HC Deb 23 March 1982 vol 20 cc873-82

Amendment made: No. 67, in page 20, line 20 at end insert— '(aa) for treating any person who occupies a dwelling otherwise than as his home as if he occupied it as his home;'.— [Sir George Young.]

Sir George Young

I beg to move amendment No. 68, in page 20, line 27, after 'relates', insert — '(dd) for enabling any rebate or allowance granted to a person not entitled to it to be recovered by the authority or the Secretary of State, and to be so recovered by deduction from a prescribed benefit;'.

Mr. Deputy Speaker

With this, it is convenient to take Government amendments Nos. 69 and 72.

Sir George Young

I hope that the substantive amendment is straightforward. It has two main purposes. First, it gives the Secretary of State power to recover overpayments of housing benefit. Secondly, it allows him to do so by deduction from prescribed benefits. It also contains a reference to local authority recovery. That is purely technical.

The unamended Bill is wide enough to cover local authority recovery, but, because we are now providing for an alternative channel of recovery, we also need to mention local authority recovery. Otherwise, the inclusion of one means—the Secretary of State—might be taken as suggesting the exclusion of the other, the local authority. I commend the amendment to the House.

Amendment agreed to.

9.15 pm
Mr. Race

I beg to move amendment No. 80, in page 20, leave out lines 30 and 31.

Amendment No. 80 seeks to delete the transitional safety net provisions in clause 26. I make it absolutely plain to the Minister that this is a probing amendment because we wish to have information from the Government about the effects of the safety net. We do not wish to remove the safety net in any way.

The Labour Party believes that 75p as a level of loss beyond which one cannot go is too high, because we do not believe that there should be any losers under the scheme. If there are to be losers, the loss should be reduced to below 75p. However, what we really wish to know from the Government is for how long the safety net will last. We received assurances in Committee that the safety net provision will last for 12 months, with the possibility of renewal thereafter. We hope that we can receive a firm assurance from the Minister tonight that the Government will continue the safety net provisions so that where an individual claimant stands to lose a substantial amount in housing benefit because his means are above the needs allowance the losses that he would incur would be limited, as they will be during the first 12 months of the operation of the scheme.

I also wish to press the Government on the 75p level of loss. We have had some conflicting information so far about the numbers involved in the 75p level of loss. How many people would be affected if the safety net were removed? That is important in relation to the operation of the safety net during the next few years. The Government have introduced transitional provisions. Our probing amendment seeks simply to elucidate information. I hope that the Minister can now tell us that the safety net will continue for a considerable time.

Mr. Andrew F. Bennett

I too wish to use this as a probing amendment and I wish to find out whether what the Minister said in Committee still stands—that he will pinch the Christmas club money from my constituents who are on supplementary benefit. His statement in Committee was one of the most disturbing and mean aspects of the legislation.

I explained in Committee the problem that faces most people on supplementary benefit. They never receive their full rent from supplementary benefit. They are paid a little short in almost every week because supplementary benefit operates on the basis that there are 52 weeks in the year whereas most local housing authorities work on the basis of 50 or even 48 weeks. The custom and practice has developed in local authorities that it is not convenient to collect rents at Christmas and holiday times. By not collecting then, the annual rent is divided between 48 or 50 weeks. The tradition grew up that one had a rent-free week either at Chrismas or at the town's holiday period. It was not really a rent-free week, because the money was distributed over the rest of the year.

Many local authorities have now formalised the system by which the claimant receives two rent-free weeks at Christmas. The result is that most claimants of supplementary benefit receive so much less each week than their full rent and that has to be made up out of other income. At Christmas they receive two weeks' rent money from supplementary benefit, which they do not have to pay to the housing department. Effectively, they end up with two weeks' rent money that is saved for them for just before Christmas. In Committee I asked the Minister whether those people, when the change-over to having the rent paid direct occurs, will be credited with the two weeks. For many claimants the sum works out to between £30 and £40. That is a considerable amount of money.

Will the Minister confirm that, in the transitional period, he will not, as he suggested in Committee, take the money away from them but instead will make the transitional provisions such that when people switch from receiving the rent, which must be handed over to the local authority, to a position where the rent is transferred directly, they will not lose that money because of the difference in calculating rent on 50 weeks and supplementary benefit on 52 weeks?

I hope that the Minister can give that assurance. If he cannot, many of my constituents who traditionally have seen the two rent-free weeks as a bonus that has managed to get them through all the extra expenses associated with Christmas, will be extremely bitter.

Sir George Young

Whatever were the objectives of the hon. Members for Wood Green (Mr. Race) and Stockport, North (Mr. Bennett), they will not be achieved by pressing the amendment, which could deprive the Secretary of State of the right to make most transitional arrangements. Therefore, I hope that the amendment will not be pressed, because it would disadvantage many people.

The most obvious effect would be to prevent the arrangements being made to protect the taper losses over 75p on a marked time basis. The hon. Member for Wood Green suggested that such protection should be made a permanent feature of the scheme, or, at any rate, that it should be carried on for a considerable period. The new tapers for incomes above the needs allowance will be 21p under the rent scheme and 7p under the rate scheme. They will apply to all incomes above the needs allowance and will appear in the regulations as part of the statutory scheme. But because the tapers are higher than the existing ones, some tenants stand to lose 5p for each £1 of income above the needs allowance.

The transitional measures that the House is being invited to delete enable us to limit such taper losses to 75p on a marked time basis. Without the regulations, there would be no compensation. If this were made a permanent feature of the scheme, it would cost about £14 million at current prices. The finance is not available to put that amount of money into the scheme on a permanent basis without finding it from somewhere else. That would create new losers so the problem would not be solved at all. I cannot accept that spending £14 million in the way that has been suggested is the most sensible way of using the resources available.

I was asked to give the number of people who are protected by the safety net. It is estimated that 460, 000 people benefit from restricting the taper losses to 75p. Our intention is to phase it out over a period of time but the method has not finally been settled, and we shall have to discuss the matter further with the local authorities.

The hon. Member for Stockport, North referred to the two rent-free weeks at Christmas. This is a matter of swings and roundabouts. It depends when one joins the scheme and at what point one leaves it. The hon. Gentleman mentioned the losers, but there are, of course, some gainers whom he did not mention. It is undeniable that some people with rent-free weeks over the Christmas period will lose as a result of the partial introduction of the benefit scheme in November. However, those with rent-free weeks outside that period, and before the partial start, will gain. This type of effect has always been implicit in the scheme. When there are rent-free weeks, and a different basis for compensation, there will be gainers and losers. The simple answer is that it is not practicable to compensate individuals for this, because it would involve establishing the duration of each claimant's entitlement during the 1982–83 financial year and separately calculating adjusting payments. In fairness, one would then have to recover money from those who had gained in order to compensate others. The administrative complications do not justify the effort involved.

Mrs. Ann Taylor

The Minister mentioned administrative complications. Surely he agrees that the safety net will be difficult and complex to administer by local authorities. Will he acknowledge that if the Government had accepted the new clause that we moved earlier with different taper rates of 19p and 6p, the safety net proposed in the transitional arrangements would not have been necessary? Will the Minister also tell the House exactly what the maximum amount is that any family may lose once the safety net is exhausted after a year, if that is the transitional period? When the original consultative document came out, it seemed that some families would lose a great amount of money each week. The Minister proudly said in Committee that he would limit those losses in the first year to 75p. What is the maximum once that safety net no longer exists?

Sir George Young

The hon. Lady raised two points. With regard to her first point, I was in the Chamber when she proposed an alternative method for dealing with the tapers. However, it was never clear to me where the money was to come from. Unless the hon. Lady wants to alter the basis on which the Government have brought forward the scheme, that is a nil-cost basis, she would create losers somewhere else. If her answer is that we should have found additional money from the £30 million or another source, she is entitled to make that argument, but it cuts clean across the basis on which the Government have introduced the scheme.

Secondly, the hon. Lady pressed me for a figure which, I am happy to say, I cannot give because that would depend on the basis of the upratings when the protection was withdrawn. If one withdrew the protection at the time of an uprating, in cash terms any financial loss might be reduced to nil. However, the information is not available to me. As we have not decided at what rate the 75p will be phased out, that is not a question that it is practical for a Minister to answer.

Therefore, I hope that amendment No. 80 will not be pressed as it would be disadvantageous to many people. I hope that the assurances and the figures that I have given will be acceptable to the House.

Mr. Race

We are grateful for the information that the Minister has given, but I am disturbed by the fact that nearly half a million households will be protected by the safety net. Given the large number of people involved, it is important to protect them against the consequences of any removal of the safety net at any stage.

As the Minister is not, for understandable reasons, capable of saying what would be the consequences for individual families if the safety net were removed and what would be the maximum loss that those families would incur, it is incumbent on the Government to come back to the House at a suitable moment and to say when they intend to announce the way in which the safety net will be dealt with over the next few years. I hope that they will make a statement to explain who will lose, when and why.

The Government are being mean over the way in which they are dealing with the administrative costs of die Christmas bonuses to those who receive housing benefit. It is important that people do not lose under that scheme. I would not like to see any of my constituents or those of my hon. Friend the Member for Stockport, North (Mr. Bennett) losing because the council in their area operated a 50-week rent year rather than a 52-week rent year and that the rent-free weeks were being withdrawn because of administrative decisions.

However, we did not want to detain the House for long on this amendment. For the reasons that I have given, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9.30 pm
Mrs. Ann Taylor

I beg to move amendment No. 77, in page 20, line 31, at end insert— '(2A) In making regulations under this section the Secret try of State shall ensure that any payments for furniture paid as part of the rent for the dwelling shall be included in the assessment of rent eligible for rebate purposes'. The amendment is concerned with those people who live in furnished accommodation and who have to pay an amount for furniture as an integral part of the rent that they pay each week or month. We discussed this briefly in Committee and the Minister made some remarks that I hope he will be able to take further this evening.

We were told that the clause already in the Bill is sufficiently wide to allow the Government to direct authorities that any payments in respect of furniture or furnished accommodation could come under the scope of subsequent regulations. The Minister said that it could all be done later by regulation.

We hope that the Minister will now have had time to consider the points made to him in Committee, and that he will tonight make a clear commitment that the Government intend to include furnished accommodation as eligible for full rebate of the whole of the rent being paid weekly. We think that that is the only way to be fair to those forced to live in furnished accommodation.

There are two points that the Minister must bear in mind. One is that there are people who are receiving money for the furniture part of their rent at the moment and that unless he gives an assurance that this will continue some people will be losing the money that they now get.

Secondly, the Minister has to acknowledge that those who live in furnished accommodation do not, by and large, do so out of choice but because they have no alternative accommodation available. Therefore, they are forced to pay for the furniture, good or bad, that might be provided by their landlord. They have no option, so that part of their rent should be included in the assessment.

The amount of money that we are discussing is extremely small in the Government's terms or even in the terms of this legislation. We are talking about £1 million only. Therefore, the Labour Party expects a clear commitment from the Minister, not simply assurances that he will go away and look at this again. We want a simple, straightforward statement that he will include furniture or that he will accept our amendment and give us a guarantee that that will go into the regulations that he will subsequently bring to the House.

There has been no give by the Government this evening. They have not spent an extra penny all day. The changes announced at the end of the Committee stage in the RPI for supplementary benefit and the removal of housing benefit will, for the reasons given, which were acknowledged by the Minister for Social Security earlier, allow the Government a saving of possibly £30 million in a full year. On that basis, the Government will be making a profit out of the proposed changes and I urge the Minister to give us an assurance that the measly amount of £1 million will be used for those living in furnished accommodation.

Sir George Young

The hon. Member for Bolton, West (Mrs. Taylor) has made the speech that her hon. Friend the Member for Stockport, North (Mr. Bennett) expected her to make in Committee when we dealt with this matter. There is a good case for making these charges eligible for housing benefits to bring them into line with the supplementary benefit scheme, although one could argue that this would give tenants with furnished accommodation an unfair advantage over those with unfurnished accommodation as the latter have to make provision for furniture out of their resources.

The hon. Lady is preaching to the converted. The difficulty is, as always, money—perhaps £1 million a year. The hon. Lady suggested that we were making money out of the scheme. It is being introduced basically on a nil-cost basis but we are putting back into the scheme roughly £10 million of the administrative savings.

There is a cost because furniture charges are not currently eligible for rent rebates or allowances. We are talking about additional benefits. The cost would have to be found from savings elsewhere in the scheme. We are examining whether it will be possible to arrive at an acceptable method of financing such a change. We intend that the extra help will apply to both rebate and allowance schemes and not only to rebates, as has been suggested in the amendment. If we followed that proposal, the consequences would be unfair to private tenants.

As the hon Member for Bolton, West has implied, the amendment is unnecessary because the powers in clause 25(3) are already sufficiently wide to permit any payments in respect of dwellings to form part of the eligible rent for housing benefit purposes. The regulations will specify which charges will or will not be eligible. They could in theory include as eligible charges for furniture.

If the finance can be found, the appropriate regulation will be drafted. I cannot give a firmer assurance than that. We have not reached the check-out yet, and we are not able to make a final calculation of the cost of the scheme. If we can find the money, the regulation will be drafted. I concede the force of the argument that the hon. Lady has advanced. In the meantime, I invite my right hon. and hon. Friends to resist amendment No. 77.

Mrs. Ann Taylor

I do not think that that response from the Minister is adequate. It is not suficiently sympathetic to say that the amendment can be accepted only if savings are found elsewhere. Surely the Minister will be able to find the £1 million that we are discussing when examining administrative costs and rounding up the figures. I accept his argument that allowances should be covered as well as rebates. I cannot accept that we should be putting those who live in furnished acommodation at an advantage over those who live in unfurnished acommodation by implementing the amendment. Most of those who live in furnished accommodation do not do so out of choice. They accept that accommodation because they cannot find alternative accommodation.

The Minister's answer is extremely disappointing. I hope that by the time the Bill reaches another place he will be far firmer. If he is not, I am sure he will find difficulties in another place. In view of the timing that is on us this evening, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mrs. Ann Taylor

I beg to move amendment No. 78, in page 20, line 31, at end insert— '(2A) In making regulations under this section the Secretary of State shall ensure that no discretion is given to a local authority to determine that the rent or rate payable for accommodation is unreasonable unless the authority is first satisfied that the applicant entered into accommodation with the intention of taking unreasonable advantage of the rebate or allowance scheme.'. The amendment concerns eligible rents. We had a useful discussion on this topic in Committee. Some concern was expressed by myself and my hon. Friends about the way in which the regulation might be interpreted by local authorities and the way in which it might be used to put pressure on tenants to move to what the individual tenant considered to be less suitable accommodation.

When we discussed this issue in Committee, the Minister was relatively sympathetic. That is presumably because it was the Under-Secretary of State, who is much better at making sympathetic noises, if not at delivering anything when the time comes. The hon. Gentleman said that he thought that local authorities would not use the provisions on eligible rents except in exceptional circumstances. He said that if an elderly person were living in a three-bedroomed house on his own because the rest of the family had moved out, he would not think it acceptable for the local authority to put pressure on that person to move from the family home to a flat or a smaller dwelling in an unpopular area.

We would like a repetition of the assurance that the Minister gave, not least because the Minister for Social Security was not quite as forthcoming when he met outside pressure groups to discuss the issue. We would welcome a renewed assurance from the Under-Secretary of State that he stands by what he said in Committee and that what he said then will be the basis of the regulations and guidelines that the Department will issue.

Mr. Race

This is an important amendment as Opposition Members do not want local authorities to concentrate people on low incomes requiring substantial housing benefit on particular estates. That will be a temptation unless the Government make it absolutely plain in regulations that local authorities must not do it. There is a danger that local authorities will concentrate beneficiaries of housing benefit on estates where there are relatively low rents to minimise the amount of money that they must pay in benefit.

We note that the Under-Secretary of State for the Environment gave assurances on that point in Committee. We hope that he will either accept the amendment or give some specific assurances about non-discrimination. It is not just a question of discrimination that local authorities may practise against people in receipt of housing benefit whom they concentrate on particular estates. It is a question of discrimination in other areas, which the Under-Secretary of State knows is important from his experience of wearing his other hat. I do not want to see concentrations of ethnic minority communities who may claim housing benefit in a way that was never intended by the House. I hope that the Under-Secretary of State will be forthcoming on that matter.

Sir George Young

The hon. Member for Bolton, West (Mrs. Taylor) said that I was more sympathetic than my hon. Friend the Minister for Social Security. We possess sympathy in equal quantities but fate has dealt my hon. Friend the more difficult amendments and new clauses. He has dealt with them very well.

In the new housing benefit scheme, the Government are abolishing the maxima of the amount of benefit that a claimant can receive. That is helpful. We are making the change because we believe that there are circumstances where application for the maximum by, for example, a large family on a low income who need a large house, could be treated harshly. On the other hand, there must be some safeguards of the public money that is spent on benefits. Even Opposition Members will agree that we must prevent abuse. We should not use public money to satisfy exaggerated or unrealistic housing ambitions. To prevent that, we have decided quite simply to follow the practice of the present rent allowance schemes. Thus, a local authority will be given discretion to reduce the amount of rent or rates considered as eligible for housing benefit when the property is too large or the rent is too high when all the circumstances are taken into account.

The movers of the amendment obviously accept that there is a need for such a power but seem anxious to restrict rather severely its use. Even given that an authority could satisfy itself that someone was moving into a dwelling that was too expensive with the intention of taking advantage of housing benefit, as opposed to making a foolish miscalculation, the amendment would allow possible abuse to go unchecked. For example, the authority would be left powerless if there were collusion between a landlord and an existing tenant to raise rents to take advantage of housing benefit. We do not wish to see that loophole left open.

Local authorities have discretion in respect of rent allowances and they have exercised that discretion since 1972. Opposition Members have not produced one instance in the past 10 years of that authority being misused. This matter has been debated at some length in Committee but there is no evidence that that power has ever been used arbitrarily, nor do I think that it will be. Good management by housing authorities should mean that that power is exercised little with regard to rebates and we certainly do not expect those powers to be used to force elderly persons to move from their family homes.

In response to the invitation from the hon. Member for Bolton, West, I repeat the assurance that I gave in Committee: it is not normally reasonable to expect an elderly or infirm person to move out of their family home. Nor would it be considered reasonable, for example, to reduce the eligible rent of a council tenant on the grounds that a dwelling was unnecessarily large if the council was unable to offer alternative, smaller accommodation of similar standard in the area."—[Official Report, Standing Committee B, 16 February 1982; c. 473.] The assurances that I gave stand and we shall abide by them.

I assure the House that the Government will make quite clear by regulation that the age of a claimant must be taken into account before the local authority's discretion is exercised. We shall be giving detailed guidance on its use in the circular that will accompany the regulations. That, rather than making amendments to primary legislation, is the proper approach to the matter.

In response to the hon. Member for Wood Green (NIL Race), we do not expect the provision to be used in any way to concentrate ethnic minorities on particular estates. That would be an undesirable consequence that we are anxious to avoid.

With those assurances, I hope that the hon. Lady will seek leave to withdraw the amendment.

9.45 pm
Mrs. Ann Taylor

When the Under-Secretary of State began to speak, I thought that he had picked up his hon. Friend's brief as he seemed distinctly less sympathetic than he was in Committee. However, he then repeated the points that he had made previously. We certainly hope that when the regulations and guidelines are drawn up all the points that he made will be explained clearly and that local authorities will not be allowed to use the new provisions to discriminate against people whom they wish to remove from larger accommodation.

In anticipation that that will be the case, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Andrew F. Bennett

I beg to move amendment No. 81, in page 20, line 33, leave out from 'dwellings' to 'include' in line 34.

We put down the amendment to get the Government's comments about the treatment of people with mortgages. The scheme was introduced on the basis that it was to be a new combined housing benefit. Yet within the scheme an exception is made from the start in that those buying their houses through a mortgage who need assistance from supplementary benefit will in that respect be kept separate and not dealt with under the combined scheme. If we are to have a combined scheme, it is unfortunate that one category should be separated out at the start. The Government should have given more thought to this.

First, it is most unfair that a person receiving supplementary benefit who has a straightforward mortgage receives assistance with the interest for as long as he needs it, but no assistance with the capital, while a person with an endowment mortgage, because he pays only interest, receives the full cost in supplementary benefit. That is clearly an anomaly.

Secondly, a person buying his own house through a mortgage applies for supplementary benefit to assist with the mortgage, but, as I understand the scheme, he must still go to the town hall, passported, to obtain assistance with his rates. It seems particularly bureaucratic that a person who receives most of his housing cost from supplementary benefit must still go on to the town hall to obtain assistance with his rates. If the Department is not handing over to the local authority responsibility for payments towards the mortgage, it seems far better that he should receive one benefit from supplementary benefit to cover both the mortgage interest and the rate rebate.

Sir George Young

The Government have addressed themselves to the issues mentioned by the hon. Member for Stockport, North (Mr. Bennett) and they were touched on in the consultative document "Assistance with Housing Costs" that we issued in March last year.

In response to the hon. Gentleman's final point about the owner-occupier who has two ports of call to obtain help with his rates and with his mortgage interest, one must set against that the number of council tenants who in the future will have to go to only one place rather than two. I think that he will find that there is an overall reduction in the number of visits.

The hon. Gentleman's basic question was why we had excluded owner-occupiers from housing benefit. To a certain extent, as he pointed out, they are not excluded as they are eligible for rate rebates and their entitlement will depend on income in relation to needs, as expressed by the needs allowance and the amount of rates paid. However, owner-occupiers do not qualify for payments of mortgage interest under the current HB proposals. To that extent, therefore, there is really no change from the existing system for rent rebates and rent allowances. The reason for that is that owner-occupiers in receipt of supplementary benefit usually have their mortgage interest payments met in full, while others can claim tax relief on the interest payments or its equivalent in the form of option mortgage subsidy. To have substituted housing benefit for these arrangements would have meant a much more thorough-going, complex and arguably unnecessary reform than that which the Government have proposed, since housing benefit builds simply on the existing system of rents and rates assistance provided by local authorities.

Alternatively, to have added housing benefit assistance on to mortgage tax relief, for those receiving this, would have greatly added to the costs. If one did it on a nil-cost basis one would have had to claw back the losses from some other beneficiaries. That is why owner-occupiers are excluded from the HB system. We basically believe that the existing arrangement for helping people on low incomes on supplementary benefit is the right one, and one has the added saving in that, whereas with rents the local authority is the body receiving the rent, that is not the case with those who are paying mortgages.

For those reasons, the Government are anxious to resist the suggestion that owner-occupiers be included within the HB scheme. We see very little advantage to owner-occupiers, and we see a lot of administrative complications, and perhaps some additional costs which the Government simply cannot accept.

Mr. Andrew F. Bennett

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 69, in page 20, line 45, at end insert— '"prescribed" means specified in or determined in accordance with regulations'—[Sir George Young.]

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