HC Deb 12 January 2000 vol 342 cc104-10WH 1.30 pm
Mr. Andrew Stunell (Hazel Grove)

I am grateful for the opportunity to tell hon. Members about the situation facing some 3,300 tenants in Stockport who have tenancy agreements with private landlords and who are in receipt of housing benefit.

Housing benefit is a complex area of benefits legislation. I shall focus on one aspect only, which is the support given by the Rent Service. To prevent abuse of housing benefit, there is a ceiling on the amount that will be paid to landlords for a property, which is based on its size and geographical location. The determination of that ceiling is in the hands of the rent officer service—recently renamed the Rent Service. Today's debate is necessary because of the arbitrary behaviour of the service for Greater Manchester and its determination of rent levels in Stockport. It has set rents at a different and inappropriate level, compared with those of a short time ago.

This time last year, the rent officer said that the standard reference rent—the fair rent—for a three-room property in Stockport was £98 a week. In setting that rent, the rent officer was also providing an opportunity for a prospective tenant to approach him and say, "I am considering taking out a tenancy agreement. What is the ceiling for the property?" That is a pre-tenancy determination. The rent officer issued certificates saying, "We will give your landlord £98 a week in support of your tenancy." Reassured by that offer, many of my constituents went on to make tenancy agreements with landlords; they paid deposits and moved into the property. Many of them may have subsequently sent their children to school, taken up local training courses and settled into a peaceful life in the community where they live.

During the course of last year, the rent officer changed his mind. Instead of offering £98 a week support for tenancies, he said that it would be reduced to £75 a week. That is a reduction of £23 a week for the standard reference rent for three-roomed accommodation. Housing benefit is paid not to the tenant, but direct to the landlord. For many tenants, the first time that they became aware of the problems was when the landlord got in touch with them to say, "Your arrears are running at £23 a week. Your deposit is being eroded, so what are you going to do about it?"

What is going to be done? The Government's official advice, which is contained in their benefits leaflets, is that tenants should try to negotiate a lower rent with their landlords. That is completely unrealistic. The Government rent and lease property in Stockport. The idea that even they can go to their landords asking to renegotiate the rent downwards because they do not have the money is absurd. To expect those at the bottom of the economic pile to be able to do so is not feasible.

What alternatives do tenants have? They can surrender their tenancies or sit it out and face eviction. In either case, they are likely to find that the deposit that they need to go into another property has been eaten up by arrears. Many approach the council to draw on its exceptional hardship fund, which is a statutory requirement that the council has been drawing from in considerable amounts in the past few months. The exceptional hardship fund is exactly that: it must be for exceptional hardship. The council has received advice that it cannot make a class decision that all such people so affected can be paid.

Tenants can do what a number of them have done in Stockport and band together to take legal action against the Rent Service. There are plans for judicial review on the grounds of the unreasonableness of decisions, but tenants cannot appeal against a decision. There is no appeals system. Instead, they can go for a reassessment, which is not an appeal but a retrial. There are dire warnings to tenants who set off on this course that it is a retrial, so the sentence could be increased. They will not necessarily benefit from such action.

That official advice is also somewhat misleading. I made some inquiries to discover the position regarding reassessments in the north-west. About a quarter of all reassessments result in the tenant benefitting; about three quarters result in no change on the original rent officer's assessment; and about 3 per cent. result in a worsening of the tenant's position. Understandably, tenants who have already taken a hit of £23 a week, or more in some cases—we have recorded cases of more than £35 a week drop in support—are reluctant to opt for reassessment, with the possibility of their position being made worse.

I wonder whether I can tempt you to take a short journey along the A6, Mr. Deputy Speaker—a road that we both know well—from Manchester, somewhere around the area of Longsight, through to Poynton in your constituency. In October 1998, if I had wanted to take out a tenancy of four rooms in Manchester, let us say in Longsight, the rent officer believed that the support that I should get was £75.55 a week. By the time we have reached the middle of Stockport, for the same accommodation, the rent officer thought that the amount should be £90 a week. If we go a little further, to High Lane, the amount is £107.50 a week. In Disley and Poynton the rent support is £121.59 a week.

I know that you cannot participate in the debate, Mr. Deputy Speaker, but you may be able to nod and encourage the Minister to make a helpful reply. That gradient of increasing property values fairly reflects the position along that stretch of road. There is a £15 increase from Longsight to Stockport, another £17 to High Lane and a further £14 to Disley and Poynton. I can still get my £76 a week in Longsight, but in Stockport and Hazel Grove, I am restricted to £84. If I am in Disley or Poynton, I can continue to receive £121.

The differential between the centre of Manchester and High Lane is 10 per cent. and the differential between High Lane and Poynton and Disley is 44 per cent. That is a manifest and gigantic step which is out of kilter with reality.

Mr. Andrew F. Bennett (Denton and Reddish)

The hon. Gentleman ought to make at least some comparison between the private sector and the semi-public sector. Will he say what housing association rents are along that same gradient for probably rather better property? Does he accept that rents for housing association properties are about a third lower and that council rents along that same gradient are probably half that level? Is it not a problem that private landlords in Stockport, in particular, have been ripping off the public purse with the levels of rent that they have been charging?

Mr. Stunell

No, it is not, I cite my own experience. About nine years ago, I rented property in my constituency. I was looking for the most economical accommodation and I was paying £390 a month. That is similar to the sum that was permitted until a year ago. The private rented sector in Stockport is no different from elsewhere. It reflects the pressure of demand. I remind the hon. Gentleman that about 6,000 people in Stockport are awaiting accommodation. The council cannot house them and only private rented accommodation is available. The overall result is that it is not now possible to rent private accommodation in my constituency and receive 100 per cent. payment of housing benefit. As a result, people are having to leave home and withdraw their children from school. We are facing economic cleansing. Poor people who need rented accommodation are no longer able to live in Hazel Grove.

Why is there such a discrepancy? Perhaps the answer is connected to the point raised by the hon. Gentleman. When I approached the rent officer, the first reason that he gave me was that Stockport has two separate locations, which makes no sense, and that there should be only one. His argument appeared to be that one area has one ceiling, that the other area has a different ceiling and that both areas should clearly have the same ceiling. Fair enough, it is a thought; but surely the solution is not to reduce the lower ceiling by £6 and the higher one by even more.

The rent officer's second reason was that rents in Stockport are too high. My personal experience is that market forces appear to be operating exactly as one would expect. However, his third argument was the one that I found most difficult to accept. He suggested that the people affected should buy, not rent. He said that mortgage rates are now so low that it would be cheaper to buy a property than to rent it. He ignored the fact that those people are on benefit. They are on the poverty level, in many cases with no source of employment. For them, the option of buying does not exist.

Next, there is the "nod, nod, wink, wink" reason, which seems to be used in private whenever rent officers from other areas visit Stockport to make their reassessments; but the visitors, too, are puzzled. They do not understand why it happens, but they know that it helps to reduce expenditure. Will the Minister tell us whether the rent officer is conforming to a genuine Government directive, or what he believes to be a Government directive to reduce public expenditure—or has he simply decided to leave a time bomb for the newly reorganised service to face?

What I want to hear from the Minister is exactly the same as Stockport council wanted to hear when it wrote to the Department of Social Security on 12 November 1999—a letter to which, as of yesterday, no answer has yet been received. First, I want him to call off the rent officer. He should make a clear statement today that the Government do not want the housing benefit system to be used to cause the wholesale disruption of local communities. Tenants should not be used as a battering ram to knock down Government expenditure. I want the Minister to tell the rent officer to reconsider the idea of restoring—

Mr. Bennett

Will the hon. Gentleman give way?

Mr. Deputy Speaker (Mr. Nicholas Winterton)

Order. I do not know whether the hon. Gentleman has sought the permission of the hon. Member for Hazel Grove (Mr. Stunell) to intervene. It is a grey area. I shall permit interventions, provided that they are brief, but this is a private debate between the hon. Member for Hazel Grove and the Minister.

Mr. Stunell

On time grounds, I do not think that I can give way now. The hon. Gentleman had not approached me previously.

I want the Minister to ask the rent officer to consider restoring the two localities and to consider whether rent levels from Manchester, through central Stockport, to the suburbs and commuter villages beyond were not more realistic in October 1998 than in October 1999.

Next, I want pre-tenancy determinations to be valid for longer than the existing six months, which will create a cushion. When tenants take out annual tenancies, which is common in Stockport, they sign them in good faith. Those tenancies should not be put in peril by a rent officer's decision that they can neither avoid nor appeal against. When tenants initiate a redetermination following the rent officer's assessment, and it results in a further worsening of the tenant's position, I want a guarantee that it will in turn be frozen, because it is the only appeals system available. It is entirely unjust that a tenant should be prevented or restrained from resorting to the system simply because he might make his situation worse.

Lastly, I want to hear the Minister say that those problems will be carefully considered in the long-promised White Paper on housing policy, and that the Government intend to safeguard tenants from such abrupt and arbitrary changes and reductions in benefit—and to give them effective remedies when it happens.

I am grateful to have had the opportunity to raise this matter. I look forward to the Minister's response.

1.46 pm

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin)

The hon. Member for Hazel Grove (Mr. Stunell) has raised an important matter. He asked about the role of the rent officer. It is to assess whether housing benefit claimants are being asked to pay more than the going rate in the open market. Rent offices do that by identifying what a person not on housing benefit would be prepared to pay for the dwelling concerned. The process involves a number of determinations, including the local reference rent, which effectively places a cap on the amount of housing benefit that a tenant can obtain, and it is linked to the general level of rents for similar properties in the area. It is therefore vital to ensure that rent officers perform their valuations accurately and consistently.

I should make it clear that rent officers are independent and that their advice should be impartial. Neither I nor my ministerial colleagues have any authority to intervene in or overturn their decisions. However, my Department has responsibility for overseeing the work of rent officers, and I clearly have a duty to ensure that they are organised in a professional manner and are accountable for their decisions.

Our drive to modernise and improve Government was the main reason why we decided, in October 1998, to establish an agency for rent officers. Previously, the service consisted of 77 separate and largely unaccountable rent registration areas. Of course, there is no question of the independent status of rent officers diminishing under the agency. However, the establishment of the agency means that, for the first time, rent officers will operate within a central management framework that is committed to greater openness, more accountability and greater consistency.

I listened carefully to what the hon. Gentleman had to say about the difficulties that some of his constituents face because of the recent determinations made by rent officers, and I am sympathetic to those difficulties. I recognise the serious consequences that flow when a tenant who has lived in a property for several years is faced with the stark choice of having to move because he can no longer afford to pay the rent.

The overriding objective of the housing benefit system is to enable those with no income of their own and those on low incomes to provide for their reasonable housing costs. The housing benefit system should cover reasonable rents that reflect the general level for similar properties in the area. However, housing benefit should not subsidise someone to live in a property that is unreasonably expensive. If it did, tenants would understandably have no incentive to look for more reasonably priced accommodation and landlords would have no incentive to seek more reasonable rents.

A fundamental principle of the regulations that the rent officers are required to follow is that their determinations must be based on rent levels that are being achieved in the open market. In that way, the possibility of housing benefit leading the market is negated. Of course, a rent officer does not endear himself to landlords or tenants by bearing down on rent levels. However, if all the evidence points to determining the rent lower than the expectations of the landlord and tenant, that is usually the right thing to do.

To understand the problems that have arisen in Stockport, it is important to bear in mind the local rental market conditions to which rent officers must have regard and which the hon. Gentleman described. Evidence collected by rent officers suggests that there is an oversupply of accommodation to let and that rent levels in the open market have been falling as a result. I accept that that is not likely to be the case in all parts of Stockport or for all types of accommodation, but the fact is that rent officers have taken the view that there is generally no scarcity of accommodation stoking up rent levels in the area.

Rent officers must regularly test the accuracy of market evidence and keep their market evidence database constantly under review. I understand that a comprehensive review of the rental market throughout Greater Manchester was undertaken in November 1998 and that it was repeated in June and December last year. I also understand that senior management in the Rent Service has considered circumstances in Stockport closely and it concluded that rent officers have been following good and professional valuation practices. I have no reason to doubt that. However, the hon. Member for Hazel Grove has rightly dwelt on the consequences of some of the decisions, however reasonable, and it is right that we should attempt to address them.

Ms Ann Coffey (Stockport)

rose—

Mr. Deputy Speaker

Please be very brief.

Ms Coffey: I thank my hon. Friend the Minister for giving way. The circumstances are very complicated, and he will be aware that more than £21 million of Government subsidy came into the private market in Stockport last year. At the same time, there are empty council properties, although I accept the remarks of the hon. Member for Hazel Grove (Mr. Stunell) about his constituency. As a way forward, will my hon. Friend agree to meet all Stockport Members of Parliament to discuss the matter in greater depth? The hon. Member fror Hazel Grove has made a valid point about the consequences in individual cases.

Mr. Deputy Speaker

Order. I must ask the hon. Lady to resume her seat. I do not believe that she has done the hon. Member whose debate this is the courtesy of asking him whether she can intervene.

Mr. Bennett

On a point of order, Mr. Deputy Speaker. I understood that the conventions of Westminster Hall were to be the same as those in the main Chamber, where an hon. Member can seek to intervene without notice and the hon. Member making a speech may give way if he or she wishes. If we wish to take part in the debate, and want time to do so, we should ask the hon. Member in question. Surely we are entitled to the same conventions as those of the Chamber, which allow us to intervene if the speaker is prepared to give way.

Mr. Deputy Speaker

The hon. Member is right to say that the procedures in this place are the same as those in the main Chamber. During an Adjournment debate, it is important for hon. Members who wish to intervene to seek not only the permission of the hon. Member who has initiated the debate, but that of the Minister. Two interventions are allowed, and I have allowed them. We are taking time from the debate initiated by the hon. Member for Hazel Grove.

Mr. Mullin

My hon. Friend the Member for Stockport (Ms Coffey) made a reasonable suggestion, which I am minded to accept and to which I shall return in a moment.

I should put some figures on record. Stockport council's welfare rights units reports various difficulties relating to recent rent officer determinations in the area. Of 2,110 tenants covered by the relevant housing benefit regulations, 400 have so far received a decrease in their benefit. Shortfalls are between £5 and £30 a week, although I know that the hon. Member for Hazel Grove referred to one of £35. As he said, such tenants have to negotiate a lower rent, find the difference from another source or move. The council has so far awarded 140 exceptional hardship payments, at a cost of £51,000. As far as I am aware, no evictions have yet been made.

I am in a difficult position. I have had very short notice of the points that the hon. Gentleman wants me to consider, although I make no complaint about that. My powers are limited, and I cannot direct a rent officer. I am sure that he agrees that it is desirable that landlords should not be able to milk the housing benefit system, especially when a great deal of public housing that might be better used is lying idle. I acknowledge the difficulties faced by some of his constituents, which he outlined graphically.

I cannot promise to satisfy the hon. Gentleman, but it would be helpful to consider the matter in more detail than has been possible in the short time available to me. I propose that all three Members of Parliament representing Stockport constituencies—

Mr. Stunell

There are four.

Mr. Mullin

I beg the hon. Gentleman's pardon. There are four. I propose that those four hon. Members, representatives of Stockport council and the rent officer should come to see me so that we can discuss the matter rationally and calmly, first, to understand the consequences and, secondly, to find out whether there is a way of mitigating them.

Question put and agreed to

Adjourned accordingly at four minutes to Two o'clock.