Housing Benefit (Hansard, 20 January 2000)

§ Earl Russell
asked Her Majesty's Government:
What opinion they have formed about the effect of the shared residence requirement in housing benefit for those aged under 25.

§ The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham)
My Lords, we commissioned research jointly with the Department of the Environment, Transport and the Regions on housing benefit and on the private rented sector to gauge the effects of the rent restriction rules which were introduced in 1996. In addition, we received a number of research reports from a variety of organisations—I believe that there were 28 such reports—on the effects of the single room rent. We are studying their implications as part of our wider review of housing policy.

§ Earl Russell
My Lords, I thank the Minister for that reply. Will she confirm that the finding of the research was that only in a small minority of cases did landlords reduce the rent to meet the housing benefit, as the Government had hoped when they introduced the regulations? The normal effect of those regulations is that housing benefit falls short of the rent. The tenants are meeting the shortfall either out of income support or, in 20 per cent of cases, out of borrowings. In those circumstances, what useful purpose do the Government believe is served by the single room rent?

§ Baroness Hollis of Heigham
My Lords, I certainly share the noble Earl's concerns and con firm that the research findings are, indeed, as he says, that landlords in particular are reluctant to rent to young people under 25 who are receiving housing benefit and that they are not reducing the rent. Therefore, there is a shortfall between the rent determined by the rent officer and what the landlords continue to charge.
Obviously, the search for a longer-term solution will form part of our review of housing benefit, which is part of a cross-governmental review of housing policy more generally. However, in the mean time, I hope that the noble Earl will help me to publicise the fact that he Government have also set up a discretionary exceptional hardship scheme of some £20 million a year. Local authorities, however, are drawing down only some £6 million of that amount a year; that is, spending only one-third of the exceptional hardship money which they could use to meet some of the circumstances which the noble Earl has outlined. In the mean time, I hope that we can at least encourage—as, indeed, we are trying to do—local authorities to be more responsive to hardship.

§ Lord Higgins
My Lords, I agree with what the noble Baroness has just said. Does she also recall that when the previous government introduced the shared residence requirement, they said that it should be monitored carefully? In the light of the evidence which 1237 she has now mentioned, it seems that it is time to review the whole matter. If that is to be done in the context of the broader reform of housing benefit, can the Minister be a little clearer about timing? At the moment, we have had to rely on press leaks, which appear to say that it will be revised either on a regional basis or integrated with the working families' tax credit, and so on. Then we read further leaks in the press stating that those ideas have been dropped. Can she give us some further indication of the Government's thinking on reform of housing benefit and, in particular, when we are likely to have a clear announcement by the Government?

§ Baroness Hollis of Heigham
Not really, my Lords. I do not believe that even the noble Lord would expect me to leak to the House something which has not yet been fully determined. We had hoped—the noble Lord is right on this matter—that the Green Paper on housing, including housing benefit proposals, would be released by the end of last year.
Of all the areas of social security, the most fiendishly complicated are housing policy and housing benefit, precisely because 99 per cent of the stock is already there and there are few levers which the Government can pull to make a difference. However, I am afraid that we face a huge inherited problem. In 1979, approximately £15 billion was spent on housing investment. That figure is now £5 billion. In 1979, £2 billion was spent on housing benefit; the sum spent now is £11 billion. The folly of the past decade's policy, which was to let rents rip and then to try to sustain them with housing benefit until that benefit collapsed under the strain, is one of the drivers of the need for housing reform.

§ Baroness Miller of Chilthorne Domer
My Lords, will the Minister accept that it is somewhat unfair to blame local authorities for their inaction in that area when some local authorities are demonstrating good practice through the establishment of landlord forums and rent deposit schemes to help young people with a deposit, which they often find difficult? It is the shortfall of accommodation which is the problem. One only has to look at supermarket notice boards to see the advertisements which say, "No young people under 25" and "No DSS". In particular, does the Minister agree that, because of the overbearing number of regulations, it is now much easier for landlords who have spare rooms to rent those rooms to tourists rather than young people?

§ Baroness Hollis of Heigham
Yes, my Lords. One of the criticisms which the noble Earl, Lord Russell, and I made was that that policy was not based on research. We had very real doubts about the availability of that accommodation; namely, shared rooms for young people which were affordable, decent and of adequate quality. That research has been carried out on a localised basis, but 28 research reports have confirmed 1238 our concerns. That is precisely why—and I hope that there will be party support for this—we need to review the policy.

§ Lord Campbell of Alloway
My Lords, what is the extent of fraud these days in housing benefit and what is being done about it?

§ Baroness Hollis of Heigham
My Lords, if we knew, we would already have uncovered it and it would no longer be fraud. Our best estimate is that it is between £2 billion and £4 billion. One problem, particularly in the private rented sector, is that in nearly three-quarters of cases, housing benefit giros are paid directly to landlords who then pocket the money, even when the tenant has moved on. Since last summer we have been trying to encourage local authorities to ensure that when they send out giros, they are not redirected by the Post Office. I am afraid that, so far, only two-thirds of local authorities have responded in that way. We are urging them to tighten up on fraud, because money going to fraudulent landlords is money denied to those people who need housing benefit.