Housing Benefit: Policy (Hansard, 18 October 1994)

§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)
My Lords, the Government are carrying out a review of housing benefit. No decisions have been taken yet except with regard to the rules for payment of housing benefit for convicted prisoners. Subject to parliamentary approval, from April 1995 benefit payments will be reduced from a maximum of 52 weeks to 13 weeks.

§ Lord Dean of Beswick
My Lords, I am grateful to the Minister for that Answer but is he aware that the figures I have show that during the past financial year the total housing benefit paid was £8.5 billion? That benefit is still rising. While one cannot switch all that money to a house building programme, is the Minister aware that that sum would build between 250,000 and 300,000 houses for rent by local authorities and housing associations? When will the Government end this stupid policy of stopping councils building houses and embark on an increased house building programme which would help the building industry, the housing situation and the country's economy as a whole?

§ Lord Mackay of Ardbrecknish
My Lords, I believe the noble Lord ignores one important point. If the £10 billion—it is £10 billion—spent on housing benefit this year, 1994–95, were removed from housing benefit and used to build houses, many people who currently rely on housing benefit to pay their rent would find themselves without houses.

§ Baroness Hollis of Heigham
My Lords, when the DoE decontrolled private rents and forced up social rents by 5 per cent. a year in real terms, what did the Government expect would happen to the housing benefit bill? Did the DoE tell the DSS that for every pound the Department of the Environment saved in housing subsidy the DSS would have to pay out a further 75p in housing benefit? In other words, is not the problem of housing benefit entirely one of the Government's own making?

§ Lord Mackay of Ardbrecknish
My Lords, the Government made no secret of the fact that as a result of two of the major decisions made over the past 15 years housing benefit would increase. First, we accepted that as we withdrew the subsidies on bricks and mortar and concentrated more on helping the individuals who require help housing benefit would increase. Savings were made in that transfer of resources. In addition, we always acknowledged that the deregulation of the private rented sector would increase the housing benefit bill. Our concern is to make sure that it does not 121 continue to increase to an extent that means that the total social security bill increases beyond the taxpayers' ability to pay.

§ Baroness Hollis of Heigham
My Lords, does the Minister recognise that as a result of his policies he has forced many more families into dependency on benefit, thereby making it harder for them to move into work?

§ Lord Mackay of Ardbrecknish
My Lords, the noble Baroness ignores the fact that one major result of our policy is that there has been an increase in the number of privately rented tenancies becoming available. That is an important aspect of our policy. We were prepared to accept that housing benefit costs would increase as a result of more privately rented housing coming on to the market.

§ Lord Desai
My Lords, is not the Government's policy very bad economics? Is the Minister not aware that as a result of freezing council house sale receipts of approximately £7 billion and not allowing that money to be spent on further house building the Government are having to spend another £10 billion to support the homeless? Is it not the failure of private house building and renting which has caused the homelessness in the country?

§ Lord Mackay of Ardbrecknish
My Lords, as I said to the noble Baroness a few moments ago, the private rented sector has increased since 1988.I believe that the noble Lord confuses two figures: first, the capital receipts from our splendidly successful policy of council house; sales (which the party opposite has always opposed) and, secondly, the amount being given in housing benefit to those people who require help with their rents. That is the kind of policy which I should have thought the Labour Party ought to approve.

§ Lord Stoddart of Swindon
My Lords, does the noble Lord agree that the more houses that are built, whether by the public or the private sector, the lower rents are likely to be? Surely he knows the theory of market forces. Would it not therefore be as well and encouraging if, as my noble friend suggests, local authorities were allowed to use their own money to build more houses, as they want to do? Finally, does he not agree that the present situation gives rise to a new phenomenon of Rachmanism subsidised by the Government?

§ Lord Mackay of Ardbrecknish
My Lords, the noble Lord asked me a number of questions. As I said before, the money recovered from council house sales is not exactly the same as the money which is spent annually on helping those people who require help with their rent. As the noble Lord knows—the question has been answered often enough—the issue of allowing councils to spend the money they receive from council house sales is tied tip with the total amount of public spending in the country. We have always made it clear that that has to be a decision for the Government in the decisions that we make annually about the capital spending of local authorities.

§ Lord Dean of Beswick
My Lords, the Minister totally misunderstood the thrust of my supplementary 122 question. I did not for one moment suggest that £10 billion could suddenly be switched into a building programme. I suggested that within the review which is taking place the Government should be considering making more finance available, perhaps from that total, in order to finance a building programme. There are half a million building employees on the dole, houses are needed, and that action would also provide finance for the Government's own coffers.

§ Lord Mackay of Ardbrecknish
My Lords, we already finance a building programme via the Housing Corporation. The expenditure in this financial year on new build will be of the order of £1.5 billion. When added to the private investment which comes into the housing association sector, that means that approximately 55,000 homes have been provided for families who would otherwise have remained homeless or living in inadequate accommodation.