Housing Benefit (Hansard, 23 January 1995)

§ Lord Milverton
asked Her Majesty's Government:
What estimate they have made of the cost implications for housing benefit following the deregulation of private rents under the Housing Act 1988.

§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)
My Lords, the deregulation of the private rented sector is only one of several factors which have a cost implication for housing benefit. It is not therefore possible to make a reliable estimate of the cost implications of deregulation alone. The amount of housing benefit rent allowance expenditure increased from £1.1 billion in 1988–89 to an estimated £3.8 billion in 1993–94.

§ Lord Milverton
My Lords, I thank the Minister for his reply. However, can he say whether, possibly through unforeseen consequences of the policy, the current bill has risen to a figure in excess of £9 billion? If so, has the House been informed of that?

§ Lord Mackay of Ardbrecknish
My Lords, the £9 billion to which my noble friend refers is the total cost of housing benefit. That is made up of three parts. The first is payments to local authorities via rent rebates; the second is payments to housing associations; and the third relates to payments to the private rented sector. My noble friend gives a figure of £9 billion (which is perhaps from the year before 1993–94) but that is for housing benefit across the whole field and not merely for the private rented sector.

§ Lord Stallard
My Lords, can the Minister tell us a little more about the relationship between housing benefit and average rents? For instance, in 1979 the average rent was £4.75, the equivalent of which today would be £13. In fact, average rents are way above the £100 limit in some cases. That is relevant when we talk of housing benefit. Can the Minister tell us something about the equation between housing benefit and average rents?

§ Lord Mackay of Ardbrecknish
My Lords, as I mentioned in my original Answer, a number of factors play a part in the increase from just over £1 billion to just over £4 billion. For example, part of that is accounted for by housing association tenants, in which there has been an increase; part of it is accounted for because of an increase in unemployment and people now needing to claim benefit who did not need to claim it before; part of it comes from inflation over the years; and part from an increase in market rents. However, part of the increase came from the introduction of deregulation, the object of which was to halt the decline in the private rented sector. That happened and we have both better accommodation on the market in the private rented sector and 200,000 more units available in the past four or five years.

§ Baroness Turner of Camden
My Lords, is the Minister aware that the National Federation of Housing Associations said, without equivocation, that the 859 problem is the high rents since 1988? The federation is pressing for adequate subsidies in order to keep rents at an affordable level. What are the poor to do if rents rise and they are faced with the problem of a government who want to restrict benefits such as housing benefit? There must be a policy of ensuring that affordable rents are available for very poor people.

§ Lord Mackay of Ardbrecknish
My Lords, accommodation must be available for all people, including the very poor, and the housing benefit system is designed for just that. But in addition to being fair to the tenant, one must also be fair to the landlord to encourage him to bring his property to the market. As I explained, that has happened since 1988. One must also be fair to the taxpayer. That is why my right honourable friend the Secretary of State for Social Security announced that there will be a limit to the amount of money which will be paid in housing benefit on above average rents. Both the tenant and the landlord should be able to look at a market where neither thinks that the taxpayer is standing behind whatever rent they agree on.

§ Baroness Gardner of Parkes
My Lords, is it not a fact that the amount that can be paid in rent is totally unlimited at the moment? One London borough claims that the housing benefit total which it administers for the Government has increased since 1988 from £30 million to £100 million. I take the opposite side from the noble Baroness, Lady Turner, on this issue. I think that there should be a definite ceiling, as some people are getting housing benefit on properties costing £300 a week or more for one person in occupation. If there was a limit well below that level more money would be available to help those people who really need affordable accommodation.

§ Lord Mackay of Ardbrecknish
My Lords, my noble friend is right that the taxpayer cannot pay for a system in which someone would house himself at the taxpayers' expense in a property markedly more expensive than he would at his own expense. That is why we have taken steps to deal with extremely expensive property. It is also why my right honourable friend announced that housing benefit will be able to meet market rents up to the point of the average rent for that kind of property in that area. Above that average the housing benefit system will pay 50 per cent. of the difference between the average and the market rent. We believe that that will strike the right balance between the landlord, the tenant and the taxpayer.

§ Baroness Park of Monmouth
My Lords, does the Minister also agree that there is another group which gravely needs to see some limit set on rents? I refer to students, who are excluded from housing benefit.

§ Lord Mackay of Ardbrecknish
My Lords, as my noble friend rightly points out, the Government decided quite correctly that students are supported through the student grant system and through the student loans which are now available. Students ought not to be dependent on the benefits system which is designed for another and quite different group of people. We think 860 that is the case and therefore the question of rents for students does not arise within the housing benefit system.