§ The Secretary of State for Social Security (Mr. John Moore)
With permission, Mr. Speaker, I shall make a statement about payments of income support to people in hostels.
People living in hostels at present have their benefit calculated under separate rules from other claimants. Those separate rules are an anomaly carried over from the old supplementary benefit system. They developed more by historical accident than by planning based on objective criteria. The proposals I am bringing to the House today will replace those haphazard arrangements. Hostel dwellers will receive benefit under the same rules as other claimants, and money now reaching hostels through benefits will be channelled more sensitively to the hostels direct.
From April the vast majority of claimants, including people living in board-and-lodging accommodation—often little different from hostels—will receive benefit from two main sources. Their personal needs will be catered for by income support, with special premiums for well-defined groups, and accommodation charges will be met by housing benefit administered by local authorities. There are different rules for people living in hostels. They currently receive help through income support alone, both for their own needs and to meet the hostel charge. Benefit is calculated on the basis of a complex set of allowances which bear little relationship to claimants' actual needs.
There is a wide variety of hostels, catering in different ways for groups of different ages and with different needs. Some deal with individuals who need little in the way of special help, and provide little more than a place to sleep. Others might cater for severely disabled people with a host of special needs, and furnish a wide range of amenities and a high level of care and attention from skilled and dedicated staff.
The present system was never intended to cope with this diversity, and it never has. In July last year the Government therefore issued a consultative paper seeking views on ways of changing the present arrangements. Many of those who responded to that paper accepted that the present arrangements were unsatisfactory, and the Government have concluded that the social security contribution to hostels' revenue should be put on a sensible basis. I shall shortly be laying regulations before the House which provide for this. From 9 October 1989, housing benefit will meet the basic accommodation costs of hostels as it does for accommodation costs of other kinds.
The personal needs of claimants and their families will continue to be met from income support, but on the same basis as operates for other claimants. This will provide access to precisely the same allowances and special premiums available to other claimants. It will also ensure that claimants do not have perverse incentives to seek a particular form of accommodation because of anomalies in the benefits available, rather than because that accommodation best fits their needs.
In putting assessment on a new footing, some claimants, particularly more elderly ones, will find that they are better off. Equally, others would have lower benefit entitlements under the new rules. I will ensure that existing claimants are protected from any adverse effects. 547 Those living in hostels at the time of the change will be compensated for any loss in benefit income. They will continue to receive compensation to bring their benefit up to at least its former level in cash terms for as long as they live in the same hostel.
Under the previous arrangements, however, social security may have contributed to some of the costs of providing care included in hostel charges. In future, housing benefit will normally cover only the accomodation element. The Government fully share the concern expressed by many respondents to the consultative paper that hostels should not suffer an unintended reduction in revenue as a result.
Hostels play a valuable role in helping many vulnerable people to live in the community. The Government are fully committed to supporting that. We have encouraged, and in many cases made possible, the large growth in hostel provision in recent years. Some £300 million has been committed in capital funding alone. We are as anxious as the hostel movement to protect that investment.
In line with that commitment, I am determined to find the right way to put benefit payments on a more sensible footing, while at the same protecting hostels' ability to provide care. In the longer term, the best way of encouraging and supporting that work must be through the familiar existing methods for channelling direct funding to hostels—through central Government grants, charitable organisations and local authorities. In that way, hostels can obtain a greater proportion of their income from organisations which are better attuned to their needs and aspirations.
This will be an important shift in the funding arrangements for hostels and I am taking great care over how the changes are made to minimise any disruption. Hostels need time to adjust. They need to see in practice what difference the new benefit system makes to their incomes before they can establish whether they need extra funding and how much.
We shall shortly open discussions with the local authorities and the hostel sector on the best way to redirect the money made available by the October benefit change. The aim will be to utilise existing funding methods, including social services and social work departments, Home Office after-care accommodation schemes and funding for approved probation and bail hostels. This will also clearly be much easier once it is possible to see exactly how the benefit changes affect individual establishments.
My Department will therefore make payments direct to hostels for 18 months after the changes—that is, until April 1991. I am establishing a special unit to do this, which will be responsible for assessing the effects of the proposed changes on individual hostels and making direct payments to compensate for any resulting loss in revenue from charges currently met by income support. The unit will also compile information on the effects of these changes on the hostel sector to facilitate the redistribution of resources to other budgets after April 1991.
I can assure the House that I shall be looking to transfer to these budgets the total amount which the special unit pays to hostels during the interim period. I stress that these changes are not prompted by a desire to reduce the money that we are already spending.
What is more, from October my Department will transfer to the Department of the Environment and the Scottish and Welsh Offices, additional sums to help new hostels which open after October 1989 but whose financing 548 has been planned on the assumption that the present income support levels would continue. These sums will total over £2 million in a full year.
I shall he writing today to all hon. Members, setting out the background to these measures in greater detail.
People living in hostels account for only 28,000 claimants—less than 0.5 per cent. of income support claimants—but I am sure the House will agree that it is right to safeguard the valuable role played by hostels. These measures demonstrate the Government's concern to achieve a simpler and more comprehensible social security system while at the same time protecting hostels and claimants. The end result will be a simpler and fairer system with no reduction in the amount of money available to hostels. I trust that this will be widely welcomed.
§ Mrs. Margaret Beckett (Derby, South)
First, there is little doubt that the extent to which the Department has moved away from its original disastrous proposals will be welcomed, although I note that the Secretary of State says that at present the benefits are calculated on the basis of a complex set of allowances which bear little relationship to claimants' actual needs, and it appears that it is proposed to replace this with a simple set of allowances that bear even less relationship to claimants' actual needs. Certainly it is also agreed that there is a need for review, especially as the rates of payment have been frozen for four years, which in itself is an unsustainable position.
However, since it is clear that the Government have, mercifully, abandoned their first proposals but have not decided what to do in the long term, it is hard to see why they are so determined to move in October when it is plain that, though they may know the station they are leaving, they do not know their destination.
Is the Secretary of State aware that it appears that what he proposes will still cause considerable disruption? Hostel budgets for this coming year will probably have been set since last July, particularly if they are negotiated with local authorities. Their budgets for 1990–91 would normally be negotiated and settled this coming July, but even then the changes he proposes will be in the following October and will affect this year's and next year's accounting without their effects being known.
Moreover, it seems that the effects will vary from one hostel to another. It is clear from the statement that the effect on each hostel will have to be assessed, and assessed after its budget has been determined, which seems to us to be a recipe for some degree of chaos.
It seems that the scale of losses of the hostels will vary and will in many cases be substantial. Perhaps the Secretary of State could confirm that already, out of a cost of, say, £145 a week for providing a place, £70 is the maximum paid on behalf of the resident and £75 or so has to be found from grant-making bodies, and that already most of those running hostels are seeking further funding from those organisations? Indeed, the report commissioned by the Department from the Policy Studies Institute indicates that charges to residents were calculated to compensate for the vagaries of grant aid. That is under the existing system.
The hostels which provide care for the young will find that housing benefit, like income support, is now being age-related and that they are likely to receive the junior rate of benefit, which I believe means—again, perhaps the Secretary of State could confirm this—that the amount 549 they receive for their housing support could be substantially reduced, perhaps even halved. I recognise that he says in his statement that the Department will protect existing residents, but that presumably means that the impact on each hostel will vary with the speed of turnover. Can the Secretary of State explain how the Department thinks it can reflect that?
The position of women's refuges, it seems to us, could be even more serious. Because the size and age of family alone determine the level of basic income due and therefore whether full housing benefit can be paid, the move to housing benefit for accommodation costs means that there will be no reflection of the size of family. Housing benefit is a property charge benefit alone. Does the Secretary of State recall that one hostel in Leeds received £18,500 in 1987–88 purely on account of the children who live there? Presumably, the hostel will lose that money. The speed of that loss will vary as claimants move in and out of the hostels and as transitional protection is lost.
Does the Secretary of State recognise that cash flow is already a major problem for many of the hostels, particularly for the women's aid refuges? How fast does he anticipate the unit which he mentioned will be set up? How fast does he expect it to deal with compensating payments for the losses which will be experienced as short-stay residents move?
The statement suggests that whether and how much hostels will lose will be assessed on an individual basis and long-term replacement money will be sought from a variety of Departments. That conjures up the hideous picture of 3,000 hostels trailing from one Department to another and each Department disclaiming its real responsibility because none has the wish to pick up the bill. Will the Secretary of State give the House an assurance today that no hostel will be left to fall between two, three or five stools and that if need be his Department will pick up the bill, even in the long term?
The initial proposals were announced a year ago. Since then there have been changes to what is proposed today, but I understand that there has been no real consultation. Does the Secretary of State recognise that there is regret that the Department has put forward proposals before full consultation and before the announcement of decisions on the Griffiths report as many people in the sector feel that those changes have to be taken into account across the board? While we are relieved that the Secretary of State has not pulled the whole building down, we fear that his statement leaves provision very rickety, and we should be glad for any further clarification that he can offer.
§ Mr. Moore
If that was a grudging welcome for what the Government have done, I should hate to hear the criticism. The Government have listened very carefully and, as a conscious recognition of the valuable role of the hostel sector, have ensured that hostels do not lose money by the changes. It is quite clear that, despite that relatively difficult welcome, the hon. Lady has been desperately trying to find problems in the statement. [HON. MEMBERS: "Get on with it."] Less intelligent sedentary reactions from Opposition Members sitting below the Gangway always demonstrate that the Government are on the right track.
The hon. Lady has tried to refer to the disruption that will occur. Those who are concerned about the continuing 550 success of the hostel sector will be aware that, although the hon. Lady said that we did not know what we are doing, we are doing precisely what we had planned to do to guarantee the successful continuation of the hostels and their charges. We are putting hostel accommodation on all fours with board and lodging and local authority and private sector rented accommodation. We are also providing extra money for new hostels and confirming the existing position for others.
The hon. Lady asked me to explain about the £70 maximum. She will know that at the moment most hostels have an interconnection with many different sources of the funding they receive. On average, about 42 per cent. of their total funding comes from grants and support sources. We are trying to ensure that the sensitive way in which that current position is protected is preserved for the future so that the existing funding bodies which are more able to judge their interest will be able to help.
The hon. Lady referred to young people. I remind the House that a detailed analysis of the 28,000 people in hostels shows that just under 700, or 2.5 per cent., are in the 16 to 17-year-old category. The hon. Lady is quite right to say that those who are new to the system and those who move to new hostels will not receive the same rate of income support. However, under the present system there are many perverse incentives whereby a young unemployed person of 18 living in a hostel may be doing better than a young person living in a hostel who is in work earning a low salary.
The hon. Lady asked about women's refuges. We all strongly support their excellent work, but the hon. Lady would not want to argue that the system for providing accommodation and income support should make it more attractive to women to be supported in refuges than in normal accommodation.
The hon. Lady asked about the speed of the change. Before October, there must be consultations with local authorities. Benefit offices must establish the precise entitlements of claimants to housing benefit and income support.
The proposed special unit will ascertain whether a person has moved from a hostel. After October, the unit will then immediately ensure that the income to the hostel never falls below its planned level.
The hon. Lady asked about the effect of the Griffiths report. Indeed, my right hon. Friend the Leader of the House referred to that report earlier today. But hostels are not like the registered homes, upon which the report mainly focuses. We look forward to further statements by the Secretary of State for Health on that matter.
When the hon. Lady has had time to reflect on my statement more carefully, I hope that see will realise that we have done the most important thing that we have been asked to do, protect the hostels, while simplifying and improving the benefit system. I know that many hon. Members take an interest in these matters, so I have written to every hon. Member giving many details of the changes.
§ Mr. Speaker
Order. As I have said, there is great pressure from hon. Members wishing to speak in the debate. Therefore, I urge hon. Members to ask brief, perhaps single, questions of the Secretary of State, as the House will certainly return to the matter subsequently.
§ Mr. Frank Field (Birkenhead)
Will the Secretary of State guarantee that no hostel dwellers will be made homeless as a result of these changes? The Secretary of State talked about his projected Budget, but will there be more or fewer hostel dwellers three years hence?
§ Mr. Moore
The hon. Gentleman knows full well that I cannot estimate whether there will be more hostel dwellers. Government support for this sector has increased. The population of 15,000 hostel dwellers in 1985 has increased to 28,000, and it has received tremendous support from the Government. I confirm that the moneys now going to the hostels will continue undiminished. However, I cannot guarantee what each and every hostel will do for the people living in them. But the money is assured under the new arrangements.
§ Mrs. Marion Roe (Broxbourne)
I welcome the proposals by the Secretary of State, but could he tell the House how housing benefit levels will be set?
§ Mr. Moore
It will, of course, be up to local authorities to establish housing benefit levels, on a similar basis with other forms of accommodation. Returning to the questions posed by the hon. Member for Derby, South (Mrs. Beckett) it is hard to be precise about the financial implications of the changes, because they will depend upon the levels of recoupable housing benefit, which have yet to be established. Those benefits will determine the precise compensation in the charging structure relating to each hostel.
§ Mr. Archie Kirkwood (Roxburgh and Berwickshire)
There is substantial worry about the impact of these proposals on women's refuges because of the problem of high turnover and difficulties relating to the level of care that each family unit might require. Can the Secretary of State guarantee that, after the transitional arrangements expire in 1991, no hostel will close as a result of these changes?
§ Mr. Moore
I hope that the hon. Gentleman listened to my statement, because I was not trying to denigrate, but rather to compliment, the role and function of places like women's refuges. I was saying that the existing system does not allow us to support these organisations effectively so as to maintain the level and quality of care provided.
Therefore, we shall protect refuges throughout the transitional period at the current level of funding. We shall ensure that hostels, including women's refuges, are protected. At the end of the transitional period, all the money held by the special unit will go to the relevant bodies, which deal with the difference between housing benefit and income support, which hostels receive at the moment.
The hon. Gentleman should examine the proposals carefully. I cannot guarantee the precise position in 1991, although I can guarantee that the full resources that are being spent now will go to hostels. The hon. Member for Derby, South (Mrs. Beckett) rightly says that hostel rates have not changed since 1985. But there is an annual uprating of income support and housing benefit, which reflects the annual decisions of local authorities and the advice of rent officers. Therefore, one could foresee that housing benefit and income support will be subject to different factors from the increased money for hostels, which we shall protect.
§ Mr. Roger Sims (Chislehurst)
I thank my right hon. Friend for the sensitive manner in which he has listened to representations made to him in recent months. Does he agree that the measures that he has announced meet most, if not all, of the concerns expressed not only by those who run hostels but those who use them? Has he not safeguarded the future of charitable hostels, which play such an important part in our community?
§ Mr. Moore
I am grateful to my hon. Friend, who takes a serious interest in these matters. I am surprised at the grudging manner of the Opposition, because we have tried to protect the funding of these important and valuable organisations. The hon. Member for Derby, South suggested that we have ignored consultation, yet at the same time said that we have made major changes to our original proposals. We have listened carefully and made the statement in a way that takes account of hostels' concerns, because, as my hon. Friend said, we wish them to continue to play their valuable function.
§ Ms. Diane Abbott (Hackney, North and Stoke Newington)
Has the Minister ever visited a women's refuge? Is he aware of the sad and tragic women who have to use refuges? Will he give an assurance that no women's refuge will close as a result of these proposals, because the consequences would be that women would not only be homeless but would go in fear of their lives?
§ Mr. Moore
Yes, I have visited a women's refuge. The hon. Lady would not want to distinguish between her natural supportive emotions and what I have said. I have said that the present financial structure that supports these organisations will continue and will be protected. I cannot comment on each and every women's refuge or hostel in this country—[Interruption.] Despite sedentary interruptions, I confirm that funds given to help these organisations will continue.
§ Sir Ian Lloyd (Havant)
I give a warm welcome to what is undoubtedly a sympathetic, imaginative and generous scheme, which I have followed closely. Tomorrow, I shall be receiving a delegation from a hostel—before I receive my right hon. Friend's letter—that is facing imminent closure for financial reasons well before October. May I give them my right hon. Friend's specific assurance that that will not happen?
§ Mr. Jeremy Corbyn (Islington, North)
Does the Minister agree that there are inadequate hostel places, that the number of homeless people is increasing rapidly, that his Department should ensure an increase in hostel places and that the total cost of running hostels should be met by his Department, because there will be an increasing gap in the future? The Minister did not reply to the question asked by my hon. Friend the Member for Hackney, North and Stoke Newington (Ms. Abbott). Will he assure us that none of the women's refuges, which are worried about the severe threat of closure, will close as a result of lack of funding from his Department?
§ Mr. Moore
I repeat what I said to my hon. Friend the Member for Havant (Sir I. Lloyd): no hostels need fear for their future because of these recommendations or this statement. I also repeat what I said a little while ago: hostels, which have experienced an increase in the number of people using them from 15,000 to 28,000 people over the past three or four years, need have no fear about the support that my Department has given. They must distinguish between the simple and sensible way in which we try to help people through the benefit system and housing benefit, and the specific additional help—which is tailored and targeted to meet the needs of various hostels—that could develop from retaining this money in the hostel sector.
§ Mr. Robin Squire (Hornchurch)
My right hon. Friend and the Minister for Social Security deserve praise for being prepared dramatically to rethink the original and inadequate proposals. Can he confirm, first, that these proposals will result in an increase in net expenditure? Secondly, does he agree that, in conjunction with the earlier statement this week about assistance to 16 and 17-year-olds, this represents very good news for homeless young people?
§ Mr. Moore
I am very grateful to my hon. Friend, who follows these matters very closely indeed. He is right to see the interrelationship between the statement of my hon. Friend the Minister of State about 16 and 17-year-olds and the decision that I have announced today. As we have said throughout, we are trying, within the strategy of the social security reforms, to be sensitive in facing issues in respect of which there may be a need for change. Quite clearly, what I have announced today will protect the very valuable role of hostels. My hon. Friend asked me specifically about the money involved. Current expenditure on the hostel sector will be maintained, and, as has been said, I am adding £2 million for those hostels that have not yet opened, to maintain the same financing arrangements as would have obtained under the old system.
§ Mr. Tam Dalyell (Linlithgow)
We have heard that £2 million is to be provided for new hostels after 1989. How many new hostels, or new hostel places, does one get for £2 million? The Minister of State shakes his head. Let me be corrected if I am wrong, but that is what his right hon. Friend said. What is the Department's perception of the number of new hostels, or new hostel places, that are required?
§ Mr. Moore
The hon. Gentleman asks a perfectly reasonable question. The hostels that were agreed under the old system prior to the issue of the consultation paper in July 1988—I do not know the precise number, but I will write to the hon. Member about that—suggested an entirely different method of financing hostel places. The Government thought it perfectly right and proper that such hostels, having been agreed under the old system, should be allowed to open. This is the amount of money that is regarded as sufficient to cover the difference.
§ Mr. Moore
By the Department, in consultation with the organisations that put forward proposals during the consultation period, which started in July 1988, as a result of which the Department established precisely its 554 arrangements, plans and numbers. But I shall certainly give the hon. Member much greater detail about his specific point.
§ Mr. Peter Thurnham (Bolton, North East)
Does my right hon. Friend accept that Conservative Members are glad that there is to be no further delay in throwing overboard these perverse incentives, which have so distorted the provision of hostel accommodation? We admire the way he has ensured that there will be a soft landing for those most affected by the changes.
§ Mr. Moore
My hon. Friend is quite right to draw attention to our efforts to maintain fairness as between expenditure on those in local authority accommodation, those in board-and-lodging accommodation, and those in private accommodation, in terms of the ways in which the state, through housing benefit or income support, supports them, and the additional costs associated with particular and very varied kinds of hostels. We are protecting the amount of money that currently goes to that sector to ensure that that fairness will continue.
§ Mr. John Bowis (Battersea)
My right hon. Friend's statement, and in particular his reference to transitional arrangements, is very welcome. May I suggest that, in the longer term, he pay particular attention to the staffing needs of hospitals? As he said, we are dealing not only with accommodation but with the care and guidance of some very vulnerable people. Indeed, present staffing is not always adequate, in terms either of numbers or of training. Perhaps we should look further in that direction.
§ Mr. Moore
My hon. Friend is right, and he has drawn attention to one of the key dilemmas here. My Department is able to make payments through the income support system, through benefit offices, but it is not in a position to judge the kind of issues that my hon. Friend refers to, in regard to the Home Office, or the local social services, or the personal social services, or other areas of other Departments or the local authorities, which have a close relationship and a close identity with the particular needs of the wide range of varied hostels.
§ Dr. Norman A. Godman (Greenock and Port Glasgow)
Can I take it that the £2 million that has been mentioned is for new hostels? How much money is to be given to those hostels seeking provision for renovation or modernisation? Regrettably, I was told the other day that the women's refuge in my constituency is packed to the gunwales. May I have an assurance that women in Scotland who have sought such shelter, and their children, will suffer no loss of income support?
§ Mr. Moore
As I said in my statement, those who are in hostels at the moment have no reason to assume that there is any change in their circumstances. They are protected. The hostels are protected by the moneys that they are currently receiving. The moneys that we are talking about are not moneys that go to the kind of decoration or rehabilitation that the hon. Gentleman is talking about. We are talking about the money that is currently broken down through the income support system as between charges and allowances to individuals and hostels. I confirm that hostels' charges will continue to be paid through the housing benefit and a compensatory amount, the same as they receive through the current system.