HL Deb 06 February 1984 vol 447 cc907-16

4.24 p.m.

Lord Glenarthur

My Lords, with the leave of the House, I shall repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for Social Services. The Statement is as follows:

"With permission, Mr. Speaker, I should like to make a Statement about the housing benefit scheme.

"I announced on 17th November last year that the Government proposed to make some changes to the housing benefit scheme with a view to containing the rapidly escalating cost of the benefit. As is required by the 1980 Social Security Act, I submitted drafts of the regulations giving effect to those changes to the Social Security Advisory Committee. I am today publishing the committee's report together with the Government's response to it. I am also laying before the House amended regulations which take account not only of the views expressed by the committee and local authorities, but also of the debate in this House last month.

"Before moving on to describe the Government's new proposals, I should like to take this opportunity to pay tribute to Sir Arthur Armitage, chairman of the committee since its inception, whose death very sadly occurred last week.

"In their report, the Social Security Advisory Committee were particularly concerned about the effect of the proposals on lower-income beneficiaries and the possible cumulative impact of the proposals on a minority of families. They suggested a number of amendments to the proposals designed to alleviate these effects. At the same time they conceded that there were some aspects of the housing benefit scheme which extend financial help further up the income ladder than anywhere else in the social security system, and that, if cuts in social security spending are essential, it might be reasonable to take resources from there rather than from the means-tested safety net.

"I have considered the committee's report and all the representations which have been made very carefully. Clearly, it is essential for the Government to maintain firm control of public expenditure and in the last 10 years cash expenditure on the former rent and rate rebates scheme has increased tenfold—an increase of 140 per cent. in real terms. It is also reasonable to propose that, where a non-dependant is living in the house of someone claiming housing benefit, that non-dependant should be expected to make a contribution to housing costs and that the housing benefit paid to a claimant should be reduced accordingly.

"Nevertheless, in view of the representations made, the Government have decided to modify the proposed changes with three principal objectives: to lessen the scale of any reductions in benefit to be faced by individual families; to minimise the impact of the changes on those on lower incomes, including pensioners; and to simplify the changes which will have to be made. The revised proposals take full account of the administrative problems involved in the changes.

"The Government now propose to make only two changes to the housing benefit scheme in April. First, the "tapers" for assistance with rents will increase from 21 per cent. to 26 per cent., instead of 31 per cent. as originally proposed, and for rates, from 7 per cent. to 9 per cent. This will have the effect of halving the losses resulting from taper changes in assistance with rent.

"Second, the deductions made for non-dependants aged 18 or over will be increased as orginally proposed; but the qualifying period for modification of those deductions will be reduced from 90 days to 56 days as proposed by the Advisory Committee. In addition the proposed changes on the supplementary benefit non-householders' housing contribution will go ahead. Other changes which were to have been made in housing benefit in April have been either postponed or dropped. This will allow time for families and for local authorities to adjust to those of the changes which still have to be made.

"The remainder of the proposals therefore provide that there now will be no change in the minimum payments for the poorest claimants—those with income levels below their needs allowance; that increases in the minimum payment levels for other claimants will not take effect until November 1984 and the minimum payment for rent assistance will be set at 50p instead of £1 originally proposed; that the requirement for 16–17 year olds not on supplementary benefit or youth training schemes to make a contribution to housing costs will not come into effect until November 1984 and will not apply to those in receipt of non-contributory invalidity pension; that the modification to the criteria for eligibility for high rent schemes will also be postponed to November 1984, when current authorisations expire; and that the rent tapers will be increased in November, but only from 26 per cent. to 29 per cent., not 31 per cent. as originally proposed.

"The restructuring of the proposals which I have outlined will reduce significantly the savings which can be made, particularly in 1984–85. I have therefore had to postpone the real increase in the housing benefit children's needs allowance which I had announced would be introduced from April. The allowance was to have been increased from £11.90 to £12.90. That cannot now be achieved in April. But I am glad to say that it will still be possible to implement an increase of 50p in November 1984 and a further increase of £1 will be made in April 1985. The children's needs allowance will then have been increased by £1.50 in real terms compared with the increase of £l originally proposed.

"Mr Speaker, taken together, these modifications will help about 1,300,000 households and will mean that about 300,000 families will not now lose entitlement to benefit in April. Moreover, I propose to discuss with the local authorities how a limit on individual losses from the taper and high rent scheme changes can be brought into effect in November.

"Mr Speaker, all these changes will be accommodated within the Government's existing expenditure plans. But the enormous growth of housing benefit expenditure and the income levels at which it is paid require further consideration. Equally, the continuing difficulties which some local authorities are still experiencing in handling claims and payments are causing anxiety for individual families.

"The Government feel, therefore, that a review of the scheme and its operation is required. Its main objectives will be to examine the structure and scope of the scheme to ensure that it is as simple as possible and that help is concentrated on those most in need; and to improve its administration by local authorities.

"I shall be appointing a small review team under independent chairmanship to report to me so that I may consider urgently what action needs to be taken. I shall also ask the review team to consider the issues which the advisory committee identified as requiring further consideration.

"Mr Speaker, the revised proposals I have described today will soon be debated. Nevertheless, I thought it right that, prior to that debate, I should describe in a Statement to the House the changes that are being proposed. I believe they represent a reasonable balance between the protection of individual benefit recipients and the need to bring under control expenditure on housing benefit which is now running at almost £4 billion a year."

My Lords, that concludes the Statement.

4.34 p.m.

Baroness Jeger

My Lords, I thank the noble Lord for making that Statement. First, I should like to express on behalf of my noble friends and myself our regret at the news of the death of Sir Arthur Armitage, the chairman of the commission. He brought to this work a clarity of mind and a warmth of understanding not often to be found in combination and greatly to be appreciated and, therefore, greatly to be missed.

So far as the Statement is concerned, we welcome these few crumbs. We are glad to hear about the review team. We only wish that the work which it is being asked to carry out had been done before this absurd system was implemented. For example, the Minister refers in the Statement to: the enormous growth of housing benefit expenditure". He does not say why that has happened. He does not say that it has happened because the economic policies of this Government, with the escalation of rent and rates, have brought more and more people into the poverty trap, into unemployment and therefore into a situation where they call for housing benefit. Surely that is an admission of the Government's inadequate assessment of the housing needs of thousands of our people and the stresses suffered by them through higher housing costs and higher unemployment.

I ask the noble Lord when we are likely to have a debate on the new regulations which will have to be brought before the House. If these changes are to be effected and worked over by the local authorities for implementation before April, we need to have the debate very soon, and that will affect the length of our discussion today. Obviously we should much prefer to have a full debate fairly soon, rather than ask too many questions on this Statement. In fact the Statement today indicates that the idea of a unified housing benefit is just a disfiguration of the English language. We have the most painful bifurcation of benefit ever invented by any Government. We have two old schemes persisting. We have two means tests taking place in different offices, never meeting up except with great delay and great confusion. Whatever small amendments are made, we must make it absolutely clear that the faults in this scheme are fundamental. It is not just a matter of changing the amounts here and there, although we appreciate where they are to be improved. The whole concept of the proposals has not worked out; it has been criticised by every political party and by all the professionals engaged in housing work and it must surely call for really systematic changes.

I want to put one or two quick points to the Minister. If these changes are to take place in April, can the Government ensure that there will be adequate facilities for staff and for training, instead of pressurising local authorities to economise in their expenditure? There are tremendous pressures on townhalls. Like myself, the noble Minister must have had information from all over the country about local councils which are hundreds of cases and, in some instances, thousands of cases in arrears. People are not getting their benefits. I do not know whether the Minister can tell me how many are in rent arrears. Perhaps he can tell me whether there have been any evictions due to non-payment of rent because people have not received housing benefit to pass on to their landlords, whether they be councils or private landlords.

Secondly, can the Minister take steps within his department to ensure that the time allotted for DHSS offices to transfer certificates to councils is reduced? Until the council gets a certificate in each case from the DHSS, the council cannot pay out the benefit. There are weeks and in some cases months of delay. That is very unfair and most distressing, especially to older people who have never been in debt in their lives and who take a pride in seeing that the rent is paid.

Can the Minister also take steps to ensure that payment is made from the date of application and not from the date of the laggard finish of these tormenting processes. which drag on far too long? Also, there is a need to speed up cases for reassessment. Every time there are changes in family circumstances—for example, a young person leaving home or perhaps a woman becoming widowed—there is a case for reassessment. This process is taking weeks and sometimes months. Moreover, if we are to have these changes in April, it must be borne in mind that at the present rate of progress it will be well into midsummer before individual cases are dealt with. Do I understand the Minister to say that then the whole bureaucratic process will have to be gone through again in November because of the up-rating of benefits in November and the other changes referred to in the Statement which are also to take place in November? Who is to do all this work at a time when local authorities are being pressurised to reduce their staff and are experiencing great difficulty in dealing with the matter? I am sorry to press these details, but they are so important to millions of people in this country.

There is confusion about the heating addition. Some people find that, through all these manoeuvres of bureaucracy, they are losing their heating additions. There is something called the "excess income figure" which the DHSS has to send to the council before the council can pay benefit to a person. Again there are complaints of weeks and months of delay before the council gets this information. I want to be constructive, so may I suggest to the Minister that his department looks very thoroughly at the forms which are sent out in this connection? At present, each local authority can compose its own form, and these forms are self-completed. A very high percentage of forms are not completed properly and have to be returned, often because the forms themselves are unclear to start with. This high failure rate is very wasteful of time and money. I am sure that it would not be too difficult for advice to be given on this by the department.

Lastly, I hope that the noble Lord the Minister will give consideration to the setting up of an appeal system in the area of housing benefits similar to the appeal system that operates for supplementary benefit, with its appeal tribunals, with, if necessary, further appeal to the social security commissioners. At present, people who think that they do not receive a fair deal from these benefit arrangements are deprived of a proper appeal system. I very much hope not only that that will be set up, but that the widest publicity will be given to it.

There is no doubt that all over the country confusion, disappointment, poverty and anxiety are being caused by this housing benefit scheme. Although I do not expect the Minister today to promise a fundamental review of housing policy in this country, I hope that, when the committee which is to be set up reports, no time will be lost in making fundamental changes to what was a really hopeless, stupid innovation.

4.42 p.m.

Lord Kilmarnock

My Lords, we on these Benches should also like to thank the noble Lord, Lord Glenarthur, for repeating this Statement. We should like to include our voices in the tributes that have been paid to the late Sir Arthur Armitage, whose Social Security Advisory Committee has done such valuable work.

On the question of the SSAC, is it not the case that the consultation period was extraordinarily short, and that all the local authority organisations complained about this? Would it not have been better to spend more time on this process of consultation and thus to have avoided the cumulative effects, of which the Government do not seem to have been aware? For example, in the original proposal some families might have been adversely affected as to £14 a week, or even more.

We certainly welcome the less savage increase in the rent and rate tapers. We also give a qualified welcome to the proposal that the qualifying period for modification of deductions for non-dependants aged 18 and over will be reduced from 90 days to 56 days, as proposed by the advisory committee. However, will the noble Lord confirm that apart from a young person qualifying under that clause, there will still be a huge increase in contributions by young people—from £3.10 to £8.20; in other words, a £6 increase in the contribution of non-dependants aged 18 and over? Are those still the correct figures?

The Statement also refers to people on YTS and it appears that their position will not be changed until November 1984. Can the noble Lord tell us whether normal young people on YTS will be expected to contribute the full rate of £8.20? Is that not an enormous amount on an allowance of £25?

The Statement refers to the enormous growth of housing benefit cost, and the original saving proposed was of the order of £230 million. Can the noble Lord tell us what the new figure is? In other words, what is the value of this package to consumers? In fact, was not this enormous growth in housing expenditure partly caused by the decision to raise the upper limit of mortgage tax relief at a cost of £200 million in the last Budget?

Finally, the Statement refers to a review team. Would it not be better to defer all changes until after the review—that is to say, until November? Is it not the case that local authority associations made it plain that they would find it very hard to rewrite their computer programs by 1st April? The Statement refers to full account of administrative problems having been taken. Is that really so? A rushed job will surely lead to over-payments or no payments, and increase frustration.

Lord Glenarthur

My Lords, I am grateful to the noble Baroness, Lady Jeger, and to the noble Lord, Lord Kilmarnock, for their comments on the Statement which I have repeated. First, perhaps I may deal with the questions asked by the noble Baroness, Lady Jeger. The noble Baroness queried whether or not adequate facilities were available within the local authorities to cope with the changes. The fact is that facilities have been made available by the DHSS to help the local authorities cope with the changes that need to be made.

The noble Baroness asked about the date for a likely debate on the regulations. The fact is that the regulations are negative resolution regulations, so local authorities can start preparing for them now, as they actually have the force of law because they have been laid. However, it is up to the noble Baroness and others to decide whether or not they wish to debate them. No doubt, if they want to, that will indeed happen. Others of the regulations which are connected with these regulations are, in fact, affirmative regulations and I am sure that, when the noble Baroness sees them, she will realise that they are another matter, although they are not unconnected.

The noble Baroness said that we would have to go through the whole performance again in November. As she knows, round about July, when the rate of inflation for May is known, it will be possible to start making the necessary calculations to achieve the results for the up-rating in November. So the answer is not in any way other than in any other situation where benefits must be up-rated. The noble Baroness asked particularly whether payment could be made from the date of the application. Perhaps I may assure her that the regulations provide for back-dating of benefits to the date when the claim is received. Indeed, for standard cases—that is to say, for those not on supplementary benefit—local authorities have discretion to back-date benefit up to a year before the claim in exceptional circumstances.

I have already answered the question: why double the changes by effectively introducing them again in November? The noble Baroness asked whether an appeal system could be introduced following the review which I described when I repeated the Statement. This is very much a matter for the review to examine, and I hope that the noble Baroness will leave the matter at that. She asked various other questions on heating additions and other excesses which go slightly wide of the particular matter before us. If I can find any information on that, I shall of course let her have it.

I do not think that I can usefully be drawn on the question of forms now. Forms which are incorrectly filled in may be partly due to the fact that they are complex and partly due to the fact that those who are filling them in are not good at filling in forms. It is incredibly difficult to produce a form which satisfies everyone, but some substantial changes have been made in the quality of forms for matters of this sort over the last few years, and, from visits that I have made to local offices, I have seen the effect that these changes are having.

The noble Baroness asked about the need for adequate facilities for training and the need to improve administration, including the flow of certificates. The April changes are deliberately limited to changes in rates of benefit so that they can be administered quickly and without great training. The department has agreed with the local authority associations a number of proposals to improve the administration of the scheme. Some of these are contained in regulations laid today; some require only administrative action. A joint circular will shortly be sent to both local authorities and local offices about this, and it will stress the need for quick transfer of information, including certificates.

I turn to the points of the noble Lord, Lord Kilmarnock. He indicated that the consultation period was too short. The need to restrain the excessive growth of public expenditure, as was made plain at the time of the autumn statement, allowed a short period; nevertheless, to have allowed spending on the benefits of which these are part to have ripped ahead of sensible public expenditure would have been very unwise. Therefore, it was necessary to have a comparatively short time for consultation.

The noble Lord asked for some facts about whether the 16 to 17 year-olds on the youth training scheme would have a rise in their contributions up to £8.20. The answer is, no. The 16 to 17 year-olds who at the moment contribute nothing will contribute up to £3.10 but, if they are on supplementary benefit, or on the youth training scheme, or in receipt of non-contributory invalidity pension, the answer is that they will not be required to make any contribution.

The noble Lord asked about the value of the package. By this I imagine that he is asking what the value of the package is overall; the sum total that is going to be reduced. When it was announced original, the effect would have been a saving of £230 million in 1984–85. This has been reduced by some £33 million and further by about £20 million in 1985–86. The question of mortgages is not a matter for me. That is a matter of general taxation policy and so is for my right honourable friend the Chancellor of the Exchequer.

The noble Lord asked about the review team, and suggested that it might have been better to wait until the review team had got under way before doing what we are doing now. The fact is that steps had to be taken now. It is a subject which has been exercising many people and causing a great deal of uncertainty. It was right that certain changes should be made. It was equally right that my right honourable friend should announce that there is a review team under the independent chairmanship to which I referred, and that will be given effect to in the way I described.

Lord Stallard

My Lords, will the noble Lord accept that his Statement this afternoon will have done little to alleviate the fears of people up and down the country who know that this benefit scheme is in total chaos? Many town halls are struggling with reduced resources and reduced staff to come to terms with the original proposals. We have now had this new package, welcome though it may be, and I understood from local authorities and the computer people who advise them that it was going to be impossible to implement the original proposals by this April. Therefore, any further changes like this will only help to emphasise what we all said at the beginning—that the scheme was ill thought-out from the start.

The fact that the Government have had to have this major reshuffle before the original scheme has been totally implemented would seem to be an admission that the thing is not working. For that reason I had intended to ask the noble Lord, in the supplementary I withheld on my noble friend's original Question, to suspend the whole operation and have a review first, then introduce the changes, rather than, as the Government seem to be doing, introduce the changes and then have a review. That seems the wrong way round, and in my view will cause even more chaos than exists at the moment.

Lord Glenarthur

My Lords, I do not accept what the noble Lord, Lord Stallard, says about chaos and the way he has referred to it. We have to contain public expenditure now. We cannot necessarily contain it only in the future, and therefore it is important that these adjustments are made now. So far as the problems faced by local authorities are concerned, what I have repeated this afternoon indicates that only two major changes are going to go ahead in April; that is, the change in the tapers and the non-dependant deductions. That, of course, simplifies the matter for local authorities. In any case, our advice is that local authorities will be able to cope with the limited changes which are now being implemented. This is commented upon by the management consultants who have been looking at the matter with local authorities, and they are satisfied.

Baroness Birk

My Lords, does not the Minister agree with my noble friend that this really is a minimal crumb to come before us today? During the Statement the noble Lord said that, by concentrating it in this way, it will help local authorities with their administrative problems. How, by dealing in this rather stingy, mingy way, with tapers, by increasing from 21 per cent. to 26 per cent. in April, then from 26 per cent. to 29 per cent. in November, is this going to help any administrative problems? It is probably going to cost even more than it gets in by trying to deal with the matter in these two bites at the one cherry.

If the Government had taken the view that the 31 per cent. and even the 29 per cent.—which I agree is a slightly welcome reduction—were still too high, would not that have done much more to deal with this? Secondly, does the noble Lord accept that some real hardship will be caused by postponing the real increase in the housing benefit children's needs allowance from April, when it was to be increased by £1? Is it not true that, even if it will be £1.50 in April 1985, with the way inflation and unemployment are going up we do not even know what that will be worth in real terms?

Finally, on the question of housing, with which I am particularly concerned, is it not a fact that it is just a postponement of the higher rent scheme, and that in fact the amount of arrears which have been mounting up, as my noble friend pointed out, will in fact be getting even higher, and that unfortunately we shall by then have seen a great many evictions?

Lord Glenarthur

My Lords, the noble Baroness asks about tapers. She suggested, if I understood her drift correctly, that taking two slices at it would have the effect of increasing the work for local authorities. The Social Security Advisory Committee made the recommendation that the taper changes should carry some transitional protection. That is a recommen- dation of theirs, and one that we are adopting. So far as the children's needs allowance is concerned, it is not possible to contain public expenditure in the way that we are trying to contain it without some measure of control to try to mitigate the effects of the adjustments which are being made. The children's needs allowance is the one area in which it is possible now to make some restrictions. But by 1985 that will have been more than compensated for by increasing it to £1.50. I cannot forecast what inflation is going to be in 1985, but I can say that it is a great deal lower than it was in 1979, whichever way one looks at it.

So far as the higher rent thresholds are concerned, it is a fairly technical matter, as the noble Baroness will be aware. While the figure that we had before indicated an increase to 150 per cent.—which is what the figure stood at before—which has been gradually eroded, it is bad news, to some extent, I suppose one can say, that it is going up to 130 per cent., but it is good news that it is not going the whole way to 150 per cent. I hope I have got that right, but, if I have got it wrong, I hope I may explain it to the noble Baroness in writing.

Baroness Trumpington

My Lords, we have had a pretty good discussion on this subject, and I hope that it will be the will of the House that we now resume the debate on the Bill.