Council Rent Arrears (Hansard, 6 December 1989)

§ Lord Reay
My Lords, Her Majesty's Government welcome the Audit Commission's report. It echoes much of the advice given to local housing authorites by the Department of the Environment on rent arrears prevention and recovery. Her Majesty's Government endorse the recommendations in the report.

§ Lord Dean of Beswick
My Lords, is the Minister not aware that the arrears mentioned in the report of this year amounted to £450 million, an increase of 30 per cent. compared with last year's figure of over £100 million? That is deemed to be the result of the housing benefit legislation introduced by the Government last year when they were warned by noble Lords on all sides of the House of the effect that it would have.
Is the Minister aware that the new regulations removed one million families from any entitlement whatever to benefit? It is calculated that another five million tenants have had their benefits substantially reduced. Does the Minister not accept that the blame for the increase in rent arrears to so horrendous a figure should be laid at the door of the people who caused it; namely, this Government?

§ Lord Reay
My Lords, the new housing benefit rates introduced in April 1988 will have initially caused administrative problems for some local authorities. However, as the Audit Commission report states, those councils should by now have adjusted to the new system.

§ Lord Dean of Beswick
My Lords, that answer is so ridiculous. We are not talking about administration; we are talking about housing benefit that is completely and utterly necessary to their survival being removed from people at the bottom end of the social scale. Will the Minister answer my question and not manufacture one of his own?

§ Lord Reay
My Lords, perhaps I may quote from Howard Davies, the Comptroller of the Audit Commission, who writes in the report: The 1988 benefit changes undoubtedly caused major problems for local authorities but they should by now have had time to overcome the initial administrative difficulties. It is up to them to put a high priority on bringing arrears quickly under control".

§ Lord Mellish
My Lords, is the Minister aware that it is understood that the vast majority of council tenants are fairly good and actually pay their rents, 856 which is very commendable? Is it a fact that the report says that those people who are decent and pay their rent will now be expected to pay the arrears of other people?

§ Lord Reay
My Lords, somebody must pay the arrears.

§ Lord Mellish
My Lords, why should it be those who are decent?

§ Lord Reay
My Lords, the responsibility lies with local authorities to collect the rent due to them properly and efficiently for the benefit of all their tenants and taxpayers.

§ Lord McIntosh of Haringey
My Lords, the Minister has now given two totally inadequate answers to successive questions. Does he not agree that the Audit Commission report refers not only to the administrative costs of the changes in housing benefit but also to the fact that housing benefit has been lost by those who find it most difficult to pay and that, therefore, there will be a continuing rise in rent arrears as a result of the changes in housing benefit which are nothing to do with the administration?
Does he not also agree that through the Local Government and Housing Act the Government ensured, as the noble Lord, Lord Mellish, has reminded us, that the good payers—and only the good payers—will pay the costs of the arrears?

§ Lord Reay
My Lords, if rents rise, housing benefit is there to cushion the effect for those who cannot otherwise afford to pay the increase. I must repeat that the Government do not accept that an increase in rent arrears is wholly the product of housing benefit reforms. Many other factors are involved including the control of debt by local authorities.

§ Lord Stallard
My Lords, does the Minister accept that I agree with him that the change in housing benefit is not the only factor involved although, of course, it is one of the main factors? There have also been changes in the rate rebate system. The poorest tenants now have to pay 20 per cent. of their rates whereas before they paid nothing, being entitled to a 100 per cent. rebate. There have been massive increases in rent because of reductions in subsidies by Her Majesty's Government. Is the Minister aware that rates have also increased as a result of government policies and impositions on local authorities and also that heating charges have increased quite dramatically, again because of new legislation, privatisation Bills and so on? Is he aware too that water charges have increased? I could go on. But those are some of the factors that have pushed up the rent arrears of council tenants.

Noble Lords
Speech!

§ Lord Stallard
My Lords, extreme difficulty is being experienced in coming to grips with administration. It is not the sort of administration the Minister is thinking of. It is a question of how to adminster inadequate social security benefits.

§ Lord Reay
My Lords, I take the point which noble Lords opposite are making. I understand that they have very sincerely held views which I shall draw to the attention of my honourable friend. However, I must return to the point that someone must pay the arrears. The debt must be settled. It is up to local authorities to manage the matter.

§ Lord Tordoff
My Lords, why should the tenants who are living up to their obligations and paying on time have to bear the full cost of the defaulters? The Government have never yet answered that question.

§ Lord Reay
My Lords, we believe that the important matter is to bring to an end the practice of allowing arrears to accumulate unchecked. We believe that we have introduced a disincentive to prevent a practice continuing which only local authorities have the capacity to control.

§ Lord McIntosh of Haringey
My Lords, the noble Lord has again repeated an answer which is straightforwardly wrong. He says that it is up to the local authorities to deal with the cost of the arrears. Is it not the case that the Local Government and Housing Act states that because of ring fencing of the housing revenue account, it is the responsibility of the good payers? Will the noble Lord now take the opportunity to correct a mis-statement which he has twice made?

§ Lord Reay
My Lords, I can only repeat that the discipline of the ring fence round the housing revenue account to which the noble Lord referred will ensure that councils have more incentive in the future to pursue arrears.