HC Deb 17 December 1971 vol 828 cc1075-86

2.56 p.m.

Mr. Ivor Richard (Barons Court)

I am grateful for the opportunity this afternoon to raise on the Adjournment the case of a constituent of mine, a Mrs. Bench. I have been in correspondence with the Ministry about this matter and I am sure that the Minister will be in full possession of all the facts.

This is an important case not only because of the peculiar circumstances relating to this individual case but also because it raises a point of general principle which is of much wider application than to Mrs. Bench herself. The point is the way in which the Supplementary Benefits Commission exercises its discretion under the National Insurance Acts to assess what it considers to be a reasonable rent.

Mrs. Bench and her husband and two children at one time lived in their own house in New Malden, Surrey. As a result of some matrimonial difficulties the husband and wife ceased to live together, and the house was eventually sold. There were some difficulties—I again use what I hope is a neutral phrase—about maintenance, but the end result of the problem was that Mrs. Bench moved into a new flat in the London Borough of Hammersmith on 1st September, 1970.

The tenancy that Mrs. Bench obtained was a somewhat peculiar one. It was not what one might call the normal form of council tenancy. I hesitate to inject any kind of party point into an Adjournment debate, but it was a tenancy which came into existence during, the short-lived tenure of the Conservative majority on the then Hammersmith Borough Council. Mrs. Bench and her two children obtained a two-bedroomed self-contained flat in Hammersmith at a cost of £8.4 a week—£7 rent and the rest rates. The type of tenancy was one under which the Hammersmith Borough Council was then making available flats which were not subject to any council subsidy.

There were later difficulties about the payment of the maintenance money that had been agreed, and eventually Mrs. Bench applied for supplementary benefit, because her income, after the payment of rent, and including family allowances, was only £6.71. That was well below the minimum subsistence levels set in the Government's own rules for keeping one adult and two children aged seven and four. Mrs. Bench discovered that the Commission considered that the rent was too high, although it was a local authority tenancy and although the standard rent for a two-bedroomed council flat of that type in the area is about £8.50 to £9 a week.

That poses the difficulty which faced Mrs. Bench, but it also illustrates the difficulty which faces a number of other people as well. I have not given the Minister notice of two other cases that I wish to mention, and I do not expect him to refer to them in detail, nor do I rely on them in detail, but my information illustrates the sort of situation that other people can find themselves in. The information, which I have received from Mrs. Audrey Harvey of the Citizens' Rights Office, is well documented.

One example is of a lady living in Lowestoft who was deserted by her husband and found herself paying a rental of £9 18s. 9d. When she applied for supplementary allowance the Commission told her that the rent was much too high, and that it was prepared to make a rental allowance of only up to £3 15s. It also said that the matter was being reconsidered by the Department and might well be reviewed. I understand that after an appeal it was reviewed, but the initial result of her application was that, although she was paying out £9 18s. 9d. a week on rent, all that she was to receive by way of assistance with that considerable sum was £3 15s.

Another example from the same source is of a lady who was deserted by her husband, who left her with two small children aged five and six. The home was, and still is, rented from a private landlord at £9 a week. The rates were an additional £2 a week. I am told that despite the arrears the landlord is most reluctant to evict the family and is willing to transfer the tenancy into the wife's name and try to get the arrears paid by the husband, who was responsible for their accumulation. Here there is precisely the same difficulty, that the commission says that it is not prepared to pay a rental of that size.

When I took up the case of Mrs. Bench with the Department and the commission, I received an initial reply from the Chairman of the Commission, Lord Collison, on 29th December, 1970, in which he said—and this is the point of general principle: When a person's requirements by supplementary benefit standards are being assessed the appropriate scale rates laid down in the Ministry of Social Security Act are added together with an amount for rent, which is defined in the Act as the net rent 'or such part of that amount as is reasonable in the circumstances'. In deciding how much of a person's rent it is reasonable to meet our local officers must ask themselves whether the rent is reasonable for the accommodation provided and whether the accommodation is reasonable for the claimant. I am prepared to accept that a "reasonable man" type of test may be the one the Act imposes, and may be the only one it can impose. But in areas of gross housing shortage and high hous- ing densities it does not make much common sense if the officers of the Commission ask themselves whether the rent is reasonable for the accommodation provided if comparable rents in the area are unreasonably high. It follows, therefore, that if they ask themselves whether accommodation is reasonable for the claimant, that is not perhaps a sensible question if there is no other accommodation in the area into which that person might move.

The letter from the Commission goes on to say: In the case of Mr. Salmon's daughter"— that is Mrs. Bench— I understand that she is living in a flat let by Hammersmith Borough Council at a market value inclusive rent of £8 0s. 0d." — and then comes the passage which highlights the difficulty— which is considerably higher than we would expect to meet in the locality for local authority tenancies of two-bedroom flats. There was some later correspondence between myself and the Commission, and between Mrs. Harvey of the Citizens' Rights Office and the Commission, and I wonder whether I might be permitted to quote one paragraph of the letter which Mrs. Harvey received from Lord Collison dated 15th June, 1971, of which he was good enough to send me a copy. He said: Where the local officer decides not to allow the full rent in the assessment, he generally advises the claimant that it is in her own interests to seek cheaper accommodation. That may perhaps be a sensible and rational thing to do on paper, but, speaking of the part of London which I represent, Hammersmith, it does not make very much sense to say to someone in that situation that it is in her own interests to seek cheaper accommodation, because such cheaper accommodation just does not exist.

The letter continues: or if she does not wish to consider moving from the address suggests that she may find some other means of meeting her commitments, e.g., by applying for a rates rebate. If there are these anomalous cases in which, applying the reasonable test, in areas of gross shortage and high housing densities, one is to say to a woman in the situation in which my constituent finds herself; "If you do not move, if you are not prepared to find other accommodation which is not available in the area, you are not going to be helped to the total amount of the rent which you are called upon to pay", I suggest that that is perhaps not the right way in which the Commission should exercise the discretion that is given to it under the Act.

There is one further point, and this arises from the Housing Finance Bill which is now being considered in Committee upstairs. In paragraph 16 of Schedule 3 there are certain provisions which apply to the computation of rent allowances. The paragraph says: (1) For the purposes of the computation of allowances, the foregoing provisions of this Schedule shall be modified in accordance with sub-paragraph (2) below. (2) It shall be the duty" — it is not discretionary— of every authority, for the purpose of computing the amount of allowance— (a) if they consider that the tenant is in occupation of a dwelling larger than he reasonably requires, or (b) if they consider that, by virtue of the location of the tenant's dwelling, its rent is exceptionally high by comparison with the rent payable under comparable private tenancies of similar dwellings in the authority's area, to treat the rent as reduced by such an amount". If that provision becomes law, it will mean that someone who is now not receiving rental allowances may find himself in the position of having the proper rent allowance reduced because, in the opinion of the authority, the house is larger than he reasonably requires, or because the rent is exceptionally high. If it were reduced in that way, I wonder whether the Minister would at some stage. if not today, let me know whether the Commission would then think that it should exercise its discretion under the Act in such a way as to make up the reduction in the allowance which would arise from the application of Schedule 3 of the Housing Finance Bill.

This is a matter of some importance. In correspondence which I have had about it with my constituents and with others it is shown to be a matter which has caused much distress to people who are occupying a house or a fiat at a high rental and unable to obtain anything cheaper in an area of high density and great housing shortage but are told by the Supplementary Benefits Commission, "In our opinion it is more than one ought to pay". This is something which the Minister should consider, for it deserves attention, and I hope that we shall have an encouraging reply.

3.11 p.m.

The Under-Secretary of State for Health and Social Security (Mr. Paul Dean)

I am grateful to the hon. and learned Member for Barons Court (Mr. Richard) for raising this issue, both in connection with the one case of which I have had notice—namely, that of Mrs. Bench—and of two other cases which he mentioned for the first time this afternoon. If he would like me or the Supplementary Benefits Commission to consider those two other cases and let me have details, I will gladly see that that is done.

For the vast majority of people in receipt of supplementary benefit, rent and rates are met in full. That is what happens in practice. But there have to be some safeguards, as the hon. and learned Member himself conceded, for exceptional cases, and that is where the Commission has to consider whether the rent is reasonable in all the circumstances. If it appears unreasonable, the Commission considers each case on its merits.

Before dealing with the particular case, may I refer to the criteria, the factors, which the Commission takes into account when deciding whether someone may be expected to seek cheaper accommodation? Clearly, one of the factors which it takes into account is whether there is acceptable accommodation available at a lower price, and, if there is, what the effect of moving would be on the person concerned and the family. It also takes account of the time the people concerned have been at their present address. They may sometimes have begun to receive supplementary benefit recently, having fallen on difficult times, but have been in the accommodation for a considerable period. That, too, would be a factor which the Commission would take into account. It would also consider how long the family had been receiving supplementary benefit and the likelihood of its continuing to do so.

I hope that I have assured the hon. and learned Gentleman that one of the main factors is the housing situation in the area concerned. There is a right of appeal to an independent appeal tribunal for those who feel that the commission has exercised its discretion in a way of which they do not approve.

To illustrate more clearly the need for safeguards, I remind the hon. and learned Gentleman that in some cases there is local authority accommodation intended for the higher income groups. Whatever he may feel about the wisdom or otherwise of that, clearly the Commission has to take account of it because of the safeguards procedure. There are areas where council accommodation is let to those who are willing to pay a high rent and the occupants are not eligible for rent rebates. This type of accommodation is not restricted to the council's waiting list.

I am sure that the hon. and learned Gentleman will agree that it would not be fair for the Commission to accept as reasonable on a permanent basis rent commitments incurred by tenants who by pass the council's waiting list by accepting high income accommodation and agreeing to pay higher rents. This is a factor which the Commission should rightly take into account in assessing the situation.

Mr. Richard

I take the Minister's point, save only that the type of accommodation about which he is talking and the type to which I have referred in the case of Mrs. Bench is let at market rental. It is not let at an artificially high rent; it is let at the rental which that property would command in the open market. Therefore, I do not see the great distinction between council and private accommodation at market rents. In the second case, surely the Commission would be likely to meet the whole rent if it came to the conclusion that the accommodation was reasonable. I do not accept that if somebody moves into a high-rented mansion he is entitled to get the full rent; but when it is a two-bedroom flat let at market rental, whether private or public, I do not see the great distinction.

Mr. Dean

I will come to private accommodation when I refer to the Housing Finance Bill which is now before the House.

The factor which the hon. and learned Gentleman has neglected is that there are no rent rebate arrangements operating regarding the accommodation about which we are speaking, whereas in the normal arrangements for housing accommodation by local authorities rent rebate arrangements operate. We are speaking about a property to which rent rebate arrangements do not apply which was specifically made available for higher income groups. Subsidy arrangements are not available to those who, as a result of taking this type of accommodation, are able to proceed, as it were, straight into accommodation without being on the council's waiting list. I suggest that this is the main distinction and difficulty which arises in this case.

Mrs. Bench's rent of £7, plus rates, was regarded by the Commission's local officer as unreasonably high for the area at that time, and her rent addition, including just over £1 for rates, was restricted to £5.50. Although it was a local authority flat, it was let at "market value." Because lettings of this kind are intended for people of higher incomes not restricted to the council's waiting list, occupants are not eligible for rent rebate. As Mrs. Bench's income was under £20 a week, she was required to provide guarantors, and her father and sister acted as such. I understand that such tenancies are not normally granted by the council to people who are known to be applicants for supplementary benefits.

In the light of the agreement negotiated last year with the local authority associations, the Commission decided in April, 1971, to revise Mrs. Bench's rent addition. As her letting fell within the "higher income" exception mentioned in the agreement, the Commission decided to allow the amount which would have been allowed under the new arrangement if she had been in a normal local authority allocation. Inquiries of the council showed that this figure would have been £7.18, including rates. Her allowance was therefore increased to provide for this amount, leaving the sum of 93p unmet. The rent would have been met in full on a temporary basis to give Mrs. Bench time to look for cheaper accommodation had she been willing to do this, but it was clear that she had no intention of moving from her accommodation. That is the picture as it appears to the Commission.

Mr. Richard

I do not understand the logic of that situation. First, the Commission considers the rent to be unreasonably high for the area although the local authority, by definition, considers it to be a reasonable market rental because that is the rent at which the accommodation is let. This seems an extraordinary proposition in itself. The hon. Gentleman then says that because it is council accommodation designed for high income tenants, although it is let at a reasonable market rental, the fact that it has that status somehow makes Mrs. Bench's occupation of it different, in the view of the Commission, from private accommodation of exactly the same type, size and rent. I do not see the distinction.

Mr. Dean

The same control procedures would apply in the case of private accommodation; the Commission would also need to satisfy itself that the rent was reasonable in all the circumstances of the case. But the main point I am making about this particular accommodation is that it was of a special type which people were able to obtain without being on the council's waiting list in return for saying that they were prepared to meet a higher rent, and as a result of this the council does not include this type of property within the normal rent rebate arrangements. This is the main distinction and the one which gives rise to the admittedly difficult problem which has arisen in this case.

I come to the broader points which the hon. and learned Gentleman made. An agreement was made some time ago between the Commission and local authority associations. The Commission is empowered to meet only rents which it considers to be "reasonable in the circumstances"—as the appropriate Act makes plain—and in the past local authority rents have generally been sufficiently low to be accepted almost automatically as reasonable.

But around 1968–69 more and more authorities, particularly in the London area, began to depart from the practice of equalising their rents by offsetting some of the cost on to new dwellings against the rents charged for their older housing stock, with the result that the rents of new dwellings rose sharply to levels which the Commission felt unable to meet. By November, 1970, the number of local authority tenants whose rents were not being met in full by the Commission had risen to about 0.7 per cent. of local authority tenants receiving supplementary benefit.

Meanwhile, a working party representing the local authority associations and my Department under the chairmanship of the Department of the Environment had negotiated an agreement setting out the levels of local authority rents which the Commission would meet and the amounts which certain local authorities with rent rebate schemes would pay to the Department to avoid a double subsidy from Exchequer funds.

The vast majority of local authorities have individually accepted the agreement negotiated on their behalf by their associations, and for some time the Commission has been meeting their rents at the agreed level.

The "high rent" agreement broadly provides that the Commission will meet either the standard rent being charged by the local authority or the cost rent of the dwelling, less the subsidy payable under the 1967 Act, whichever is the smaller. In view, however, of the commission's statutory duty to have regard to the reasonableness of individual rents, the "standard rent formula" specifically reserved the Commission's right to consider how far it would be reasonable for it to provide for individual rents in two special categories—that is, where the accommodation was substantially in excess of the claimant's requirements or where it was specifically for higher income tenants, and it is in the latter category in which Mrs. Bench's case falls.

The hon. and learned Gentleman will appreciate that I am not an expert on the Housing Finance Bill nor do I have responsibility for it. However, I undertake to look carefully at and take advice on the point he raised about the Bill. I understand that the general effect which the Bill will have will be not only in situations like this but on those generally who are getting supplementary benefit and those who are getting either all or part of their rent payments met by the Supplementary Benefits Commission.

Under the provisions of the Housing Finance Bill supplementary benefit claimants in local authority or private unfurnished accommodation will pay only 40 per cent. of the rent of the dwelling, the balance being met by the rebate or allowance from the local authority. The Commission will be required in almost all cases to accept as reasonable the total rent figure charged or accepted by the local authority as reasonable. There will thus not be any question of leaving unmet part of a local authority rent—for example, for high income letting—unless exceptionally the rent was so high that the amount of the rebate had to be restricted to the permissible maximum. It would therefore appear that this type of problem, although not entirely removed by the new arrangements, will be much easier to deal with and will be much less likely to arise.

I hope that I have given some assurance to the hon. and learned Gentleman. I shall gladly receive from him further information about the two cases he mentioned of which I have not had notice. Although I have not been able to satisfy him in respect of the case which he has pursued, I hope that I have been able to give him a reasonable explanation of the background to the Commission's decision in this case and the need for safeguards in the exceptional circumstances which it represents.

Adjourned accordingly at twenty-six minutes past Three o'clock.

Question put and agreed to.