud. Until some distinction is made, we can have no reliable proceedings.

The Government admit that they have little evidence concerning hardship to the landlord by an absconding tenant. But there will be a great deal of hardship if the regulations are proceeded with. The National Association of Citizens Advice Bureaux quotes a case in North London, which is not exceptional, where with two months' rent and a deposit the claimant would be forced to provide out of his own resources, while waiting for housing benefit, £1,213. What person, recently unemployed, is in a position to do that? The Government said that people recently unemployed will have several weeks' wages in hand. If I had no other reason for looking forward to the next election, I should look forward to it for the pleasure of hearing Conservative candidates repeating that argument in Manchester, Liverpool, Sheffield and Newcastle. I should expect it to confirm the Conservatives' status as the third party in all three of those cities. It is not in the real world.

Apart from that, we must consider the effect on former prisoners. They do not come out of prison with several weeks' wages in hand. All of us, even the Home Secretary, agree that if prisoners are to go straight they must be able legally to be housed and to work. If they cannot do that, the costs will be much greater.

The second part of the regulations is, if anything, even worse. People of 24 are too old to be compulsorily kept at home. They are not children and their parents do not want to treat them as children. They are entitled to live independently. When I got married 25 was the average age of marriage for men and 21 for women. To be kept at home, as the Government wish, up to the age of 25 is an unnecessary indignity. I find it a curious provision that such people are not to be allowed a sitting room. It is the opposite mirror image of what happened in the 1930s when male undergraduates were first allowed to visit St. Hugh's College, Oxford. The college laid down that they could only visit between the safe hours of two and five in the afternoon and that all beds were to be moved out into the corridor before they came. The Government seem to have got that back to front and I do not understand why. It puzzles me. The biggest problem is that I do not see what they know about the supply of shared accommodation. To quote their own argument at paragraph 29 of their note to the advisory committee, There is no reason why Housing Benefit, which is intended to meet reasonable housing costs, should meet rents for types of accommodation which tenants would not be able to afford if they had to meet the rent from their own resources". But that argument does too much. It is an argument against all housing benefit. The essential point of housing benefit is that it meets rent that the tenant could not otherwise have met. If that is the argument on which they rely, I shall be asking, come the general election: could we expect them, if in office, to continue housing benefit at all for another Parliament? It creates a very real doubt.

The supply of shared accommodation is the most surprising element. The Government invoke the housing market for students. I do not think they will find anyone in any university who agrees that that proves a plentiful supply of shared accommodation.

In a Written Answer to me on 29th January, the Minister said that there must be a large supply of shared accommodation because young people move house so frequently. I should have thought that evidence might have proved exactly the opposite. Many people move because their shared accommodation is not satisfactory, in many cases not safe: the fire rate in houses of multiple occupation is considerable.

The only quantifiable information we have is from Gloucestershire. We owe it jointly to Shelter and Gloucester city and Gloucestershire county councils. They found shared accommodation for 949 people. In a Written Answer, the noble Earl, Lord Ferrers, went better and found 1,223. There is a difference of definition there which I have not found, a shortfall—on Shelter's figures of 900 places, and on the noble Earl's figures of 600; and he knows absolutely nothing about the supply of shared accommodation or the demand for it in Gloucestershire. The Government should have had that information before they brought in these regulations.

That is the sort of evidence that makes me believe that this measure must lead to homelessness. It is my view that the Gloucestershire figures are likely to be typical. If the Government have one bit of evidence to the contrary I shall hear it with very great interest. The Minister will doubtless say that the Government are confident. They are often confident, but that confidence is sometimes misplaced. I beg to move.

Moved to resolve, That the Housing Benefit (General) Amendment Regulations 1996 (S.I. 1996 No. 965) be not proceeded with and that this House invites Her Majesty's Government to lay amended regulations in place of Part 1 when they can show that it will significantly help to alleviate the problem of over-payment of housing benefit and in place of Part 2 when they can show that the supply of shared accommodation is sufficient to carry the burden which would be placed on it.—(Earl Russell.)

5.53 p.m.

The Lord Bishop of Oxford

My Lords, my concern is with the regulation that restricts housing benefit for people under 25. The trouble with youth, as someone said, is that it is wasted on the young. It is easy to pick up a false stereotype of young people as though they were all having a thoroughly wonderful time as purveyed by the colour supplements. But for a good many, life today is not at all easy. We need, particularly in this House, to hear some of their concerns.

I understand that the purpose of the regulation is, above all, to ensure that young people on housing benefit do not take on accommodation that will lock them into dependence on benefits and prevent their taking up modestly priced employment. I imagine what is envisaged is a person in a flat paying more rent than he or she can earn and that money at present being paid through benefit.

The aim of helping people into employment is entirely laudable. But it needs to be set against the background of a number of other considerations. The first is the very high level of unemployment, particularly in some areas and especially among young people. In some areas of the country unemployment is still over 20 per cent. Jobs are simply not there for very great numbers of young people. We need to bear in mind also the increasing homelessness, disillusionment and other problems associated with so many of that age group. This will be one more blow to a good many. It has been calculated that some 144,000 young people could have their benefit reduced by the regulation.

The Social Security Advisory Committee could not accept the principle of making rates of benefit that distinguish those over 25 from those under 25. I have to agree. There seems no good or logical reason for drawing a line on the basis of that particular age.

The relevant regulation restricts the amount of benefit payable to someone under 25 to "single room rent". That means in effect that the young person will have to live in a multi-occupancy house if he or she is to have benefit paid in full. That might be perfectly acceptable to a good number. Those of us who were sent away to boarding school or served in the forces may very well not consider it to be much of a hardship. But some people will be badly hit. For example, there are young people who had work but who have suddenly become unemployed. While in work they managed to afford modest accommodation which included exclusive use of a small kitchen and bathroom and toilet facilities. When unemployed, they will lose all that. The single room rent benefit will not be enough to cover the rent for that kind of accommodation.

As mentioned by the noble Earl, Lord Russell, there are those who have been discharged from prison or who have mental health problems. Such people do not always find it easy to obtain accommodation. And there will be people who, for a variety of perfectly understandable and good reasons, might very well need something more self-contained than a single room in a house of multi-occupancy. Few of those will have family resources to fall back on. Some will be estranged from their families. Their problems can only be exacerbated by the regulation.

Life is already difficult enough for many young people today. It is estimated that 100,000 of the homeless in Britain are under 25 years of age. Many people affected by the regulation will come from a broken home or one from which they are excluded. They may have very little in the way of skills and training. The jobs open to them are few and far between. The rents in an area of acceptable accommodation may be way beyond what would be covered by benefit for a single room. I am afraid that this regulation, although well meant, far from helping young people into modestly paid employment as is its aim, will further depress and demoralise a good number.

5.58 p.m.

Baroness Hollis of Heigham

My Lords, we thank the noble Earl, Lord Russell, for today's Motion on the Order Paper. When the regulations were foreshadowed in the social security Statement last November, we on these Benches strongly opposed them.

Of course it is true that the housing benefit bill has soared—and we know why. The reason for some of that increase is demographic; the increasing numbers of lone parents and more particularly pensioners. Some is due to the recession and the growth in unemployment and of irregular, temporary, casual work combined with falling wages and low pay. But most of the reasons for the growth in housing benefit is the deliberate decision by the Government to introduce into housing the market and market economics. In the local authority and private rented sector there has been a deliberate switch from subsidies in bricks and mortar to subsidies for individuals, thus, at a stroke, creating dependency, without adding a single extra house to the housing market.

The second way in which government policy added to the growth in housing benefit was the deregulation in 1988 of the private rented sector. The Government hoped—it was not an unreasonable hope—that it might encourage investment in private rented housing. That has not happened. At most, something like three-fifths of the new private rented tenancies are one-off properties let by individuals—individuals like me, for example. I am temporarily a landlord of my parents' former home until the market becomes sufficiently robust to sell it on into owner occupation. There is no evidence, except at the luxury end of the market, that significant portfolios of permanent rented housing have come onto the market.

The Minister at the time, Sir George Young, said that housing benefit would take the strain of government policy decisions. It has done so. Whereas in 1987–88 the housing benefit bill was £3.9 billion, it was £11.1 billion in 1994–95. So it has risen threefold or fourfold. That was because of demography and recession but, above all, because the Government willed it so by way of their policy decisions. Now the Government complain of the cost of their own folly. Did they not think of the consequences before making those policy choices? The Government now seek to cut the very housing benefit bill that they themselves forced upwards. Having made the mistake, they are determined that someone else will pay the price. In this case, as the noble Earl, Lord Russell, and the right reverend Prelate said, the price will be paid by those under 25. I wish now to speak about those people.

Why have the Government targeted the under 25s? It is in the belief that young people under 25 can and should live at home. The Government believe that they do not do so because they are enticed into their own luxury accommodation through the generosity of housing benefit. The argument goes: cut housing benefit, get young people to shop around for cheaper accommodation—or better still, go home—and the DSS bill will at a stroke be cut by £65 million and one will simultaneously strengthen family life.

Every point of that analysis—if such it can he called—is false. It is false that those young people could live at home; that they are living in luxury accommodation and do so because of the generosity of housing benefit. The Government know that analysis to be false because, to my certain knowledge, since 1990 they have commissioned three significant pieces of research which show their arguments to be false.

Can and should those young people live at home? The great majority already do so. Two-thirds of young people under 25 live at home. A further 850,000 are owner occupiers. Only about one young person in eight lives away from home in private rented housing. Especially if they come from a rural area, to move to a place where they may find work may be the only way for them to get a job, however ill paid. Many others have left home because they are highly vulnerable there. Research by the Rowntree Trust showed, for example, that of those leaving authority care, something like 60 per cent. did so because of a background of family conflict and around four in 10 had experienced abuse at home which made it unsafe to return there. But, even if they could return home, they would not be particularly welcome there. If the parents themselves are on housing benefit, the Government, by virtually doubling the non-dependent adult deduction, have made sure that their parents' housing benefit will be cut. Therefore those young people will not be welcome there.

Let me move to the second part of the Government's so-called analysis. Do those young people seek up-market accommodation, courtesy of housing benefit? No, they do not. Peter Kemp's research for the DSS itself shows—I quote from Report 26—that housing benefit has "minimal effect" on young people's housing decisions.

Single people under 25 already have a hard time in the housing market. Why is that? First, it is because the private rented sector is a landlord's market and not a tenant's market. The landlords in private renting choose the tenants. It is not the other way round. So, whom do the landlords choose? Research by Peter Kemp for the Government has shown that over half of all landlords will not accept DSS tenants. Among those who do, most of them prefer couples with or without children or the elderly. By far and away the least popular letting that a landlord will make, and then only grudgingly, is to a single person on benefit and not in work. Landlords will not let to those young people if they can let to anyone else. As a result, those young people end up in the grottiest accommodation. It is of the poorest quality, represents the worst value for money and stock that private landlords cannot let to anyone else. Therefore, the Government's notion that those young people can somehow shop around for more modest accommodation is utter nonsense. That argument has been proved false by the research and the Government know it. If they do not, they have not read their own research and should not have commissioned it.

Is housing benefit funding over-expensive accommodation? No, it is not, because housing benefit is already capped. Again, the Government do not seem to be aware that two-fifths of private tenants already find that housing benefit does not cover their rent by, on average, something like £19 a week. Deregulation in 1988 encouraged landlords to raise their rents dramatically. But housing benefit did not follow because local authority rent officers capped the benefit that they would provide. A childless couple in a two-bedroom flat will not receive full housing benefit, however low their income, because they are regarded as being over-housed.

So what happens then? What happens if a young person under or over 25 in a modest flat or a bedsit with kitchen and bathroom finds that housing benefit does not cover the rent? That young person has to top it up out of his income support. However, if one is under 25, income support is £9 a week less than if one is over 25. Perhaps I may give the example of a young person to whom I was talking just four days ago. He is under 25 and lives in a bedsit which he rents for £43 a week. That was the only one he could find that was reasonably salubrious. The rent officer said that the accommodation was worth £27 a week in housing benefit. So from that young person's income support of £36 a week, he has to top slice £16 a week to add to his housing benefit to remain in the very modest bedsit that he currently occupies. He has £20 a week on which to live—£3 a day for food, heating, clothes, a newspaper and bus fares in order to search for a job. It is absolutely impossible.

The more reluctant the landlord, the more the young person has to spend; the younger the person, the less income support and the more will go on rent. Those young people are caught in a vicious circle. As a result, because housing benefit does not cover the rent, there is an increased risk of rent arrears and eviction. When such a young person is evicted, he finds it that much harder to find another home, not only because of his record of rent arrears but because in future housing benefit will be paid four weeks in arrears.

Nearly half of all single homeless people are under 25. One of the biggest reasons for their homelessness is the lack of affordable rented accommodation and the reluctance of landlords to take them in. Most of those young people are unable safely to go home. Without a home they cannot get a job; without a job they cannot afford a place to rent; without the money for rent they cannot afford a home; and without a home they cannot obtain a job. And so they go round the treadmill of dependency that the Government, by their policies, have created.

Now, after the battering that those under 25 year-olds have taken, they are told that housing benefit will be depressed even further in order to finance only a room in a shared house. The Social Security Advisory Committee has said that shared accommodation is already in short supply. Such young people are out-bid by students who share or families wanting the entire house. It is precisely that accommodation—a room in a shared house—which will be withdrawn from the rented sector when housing sales pick up. In any case, a high number of those young people, as the right reverend Prelate said, come from homes where they have been abused. There are 20,000 young people who come from local authority care but do not come under the Children Act. There are those with some degree of health or mental problem, wheelchair users, partially sighted people or those dependent on a guide dog. Some of them are HIV positive. For all those young people, it is not clear that shared accommodation is right or right for the people with whom they would share. Yet that is all that they will be able to afford without top-slicing their income support, thus forcing them into deeper poverty. The discretionary moneys available to local authorities do not even begin to touch the problems that will emerge. The standards are extremely low. Finally, to add insult to injury, those under 25 will not have the right to a 50 per cent. top-up between the actual and average rent that those over 25 will enjoy.

These regulations are monstrous. The Government encouraged rents to rise deliberately and said that they would be underpinned by housing benefit. When, as a result of what they did, housing benefit rose, the Government fingered those living in rented accommodation, especially young, single people, for the folly of the consequences of the Government's own decisions. Then the Government have the effrontery to say that young people have an alternative to private rented accommodation. They can live at home, which they cannot; they are living in upmarket accommodation, which they are not; and when they make a legitimate claim, housing benefit is available, which it is not. Already half of all young people are paying part of their income support to contribute to a housing benefit which does not meet their rent. The Government will plunge them further into poverty.

What are the implications? For the young man I spoke of, with a net income of £20 a week, these regulations will mean that he will have a net income of £11 a week—£1.50 a day; not even the cost of a McDonald's meal of a burger and chips. That £1.50 a day must buy his food, clothes, newspaper and travel in his search for a job, his toiletries and so forth.

The Social Security Advisory Committee said that these regulations should not be implemented. It is quite right. Hence we will support the Motion on the Order Paper as hostile, but not fatal. We accept the strict convention of this House that we do not vote against a statutory instrument because to do so would create a situation where, unlike amendments to a Bill, the view of an unelected, largely hereditary House would prevail over that of an elected Chamber. In my view that would be wrong. But we feel so strongly about the inequities of these housing benefit regulations in which the Government created a housing policy which forced up rents and therefore housing benefit, and having done so are then penalising young people for the consequences of their policies, that if the noble Earl chooses to press his Motion, we will be happy to support him in the Lobbies.

6.13 p.m.

Lord Mackay of Ardbrecknish

My Lords, the amendments we are debating tonight are designed to serve two purposes: first, to focus housing benefit more effectively in the private rented sector; secondly, to strengthen the Government's fight to tackle the abuse of public funds.

We have just been treated to the noble Baroness explaining how appalling the social security system is; how monstrous it is; how miserable it is; and how inadequate the various levels are. As always, the noble Baroness never ever puts anything into her speech in the way of numbers as to what her party would prefer to do; what they suggest; how much extra government expenditure they will be prepared to put into housing benefit. The logic of the 14 minutes to which I have just listened, as I have listened on a number of occasions, is that there ought to be a considerable increase in taxpayers' spending in this field. Fine. If that is the case, let the noble Baroness say so and let her come to the conclusion, as she must do, that either something else must be cut—perhaps another part of child benefit—or that taxes will have to be increased.

I do not need to challenge the noble Earl in that regard; he is honest enough to say, when we discuss these matters, that as a taxpayer he is happy to pay more taxes in order to increase benefit. I hope that he is not going to disillusion me.

Earl Russell

My Lords, I am grateful to the Minister for giving way. I was merely going to say that I am reluctant to pay more tax in order to implement these regulations, which are not beneficial and are excessive.

Lord Mackay of Ardbrecknish

My Lords, the noble Earl is therefore suggesting that any savings we propose to make he would prefer to forego because he feels that the money saved ought to continue to be spent on housing benefit. I believe that I paraphrased him correctly.

I come back to my point, which is simply this. As always, the noble Baroness makes a case that paints a picture of people who need a great deal more money. That is the only logical conclusion of the language she uses. Fine.

Baroness Hollis of Heigham

My Lords, I thank the Minister for giving way. The reason young people need more money for their housing is that government policy has deregulated the rents that they are forced to pay. We would not have been in that situation.

Lord Mackay of Ardbrecknish

My Lords, the noble Baroness would re-regulate.

Baroness Hollis of Heigham

My Lords, I did not say that. I wish the Minister would not attribute words to me that I did not use. I said that we would not be in that position had we been in power. The Government are responsible for the crisis in housing benefit that they created, not us and not young people under 25.

Lord Mackay of Ardbrecknish

My Lords, I am at a loss. Perhaps it is too late in the day for me to follow the logic. But if the problem is deregulation, then the alternative is regulation. Therefore, when the noble Baroness says that there is a huge problem with deregulation, logic tells me that she is suggesting re-regulation. But there is obviously another course of action which is beyond my mental capacities to work out. I shall be interested to see—it may well be revealed at some time in the next few months—the alternative to spending any more money in this field. We either have to do something about regulating, controlling—whatever word we use—or reviewing the private housing market, or we must spend more money if the points made by the noble Baroness are correct regarding how poor the situation is and how inadequate is the housing benefit that we give to people.

The noble Earl in his amendments seeks to have these regulations declared invalid and replaced by new regulations only when the Government can show that the measures will significantly reduce overpayments of housing benefit and there is sufficient shared accommodation available. I believe that your Lordships can be satisfied on both accounts and that these regulations should proceed as planned.

I begin with periodicity. Local authorities are responsible for administering the housing benefit scheme. They currently pay housing benefit wholly or partly in advance to claimants who rent from private landlords. Payments to local authority tenants are made by way of a rebate and are not affected by these amendments. In practice, that means that private tenants are usually paid every two weeks in advance or every four weeks; that is, two weeks in advance and two weeks in arrears. Payments may be sent to the claimant to enable him to pay his rent or in some circumstances— for example, where there are substantial arrears of rent or where the claimant has requested—the benefit may be paid directly to the landlord.

The noble Earl raised the question of delay in processing claims as a point of concern. Local authority performance in that area has been improving. Currently, over 80 per cent. of claims are determined within 14 days of all the information being made available. These regulations do not affect the authorities' statutory obligations to decide claims quickly and, where there is a delay, to consider making payments on account. The Department of Social Security constantly monitors local authority performance in that regard.

There is a major disadvantage in paying benefit in advance. Quite simply, it presumes a future entitlement to benefit based on what local authorities understand the claimant's circumstances to be at the date of the claim. It also relies to a great extent on the honesty of both claimants and landlords to report changes likely to affect benefit. While the majority of claimants and landlords are completely reliable, your Lordships will not be surprised to learn that claimants do not always tell local authorities promptly when their circumstances change. But even when they do, the current benefit rule of paying in advance often prevents authorities from changing the amount of benefit straightaway. That may result in the claimant being overpaid or underpaid benefit.

On other occasions a landlord who receives payments direct from the local authority may be tempted to delay reporting a change if he thinks he will gain financially from so doing. In some cases, people receive the payment in advance but do not pay it over and then it takes the landlord three or four months to obtain access to his property again.

There were approximately 2 million recorded overpayments of housing benefit in the private rented sector during 1994–95. Recent studies also suggest that fraudulent encashment of housing benefit costs as much as £1 billion a year. Other overpayments cost an estimated £400 million last year, including £165 million in the private rented sector alone. We must curb this loss by whatever means at our disposal. It would be irresponsible of any government to do otherwise.

That is why these amendments to pay housing benefit in arrears from 7th October represent an important step forward. From that date, new claims from private sector tenants, and claims made following a move to private sector accommodation, will be paid wholly in arrears. However, the amount of benefit payable will remain unchanged and payments will continue to be made at the same two or four weekly intervals as before, but in arrears. Payments made direct to landlords in such cases will be made four weekly in arrears.

That will immediately reduce the amount of benefit overpaid or underpaid by local authorities because they will be able to take account of changes in circumstances much earlier than at present. This effect was acknowledged by the Social Security Advisory Committee in its report. We do not, of course, maintain that paying housing benefit in arrears will prevent fraudulent activity, but we expect it to reduce the amount of benefit overpaid in the vast majority of cases.

Another abuse which we discovered when talking to landlords' representatives concerned a practice by some claimants to abscond with the first payment of benefit—which may be a significant sum—without paying their rent. We are determined to stamp that out.

These amendments will enable local authorities to make the first benefit payment payable to a landlord, but to send it to the claimant. This will send a clear message to claimants that it is their responsibility to pay their rent and at the same time offer positive safeguards to landlords. It has been widely welcomed both by the Social Security Advisory Committee and by landlords.

These amendments contain advantages for taxpayers, for claimants, for landlords and for local authorities. I can assure the House that the new rules will have no effect on local authority obligations for determining claims as quickly as possible.

I turn now to the question of young people. The new rules governing the payment of housing benefit to young people were announced in another place, as the noble Baroness, Lady Hollis, said, during the social security Statement in November 1995. My right honourable friend Peter Lilley saw them as essential in discouraging benefit dependency and encouraging young people to take up employment. The noble Earl wants the Government to demonstrate that the supply of shared accommodation is adequate before this measure is implemented. That cannot be done because the availability of accommodation depends, in part, on the demand for it. Any research in this area can only be of limited use because the change we are seeking to implement is designed to encourage behavioural changes on the part of both landlord and tenant.

There is evidence to show that the private rental market has been able to respond to the demand from students for shared accommodation. We have every confidence that landlords and young people will be able to adapt to this change. We are not withholding housing benefit. We are saying that young people who decide to set up their own households must make sensible accommodation choices where they expect the taxpayer to help meet their housing costs. We are asking them to behave responsibly and to make the same decisions as their counterparts who are in employment or in full-time education. Most young people expect to live in modest accommodation, such as bedsits and rooms in shared flats and houses. There is ample scope for young people to share houses and flats without landlords losing rental income. I do not believe there is any risk of the amount of available rented accommodation declining because of these moves.

Housing benefit should not provide an incentive for young people to leave the parental home nor encourage migration to seaside areas where unscrupulous landlords arrange expensive accommodation for young unemployed people. The initial proposals for this measure provided exemptions for couples and those single people with the care of children, and that is still the case. This was to ensure that all households would be able to occupy accommodation which is suitable to their needs.

The right reverend Prelate asked about those youngsters in need of care, support and supervision. It was decided from the outset that young people who live in accommodation provided by housing associations, charitable or voluntary bodies, where an element of care support or supervision is provided, would be exempt from the proposals. We are confident that this exemption will provide protection for the majority of disabled young people who tend to live in accommodation where care is provided. Other vulnerable young people are often housed in this type of accommodation as well, so they would also be protected.

As the measures apply only to the private rented sector, all local authority tenants will be exempt. We consider that this will also protect a proportion of vulnerable young people from being affected by the changes.

The amendments were submitted to the Social Security Advisory Committee and the local authority associations prior to being made. A number of helpful comments and suggestions were made, for which we are grateful. As a result of the submissions received, two changes have been made to the original proposals.

A number of submissions expressed concern for vulnerable young people who find themselves living independently on leaving local authority care, a group to which the noble Baroness referred. As some of these young people are as young as 16, and often have no family support to rely on, we considered it reasonable to make a further exemption for this group. We have decided to allow all young people who leave local authority care to be exempted from these changes up until their 22nd birthday. We hope that this will enable young care leavers to live in accommodation where some support is available to them—for instance, supported lodgings—until they are able to live independently.

We also decided to exempt from these provisions all those young people who live in self-contained accommodation provided by a registered housing association. Many young people who are housed by registered housing associations have a priority need for social housing. We believe that this exemption, taken with those mentioned already, will provide protection from the changes for most of the vulnerable young people for whom exemptions have been suggested.

The discretionary funding which was available to alleviate cases of exceptional hardship under the January changes to housing benefit will also apply to this measure. The Government will increase their cash contribution to local authorities to enable them to prevent exceptional hardship to those young people who are not within the scope of the agreed exemptions. We are currently consulting the local authority associations on the proposed increase.

We intend to monitor this change to gauge its impact on the rental market as a whole as well as the effectiveness of the change in relation to young people's choices of accommodation.

These amending regulations will safeguard public funds and continue to provide protection to tenants and landlords. They will also encourage young people to make sensible accommodation choices that are within their own and taxpayers' means, just as other young people, either in employment or in education, have to do. I commend the regulations to the House.

6.28 p.m.

Earl Russell

My Lords, I thank the right reverend Prelate and the noble Baroness for a helpful pair of contributions. I congratulate the Minister, who really is a trouper. His skill in making bricks without straw I admire very much indeed. I told your Lordships he would say that the Government are confident. He did. He gave us no reason for that confidence at all. Above all, he gave us no statistical information on which to base his arguments.

Perhaps I may deal first with fraud. Fraud is a crime. Because it is a crime it must be proved beyond reasonable doubt. Because it is a crime it must be dealt with by punishing the individual who is found guilty; not by a collective punishment for everyone in any way associated with him. It was suggested that there might be £1 billion of fraud. There is no evidence for that; or at least there is none before us at the moment. If the Government are publishing any tomorrow, I shall look at it with great care.

What do the Government actually say? They say: The Government acknowledge that there is little evidence about the number of landlords who are left with substantial debts because new tenants have absconded with their Housing Benefit. However, this proposal illustrates the Government's determination to protect the taxpayers' interest and stamp out abuse". It sounds like an argument for, "There must be fraud because we stamped here".

The Minister said that he cannot carry out any survey of the amount of shared accommodation available. If he cannot do the one thing, then perhaps he should not do the other. The maxim, "Look before you leap" has a great deal of sense behind it. I am not alone in my belief that there is simply not a sufficient supply of shared accommodation. The National Association of Citizens Advice Bureaux thinks so; the National Federation of Housing Associations thinks so; the Social Security Advisory Committee thinks so; most universities with which I have talked, think so. In fact, everyone thinks so except the Minister. It really cannot be the central item of government policy that we are all out of step, but our Johnny. I commend the Motion to the House.

6.31 p.m.

On Question, Whether the said Motion shall be agreed to?

Their Lordships divided: Contents, 58; Not-Contents, 122.

Division No. 1
CONTENTS
Addington, L.	Lester of Herne Hill, L.
Beaumont of Whitley, L.	Lockwood, B.
Blease, L.	McIntosh of Haringey, L.
Borrie, L.	McNair, L.
Carmichael of Kelvingrove, L.	Meston, L.
Chichester, Bp.	Milner of Leeds, L.
Dean of Beswick, L.	Monkswell, L.
Dean of Thornton-le-Fylde, B.	Morris of Castle Morris, L.
Desai, L.	Northbourne, L.
Dormand of Easington, L.	Oxford, Bp.
Dubs, L.	Palmer, L.
Elis-Thomas, L.	Rea, L.
Fitt, L.	Redesdale, L.
Geraint, L.	Richard, L.
Gladwin of Clee, L.	Robson of Kiddington, B.
Glenamara, L.	Rochester, L.
Graham of Edmonton, L. [Teller.]	Russell, E. [Teller.]
Gregson, L.	Seear, B.
Grey, E.	Sefton of Garston, L.
Hamwee, B.	Sewel, L.
Harris of Greenwich, L.	Taverne, L.
Hertford, M.	Taylor of Blackburn, L
Hilton of Eggardon, B.	Taylor of Gryfe, L.
Hollis of Heigham, B.	Tope, L.
Holme of Cheltenham, L.	Tordoff, L.
Jenkins of Putney, L.	White, B.
Kilbracken, L.	Williams of Elvel, L.
Kintore, E.	Williams of Mostyn, L.
Kirkhill, L.	Young of Dartington, L
NOT-CONTENTS
Addison, V.	Clark of Kempston, L.
Ailsa, M.	Cochrane of Cults, L.
Aldington, L.	Coleraine, L.
Allenby of Megiddo, V.	Colwyn, L.
Ashbourne, L.	Courtown, E.
Astor of Hever, L.	Craigmyle, L.
Balfour, E.	Crickhowell, L.
Barber, L.	Cumberlege, B.
Beloff, L.	Dacre of Glanton, L.
Berners, B.	Dean of Harptree, L.
Birdwood, L.	Denham, L.
Blaker, L.	Denton of Wakefield, B.
Blatch, B.	Dixon-Smith, L.
Blyth, L	Eden of Winton, L.
Boardman, L.	Elliott of Morpeth, L.
Bowness, L.	Elton, L.
Boyd-Carpenter, L.	Goold, L.
Brabazon of Tara, L.	Goschen, V.
Braine of Wheatley, L.	Gray, L.
Brentford, V.	Gray of Conrin, L.
Brookeborough, V.	Greenway, L.
Brookes, L.	Grimston of Westbury, L.
Brougham and Vaux, L.	Harmar-Nicholls, L.
Bruntisfield, L.	Henley, L.
Cadman, L.	Hesketh, L.
Caithness, E.	Holderness, L.
Campbell of Croy, L.	HolmPatrick, L.
Carnegy of Lour, B.	Howe, E.
Carnock, L.	Ironside, L.
Chelmsford, V.	Jenkin of Roding, L.
Chesham, L. [Teller.]	Kinnoull, E.
Clanwilliam, E.	Lane of Horsell, L.

Lindsay, E.	Prentice, L.
Long, V. [Teller.]	Prior, L.
Lucas, L.	Quinton, L.
Lucas of Chilworth, L.	Rankeillour, L.
Lyell, L.	Rawlings, B.
Mackay of Ardbrecknish, L.	Rennell, L.
Mancroft, L.	Renton, L.
Merrivale, L.	Sainsbury of Preston Candover, L
Mersey, V.	Savile, L.
Miller of Hendon, B.	Shaw of Northstead, L.
Milverton, L.	Skelmersdale, L.
Monteagle of Brandon, L.	Skidelsky, L.
Mountevans, L.	Stockton, E.
Mowbray and Stourton, L.	Strange, B.
Munster E	Strathcona and Mount Royal, L.
Murton of Lindisfarne, L.	Strathmore and Kinghorne, E.
Newall, L.	Sudeley, L.
Northesk, E.	Tebbit, L.
	Teynham, L.
Oppenheim-Barnes, B.	Thomas of Gwydir, L.
Orr-Ewing, L.	Trumpington, B.
Oxfuird, V.	Tugendhat, L.
Park of Monmouth, B.	Ullswater, V.
Pearson of Rannoch, L.	Vivian, L.
Pender, L.	Wade of Chorlton, L.
Perry of Southwark, B.	Wilcox, B.
Peyton of Yeovil, L.	Wise, L.
Pilkington of Oxenford, L.	Wynford, L.
Platt of Writtle, B.	Zouche of Haryngworth, L.

Resolved in the negative, and Motion disagreed to accordingly.