Housing Benefit

HC Deb 15 March 2001 vol 364 cc303-44WH

[Relevant document: Sixth Report of the Social Security Committee, Session 1999–2000, HC 385.]

Motion made, and Question proposed, That the sitting be now adjourned—[Mrs. McGuire.]

2.30 pm

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

I am delighted to have the privilege of opening this short debate—

Mr. Deputy Speaker

Order. Perhaps I should tell the hon. Gentleman that the same dress code rules apply in Westminster Hall as in the Chamber.

Mr. Kirkwood

I beg your pardon, Mr. Deputy Speaker. How embarrassing. Take two.

I am pleased and grateful to have the opportunity to open this important debate. I am delighted that the Liaison Committee was persuaded that this was an important subject that affected hon. Members on both sides of the House because of their casework and their commitment to look after their constituents' interests. There is certainly prima facie evidence that the housing benefits system is failing substantially in its application and its structure and that problems flow from that. The debate is therefore apposite.

I am also pleased to open the debate because the Select Committee that I have the privilege to chair undertook an inquiry into housing benefits in its sixth report last year. We took evidence and produced what I hope will prove an invaluable resource document for hon. Members. We took substantial evidence from most of the pressure groups, interested parties, local government associations and others. Although the report was published in July last year, I hope that it is still relevant and helps to focus some of the main issues that are still at the forefront of the minds of people who study these matters outside the House.

Housing benefit has an increasingly important part to play in the range of income support and financial resources available to low-income households. It is a subject that can fall into the interstices between housing policy on the one hand and benefit policy on the other. That makes it difficult for the Government. It is difficult to know who has the prime responsibility for taking the policy development forward where housing benefit straddles and overlaps the areas of pure housing development and social security plans in the respective Departments.

It is not a subject that it is easy to get right either because 4.5 million households rely on it. We pay a total of £12 billion. That is nearly 12 per cent. of our total social security spend and a significant proportion of public expenditure. Occasional difficulties and hiccups are almost inevitable in a system that deals with such massed numbers of people who are in adverse financial circumstances. However, £12 billion is much better than nothing at all. We must always bear it in mind that, although the housing benefit system may have its problems, it has an important support role for people who are financially distressed.

The Committee was pleased that the Government undertook the March 1999 review of housing policy in a Green Paper. We thought that that was right and we looked forward to seeing the fruits of that Green Paper—consultation. We then took the view that it would have been right for the Committee to have taken on an inquiry. I shall spare her blushes, but the hon. Member for Regent's Park and Kensington, North (Ms Buck) was quite—

Ms Karen Buck (Regent's Park and Kensington, North)

Obsessive.

Mr. Kirkwood

I was looking for another word. The hon. Lady eloquently persuaded us that, once the Government had produced the Green Paper proposals on housing, it was time for the Committee to consider the impact of housing benefit on housing policy in London and elsewhere. Through her experience as a councillor, she knows a great deal about the issues. Her constituency is considerably stressed, because it is situated in a high-rent area, which brings problems of its own. I am particularly in her debt, because I learned a great deal by listening to accounts of the situations that she confronts daily in her constituency work. The Committee is grateful for her involvement, because it was right for us to consider housing benefit.

We became a little frustrated because the Green Paper took a long time to arrive, and we kept being told that it was coming next month or soon.

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle)

Very soon.

Mr. Kirkwood

Indeed. By December 1999, we were so frustrated that we decided to proceed with our own inquiry, even though we did not have the advantage of knowing the Green Paper's conclusions. In retrospect, that was the right thing to do, because it took us until July to produce our report and recommendations. The Green Paper was published some time later. We have now been able to consider what the Government said, and some of the consultation and comments that have flowed from the paper have been helpful.

We were disappointed that we could not proceed more coherently, but we got there in the end. We have made recommendations, which the Government are considering. Their formal response was a little disappointing. It was quite full and well argued, but did not deal as thoroughly as we had hoped with some of the issues that we raised. Perhaps that is always the way with Government responses to Select Committee reports. I know that Governments cannot do everything all the time. I am not a Government Member, but they have achieved a lot on social policy generally and on social security. I broadly support the thrust of welfare-to-work provision. Work for those who can work and security for those who cannot is a perfectly arguable adage. From my perspective, there has certainly been much more emphasis, perhaps rightly, on the first half of that adage and getting people who can work into work. A great deal of work has been done on that. Whether or not we agree with all of it, we certainly cannot accuse the Government of doing nothing.

However, there are real concerns about the impact of housing benefit policy when we come to consider security for those who cannot and never will be able to work, such as those with mental illnesses or stressed backgrounds and those from ethnic communities. There is a category of people to whom the Government have not yet adequately turned their attention. There is work still to be done on housing policy, and housing benefit as a part of it, which is a bit of a disappointment.

I do not want to turn this into a party political debate, because I hope that it will be more positive than that, but a Parliament has been lost in respect of significant housing and housing benefit reform. Indeed, evidence from pressure groups is mounting that the problems, far from lessening, have become worse over the past four years. I hope that this debate will allow consideration of some of the main concerns about housing benefit. There are two principal areas of concern that can sensibly be considered, both of which our report embraced. There is the question of administration and complexity. Separate from that is the need for long-term policy reform and a future strategy. I am concerned that we may concentrate exclusively in this debate on some of our constituents' short-term problems at the expense of trying to encourage the Government to share some of their thinking, such as it is, and to focus on what can be done in the longer term, in the next Parliament and beyond. I wish to spend a moment considering that.

I am not a housing expert and would never masquerade as one, but some requirements are stark and staringly obvious if sensible long-term reform is to be achieved. We need to examine the provision of tenure-neutral housing support. The current system is far too fragmented, and that is inevitable given the provenance of the current housing benefit scheme. It came from different systems of the public and private sectors and was designed to do different things. Some of it originated with local authorities, some with social security and the old supplementary benefits payment. One of the long-term goals that we should be aiming for is provision that is blind to the sort of housing that it supports.

We also want provisions that fit seamlessly into the new regimes and take us in the direction of tax credits rather than benefit payments. We cannot and should not ignore that. If we did, we would end up with a housing benefit system that did not fit, which would not be sensible. We must consider the need to establish common rules on such things as capital thresholds, earnings disregards and periods of entitlement. Those are all areas that agencies could more easily administrate. They would be more transparent for claimants if the rules were common to all systems of social security as well as housing.

We need urgent and radical reform. Reading the minds of Ministers, and between the lines of the Green Paper recommendation, the Government seem to be heading for some form of national flat rate. If they are, it will need to be topped up clearly and robustly by locally variable amounts. I am convinced that a system that might be adequate for Roxburgh and Berwickshire simply would not begin to work in Regent's Park and Kensington. One can buy a modest estate in Roxburgh and Berwickshire for the rents in Regent's Park and Kensington. That must be taken into account in the long term if we want radical reform.

Mr. Jeremy Corbyn (Islington, North)

Will the hon. Gentleman clarify what he means? Many of us who represent high-rent, high-priced inner urban areas also represent people who are very poor but who live in high-rent properties paid for by housing benefit. I, and I am sure many other hon. Members, would be concerned about any proposal for housing benefit to be cash-restricted, which would effectively mean the export of poor people from areas such as mine.

Mr. Kirkwood

I am obviously not making myself clear. It is precisely to protect against that eventuality that I am arguing for local variations. We need to take account of high-rent areas. If I have learned anything from the hon. Member for Regent's Park and Kensington, North, it is that rents in parts of London, with which I am not familiar, for obvious reasons, are astronomically—and, to me, unbelievably—high. That must be taken into account in any structural reform.

Mr. Corbyn

So the hon. Gentleman agrees with me?

Mr. Kirkwood

Indeed, and not for the first time.

I am sure that the Minister needs no persuasion that housing benefit is often the biggest remaining obstacle for claimant households trying to get back into work. Such cases may not be a large proportion of the housing benefit claimant case load, but there are significant hurdles in the way of people on housing benefit who want to move. They do not want to prejudice their ability to receive the benefit because it is so difficult to reclaim. I have evidence in my constituency of people who would be prepared to take the risk of going to find work elsewhere, but they will not come to Regent's Park and be faced with horrendous levels of rent if they think that they may lose their housing benefit entitlement. That needs urgently to be addressed if the Government's policy of encouraging more people out of dependency and into work is to be successful. It is regrettable that after four years of the current Parliament we have travelled little further on from where we came in. I hoped that, whoever wins the election, the next Government will view the matter more urgently and will implement a change that is long overdue. Will the Minister give us a flavour of what the Government regard as viable longer-term options?

Angela Eagle

The hon. Gentleman will have read the Green Paper and the response to it. We made it clear that long-term options for housing benefit had to await rent restructuring. For obvious reasons, the Green Paper estimated the period necessary for rent restructuring at seven to 10 years.

Mr. Kirkwood

That is a long time. I did not realise that the Government had publicly made that clear. That is a real problem, because if we have to wait for rent reform, structural reform of housing benefit will not happen for at least 10 years. I regard that as far too long, and I hope that we can persuade the Government to view the matter with greater urgency. If the evil manifestations of the current system continue for another 10 years, goodness knows how many people will suffer in the meantime.

Angela Eagle

I would not want the hon. Gentleman to gain the impression that we will not do anything to reform housing benefit for seven to 10 years. He asked about the long-term structural changes in the Green Paper, which included moving to a flat-rate style housing benefit system. The Government had considered the possibility, and the Green Paper included consultation on the subject. The outcome of the process is that the Government are not contemplating radical change to housing benefit before the restructuring of rents. It would not work until the rent structure became more coherent than it is now.

Mr. Kirkwood

That cheers me up, but only a little. I accept that big changes should not be rushed—in case people lose and get hurt—and that restructuring rent strategy takes a long time. I will hold the Minister to her commitment that the Government will not do nothing about the problem for 10 years. The Government have mentioned some potentially useful ideas since the Green Paper and our report were published.

I shall now deal with improving the administration of the scheme. I suspect that hon. Members are interested mainly in how their constituents will be affected here and now. The present delay and confusion in the system is certainly causing problems. All the consulted pressure groups—Shelter, the Chartered Institute of Housing and the National Housing Federation, which published a document yesterday—confirm how dire the current position is. They have shown that improvements such as the verification framework, which was rightly introduced to bear down on fraud, have slowed the system and caused even more delays. Even intended improvements can have perverse effects.

Outsourcing is another real difficulty, which is beginning to compound the problems of investigation. It is necessary to investigate some private sector companies' performance. Some hon. Members present have more direct experience than I do. I hope that they will share some of that experience with us.

There are problems with outsourcing. I am not an expert in the fine detail, but it strikes me as odd that the Government threaten public authorities that are struggling to administer a scheme. Big brother central Government say, "If you don't get it right in a fortnight, we will outsource." I am sure that much can be learned from the private sector; clever consultants can help. However, it is wrong to use outsourcing as an active threat—almost as a sanction—against local authorities that do not have adequate resources and are inundated by case loads that are difficult to administer.

The hon. Member for Regent's Park and Kensington, North made it clear—it is a problem that I do not have in my constituency—that the level of pay that is offered by the Benefits Agency and the housing authority makes it impossible to win, train and retain staff who are able to deal with complicated situations Turnover rates are high. People are hired and trained, their civil service background and training give them a high market rating, and they move on. It is wrong and counterproductive for central Government to use that hopeless situation as a big stick with which to beat local authorities.

Some changes are introduced in a capricious manner. The changes that the Department made to its own management information systems were visited on local authorities without notice, out of the blue. Great difficulties were caused because there was no training or IT back-up. Department officials must exercise self-discipline when introducing legislative and regulatory changes. There must be greater stability; in fact, there should be an annual deadline, a point each year after which no further reforms or changes to the benefits system are issued from the Adelphi office to local authorities and others. That would provide some stability for the people who provide the administrative systems for paying benefits.

Finally, additional resources or subsidies are urgently needed if the system is to be rescued from its present state. I do not care whether qualifications or conditions are imposed to link extra resources with administrative improvements. The need is great—I will discuss some details shortly—but the additional resources that have been made available to support the administrative regimes do not come near to matching it. Ministers should be concerned about that.

A problem that is of increasing concern to me—it has more to do with social security than housing—is the number of households in the United Kingdom that are living below income support and jobseeker's allowance levels. The number is much higher than the vast majority of folk realise. Households fall below the meagre safety level of support in two ways as a result of housing benefit. First, institutional restrictions, which are internal to the system itself, are put on the level of payments that can be made for housing costs. People have to take resources from their income support or other income streams, because housing benefit can no longer be depended on to meet their actual housing costs. That problem exists not only in London, but in constituencies as far north as mine. People find it difficult to make up housing costs from other income streams, and the problem is worsening.

Secondly, because the administration is now so poor, payment of the benefits to which people are entitled is delayed. That leads inexorably to rent arrears and, thereafter, eviction. Computers do not have any sense: they spew out eviction letters. An 85-year-old churchwarden had her confidence in life destroyed, not because her housing benefit was cut but because she was threatened with eviction. She was perplexed and it took me a long time to persuade her that her approach was too responsible and old-fashioned, and that the problem could be fixed because it was just part of the system. That is not the worst case and hon. Members will have other examples of stressed households, but it happened in my constituency only last week. Households are being driven systematically below income support and jobseeker's allowance levels in a way that we cannot ignore.

The sixth report of the Social Security Committee on housing benefit raised issues such as entitlement to housing benefit being set for fixed periods. There was some encouragement in that respect, as the Government did not say no, although they did not say yes either. We hold out some hope of pensioners having an annual fixed entitlement; their financial circumstances are unlikely to change and there is little point chasing average pensioner households, especially in my constituency, where they are a stable cohort of the population.

We must consider the number of rates and levels of non-dependant deductions. There is a case for them to be reduced, perhaps over a period, as such things are expensive; there are no blank cheques. However, there are frequent occasions on which non-dependant deductions exceed rent levels, which does not make much sense. The matter must be considered urgently.

The rules restricting private rents also need to be considered urgently; the Government's response gave us some comfort and we may return to the matter later in the debate. Single-room rent restrictions need to be reviewed and I am pleased that the Government are broadening some of the types of single-room rents that can be considered. However, it is a marginal change; it does not fill us with confidence that the Government are dealing with the problem, especially when households with under-25s are involved.

The report drew attention to the exceptional hardship provision and how it is used, or not used. More resources could be made available; if there were more flexibility, everyone would be more able to cope with the circumstances that arise. The Government response to the report stated that there had been increases in earnings disregards, but they should be restored and updated regularly, just as they are in other parts of the benefits system.

Fraud and error are not specifically housing benefit issues. However, I am worried that there is so much party political discussion about fraud that it deters people who have a genuine entitlement, especially retired people, from making claims. If an election is visited upon us, every political party, including my own, will say that we must bear down on fraud, and so we must, but we must be disciplined about using language correctly and getting things properly targeted; we must be sure that we are talking about confirmed or suspected fraud, so that there is a sensible relationship to what actually happens. People make assumptions about fraud without having any evidence, and that must be dealt with.

Fraud and error could be much better and more substantially addressed if the system were easier to administer and to understand. Some of the experiments that we saw in Lewisham, for example, used clever, modern technology to cut delays and make administration much easier. The explanation process that is made available to claimants from the beginning is excellent, and staff morale was high when we visited recently. It is a model of what can be achieved with some extra resources and creativity.

I hope that the Minister will speak about what is happening to the verification programme. All the evidence available to me since the report was produced says that, in many cases, the verification procedures are substantially slowing down the application process and, worryingly, contributing to arrears. The inspectors, who do valuable work to assist the authorities in the verification framework project, need to support and to co-operate with the authorities to secure improvement, rather than appearing out of the blue as men from the Ministry to threaten fire and brimstone if local authorities do not quickly improve their operations.

The Government's response to the report was a little disappointing. Since then, they have, through the Green Paper, made it clear that they want to concentrate on raising standards in administration. That is right and proper, and I hope that the Minister will talk about how they want to do that. They also said that they were trying to simplify the system. We support that enthusiastically, although some of the suggestions that we have seen, helpful as they are, do not go far enough by themselves. The Government would have to take radical and far-reaching steps to deal with the problems surrounding tapers, disregards and non-dependant deductions before we were assured that their response was adequate.

The tone of some recent statements from those responsible for housing, rather than benefit, has been more encouraging. If the Minister can help me this afternoon—if not, a letter would be acceptable, and I would ensure that other Members had access to it—I would like assurances on timings and, specifically, on the question of setting housing benefit for fixed periods, which applies to requirements to notify changes as well. We gained the impression that the Government were actively considering positive changes on that, and if the hon. Lady could say anything about that today, it would be welcomed. On simplifying rules, the ministerial mind might be currently applying itself to examining the rules that restrict eligibility of private sector rents, but whether that is in the Department of the Environment, Transport and the Regions or the Department of Social Security, I know not. However, if the Minister could report anything about that, it would also be welcomed.

I have spoken to registered social landlords, and get the impression that the Government are constructively considering involving them in the verification process as a way of speeding it up.

Mr. Corbyn

On the idea of involving registered social landlords, I can see where the hon. Gentleman is coming from. However, the efficiency of services run by registered social landlords varies enormously, and I am concerned that if some housing associations become involved in verification, the situation might be worse than if local authorities did it.

Mr. Kirkwood

I accept the hon. Gentleman's wider experience and more detailed knowledge of the scheme. He has a perfectly valid point, and if landlords are to be involved there must be proper safeguards and standards. Involving third party organisations in people's personal details should not be done casually; we must be clear that people's rights remain protected. Perhaps the scheme would be too hard to implement but, if there is anything in consultation, we would be pleased to hear about it.

During the inquiry, I was impressed by the depth and strength of feeling of claimants, pressure groups, local authority organisations and academics, who consider that the situation is still unacceptable and who say that, in some instances, it is becoming worse. If that is true, we cannot ignore it. The Government in all their various departmental manifestations need urgently to reflect on what additional consideration can be given to housing benefit. Additional resources are inevitable. I am not talking about sums that would be significant in public expenditure terms. Some money has been put into help teams and that is welcome, but I am not reassured that the Government have yet seriously grasped the extent of the problem.

To achieve short-term improvements and the longer-term fundamental changes to prevent millions of citizens from being consigned to poverty for a long time, it is necessary for the Government urgently and seriously to respond adequately to the representations that have been made from not only outside the House, but colleagues and Select Committees such as ours, which in the sixth report has seriously suggested ways forward. Naturally, the Government must measure the resources conflict that some suggestions may involve, but I hope that the Minister will give us some short-term cheer this afternoon in the expectation that, in 10 years' time, some of us may not be here to cheer her improvements in the long-term fundamental reform of the housing benefit system.

3.6 pm

Ms Karen Buck (Regent's Park and Kensington, North)

I woke up this morning and thought, "Great, an opportunity to discuss housing benefit." That worried me for two reasons. First, I am becoming weird and, secondly, as the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) said, it reflects the fact that housing benefit has not achieved anything like the attention that it warrants. We must bear in mind its scale and importance—4 million households depend on housing benefit—and that, in some parts of the country, the situation is catastrophic and the delivery of housing benefit has almost collapsed.

The National Housing Federation report was published yesterday. It was also the 18th birthday of housing benefit, but there is no cause for celebration. The federation concluded that housing benefit is paid to some of the most vulnerable people in society. It said that in the summer of 1999 a crisis affecting passport claims hit the headlines, politicians quickly moved into action and, as a result, only 500 people actually missed their holiday. That was bad news for those people, but housing benefit affects many more people than that and can result in more serious problems than missing a holiday. Urgent action is needed now to tackle the crisis that is hitting people's homes. As the hon. Gentleman said, to place emphasis on that point in no way detracts from the fact that, before Christmas, the Government made various welcome announcements in response to the consultation process on the housing Green Paper. No one is accusing the Government of inaction, but clearly a great deal more can be done.

Housing benefit is the backstop that keeps a roof over people's heads. It is disproportionately paid to potentially vulnerable people, such as pensioners, families with children and people who are ill and disabled. We should be proud of the system because arguably there is nothing more important than a secure home. Without that security, all the Government's other objectives of promoting work, education, good health and so on cannot be achieved. The housing benefit system should underpin the brave and bold commitment of the Government to tackle child and pensioner poverty. At present, however, it is not doing that.

The roots of the problem go back a long way—it has not emerged recently—to the conscious decision of previous Governments, after the institution of the current structure of housing benefit, to shift housing subsidies from bricks and mortar to individuals. The problem also stems from a long-term failure to invest in benefit administration sufficient to provide a quality service to claimants on low incomes. Since 1997, the Government have made excellent progress on a number of relevant fronts, especially through the ONE pilots and the development of personal advisers in the new deal. However, the problems that afflict so many areas of the country show how much more must be done.

I can scarcely put a cigarette paper between my opinions on this matter and those of the hon. Member for Roxburgh and Berwickshire, apart from one point. I understand and accept the need for caution and the importance of not rushing into a set of fundamental reforms of subsidy in a way that would inadvertently lead to hundreds of thousands, or even millions of losers. We cannot do everything at once and fundamental reform is tricky. Some element of rent restructuring is essential, especially to allow housing subsidies to facilitate the better use of the housing stock. Housing benefit fraud is a serious issue, and there is a need for a version of a verification framework and all that goes with it. All those things are taken as given.

In preparing for this debate, I went back to the Beveridge report to see what it said about housing subsidies. It would be fair to say that Beveridge bottled it. The report states that the country should give future Governments

twenty years for dealing with the rent problem, that is to say, reducing the anomalous rent level of London and the acute individual inequalities, which persist throughout the country…The extreme variation of rents is evidence of failure to distribute industry and population and of failure to provide housing according to needs. No scale of social insurance benefits free from objection can be framed while the failure continues. If Governments failed to deal with those problems for 55 years after Beveridge, it is unsurprising that this Labour Government have failed to tackle it in just four years. We need more time. However, the thought of the 59 years since those words were written would cause me considerable anxiety if we were not planning to make any more radical reform for another seven to 10 years. I can easily imagine the matter stretching on to 100 years in that case—although I know that my hon. Friend the Minister will say that that will not happen.

Angela Eagle

Clearly, the introduction of tax credits into the system has implications for housing benefit. A lot of work will have to be done to ensure that the making work pay agenda is not weakened by the anomalous nature of some housing benefit structures. Although, by definition, big flat-rate reform cannot be on the agenda until rents have been restructured, a person does not have to be a genius to understand that an extension of the tax credit system would have implications for housing benefit.

Ms Buck

I warmly welcome those comments from the Minister. I will return to the matter, but I accept her point.

I welcome, too, the range of specific initiatives announced before Christmas to deal with some problems that have emerged in the administration and delivery of housing benefit and aspects of the policy agenda. There was a degree of relaxation of single-room rent restriction, the establishment of the expert health team and the first significant increase in financial support for local authorities since 1993. Those policies show that the Government are listening and responding to problems on the ground. They are especially welcome after an initially disappointing response to Select Committee reports in the summer. We have made progress and will make more.

The current situation requires significant and urgent change and I expect a future Labour Government to make the issue an absolute priority. There are three main clusters that must be addressed. First, administration must improve, with a consequent improvement of people's experiences of claiming, which can undermine their experience of the welfare state.

The problems that have emerged in different parts of the country have been devastating for hundreds of thousands of individuals, but I will concentrate on my constituency experiences. I have dealt with hundreds of individuals who have received possession notices. That is a dreadful experience for such individuals, who may be elderly, disabled or bringing up children. Such experiences are a result of the extremely ill-thought-out and mismanaged process of privatising the benefit service to Capita. At one point, I believe that 27,000 items of post built up, with a backlog of cases that has stretched back since last April.

I am pleased that the peak of the crisis in Westminster has passed and that is a tribute to the client team of Westminster city council, which has taken the brunt of dealing with cases on behalf of councillors, advice agencies and me. However, even though the peak has passed, lives are being turned upside down. A constituent named Louisa wrote to me last week, saying: Ms Buck, I am writing to you as the worker in the housing benefit department told me that they couldn't do anything more about my case, apart from waiting, and that is something I have been doing since last April, so the lady suggested I see my MP. It says something when the administrators of housing benefit pass on their cases to a Member of Parliament. The letter continues:

I applied in April…over the next seven months I gave the same documents in again and again…In December they gave me my cheque…Three weeks later they asked me to renew my claim…I have now been waiting another 8 weeks…I have two small children to feed and clothe and I am on anti-depressants. I can't take any more of this. One of my local law centres in Paddington, to which I pay tribute for the amount of work it has done, said that claimants with outstanding claims for housing and council tax benefit are invariably issued with summonses for arrears, court costs are added to these, all where the substantive problem is the failure to process benefit. It then takes numerous letters and calls to get these costs waived, and this despite numerous assurances from Westminster that costs should never be imposed where there is underlying benefit entitlement. I share its view that the decision to privatise Westminster's service made no sense at the time and, when examined now, it has been a total waste of public money, with no obvious gain to either the council or benefit recipients.

Another of my constituents, named Stephen, gave up the keys to his flat and we believe that he has been living rough as a result of the extreme anxiety that he experienced when the North British Housing Association delivered him a notice to quit because his benefits could not be resolved. He wrote: Almost every day in the last two weeks of my tenancy I phoned the Benefits helpline to inform them that they must finalise my claims. I stressed to them that they had no more time left. There is a high risk that my TB will return as I could not finish my last treatment (when homeless and walking the streets all day). I regard Westminster Council as criminal. Those letters, which have been picked from the top of my post, are illustrative of the problem.

The case of Stephen, a former rough sleeper who we now understand to be back on the streets, leads me to the second issue that should be delivered by a housing benefit system that is working properly. Housing subsidy must counter poverty and social exclusion, not reinforce it. That is achieved in many parts of the country. I agree that it is a badge of pride to have a housing benefits service that can satisfactorily relieve the pressure of housing costs, when administered properly, as it is in seven tenths of the country or more. In areas of high housing cost, however, it simply does not do that.

According to the North British Housing Association, part of Stephen's problem is that Westminster council told him that his rent was too high and that after payments were made he would still have to make a weekly contribution of £42.70, presumably out of his incapacity benefit or jobseeker's allowance. The neighbourhood officer of the North British Housing Association stated: I too am concerned that he has returned to the streets, especially as he is in poor health, but we have no way of contacting him". If that is not a case of the reinforcement of social exclusion, I do not know what is.

At the heart of the problem is the shortfall between actual rent and housing benefit payments, which is now commonplace across London and in many other high-cost areas in the south-east such as Brighton and Oxford, and even in north Wales, which the Select Committee visited to see the system in operation last summer. I was shocked to discover that a problem that I thought was confined to central London was being replicated in an area of low housing cost and demand.

I have dealt with dozens of cases of shortfall over the years, as a councillor and as a Member of Parliament. I am reminded of the case of a pregnant woman who shared a one-bedroomed flat with a friend in one of the poorest streets in my constituency—I assure hon. Members that there are many such streets in my constituency—and who, after housing benefit or rent restrictions had been imposed, had £12 a week left to live on. I had to engage the social services department to try to introduce a child protection approach to that case.

According to the evidence presented to the Committee last year, 54,000 families with children on income support or jobseeker's allowance had their benefit restricted by an average of £6 a week. We also presented as evidence to the Committee the study done by the London Housing Unit on Brent council. It found that the average shortfall was £17.13 a week, with 15 per cent. of claimants facing a rent gap of £30 a week. That is absolutely unacceptable. It is a consequence of changes made to the housing benefit system under the previous Government, especially those introduced in 1996. However, that does not make me feel any better about it.

The Government have taken some positive steps, such as the relaxation on single-room rent, which is one aspect of the rent restrictions issue. I welcome that, although I share Shelter's view that a strong case remains for total abolition, as the single-room rent provision takes no account of the availability of accommodation matching the single-room rent definition in a particular area. Much will depend on the detailed consultation on the matter, which we are still awaiting. I would be pleased to hear my hon. Friend the Minister comment on that.

The national private landlord and tenant working group, which deserves a great deal of congratulation for its work in finding common ground between landlords and representatives of tenants, confirms the point. It states: We find much to commend in the government's proposals to reform Housing Benefit". It then highlights the priority for more change than has so far been proposed on shortfall, stating: Many areas of the country report a growing discrepancy between average market rents and Local Reference Rent…We would like a commitment to a consultation of how Local Reference Rents are valued and by whom, in order to ensure claimants are not excluded from private rented accommodation or caught by large Housing Benefit shortfalls, because the valuations do not truly reflect market rents. I strongly support that call. I would welcome the Minister's response to that point, either during this debate or subsequently.

Doing nothing about this issue is not an option, partly because so much distress is being caused to a statistically small but none the less significant number of people, but also because of the knock-on consequences of housing benefit restrictions for the whole issue of access to social housing.

I am indebted to the London Housing Unit for drawing attention to the increasing exclusion of low-income households from the private rented sector. The number of private tenants on housing benefit has halved in recent years. That fall is far greater than can be explained by the decline in unemployment.

Half a million fewer low-income households will soon be housed in private rented housing than in 1996. That decline is sharpest in areas such as London. Where are those who are not using housing benefit to access private rented accommodation? From studying applications to local authority housing departments I know that the answer is that those people are calling upon the scarce resource of social rented housing. People coming to the end of an assured shorthold tenancy are one of the biggest groups making a demand on social rented housing, either because they have been struggling for half the period of their assured tenancy to meet the shortfall or because, when their rent is revalued, they find themselves in a category in which housing benefit will not cover the entire rent. Those people are now joining the queue for social rented housing and, ironically, ending up back in temporary or bed-and-breakfast accommodation at fantastic expense to the public purse.

It appears that the undershoot on housing benefit expenditure in recent years is partly due to an underestimate of savings following the 1996 changes in rent restrictions. The Minister should accept that there is room for manoeuvre, because a joined-up analysis of costs would surely find that savings on housing benefit are inevitably being shunted on to other budgets. We need a healthy private rented sector to allow mobility in the labour market and, for the foreseeable future, to provide a valuable supplement to housing association and council property, which is in such short supply. Putting the squeeze on people accessing such accommodation on low incomes is causing all sorts of problems.

No one is saying that all restrictions should be lifted. I understand that the public purse should not subsidise penthouses in Mayfair, and having served on numerous housing benefit review tribunals in Westminster in the early 1990s, I assure hon. Members that that occasionally happened. However, the pendulum has swung too far. Too many people are being caught by restrictions that are damaging to the private rented sector and have consequential effects that must be dealt with.

My third group of points, after administration and poverty, concerns the question of work incentives. Housing benefit is the last piece in the jigsaw of welfare reform. It is especially critical in areas of high housing cost, where the interaction between housing benefit and the working families tax credit—and, potentially, the integrated child credit—are such that it is becoming increasingly difficult for people in areas of high housing cost to get out of unemployment and back to work.

The Government have been sympathetic to the need for change to make it easier for people to enter the workplace after they have been on housing benefits—by passporting claims for example—but more is needed. The Select Committee report endorses a fixed-term entitlement for working claimants of six months, with a safety net for changes of circumstances. I strongly agree with that, and encourage the Minister to be as positive as possible in helping us to deal with that matter.

I would also support an easing of the burden of the higher rate of non-dependant deductions, and, as Shelter is recommending, the introduction of a cap of no more than 50 per cent. of the total rent, partly because that would encourage members of the household other than the tenant to work. It would also relieve stress and strife within households. In my surgery, I have witnessed the tensions that can occur in families when adults call upon children to contribute to the rent. That can contribute to the break up of households, which leads to 19 and 20-year-olds seeking help to secure housing because they are unable to stay at home and because of the complexity of the benefit system.

In future, the Government could act swiftly on the issue of earnings disregard to float a significant number of claimants off benefit. Last summer, I asked questions that led me to understand that to increase the level by £10 a week for families with children would cost around £70 million. The net cost of returning to the 1988 levels would be £35 million. That is not a huge sum.

Despite excellent initiatives such as the working families tax credit, pockets of concentrated unemployment in areas such as my constituency highlight the fact that it is necessary to provide the extra incentive and to remove the fear that plagues people when they are deciding whether, in effect, to risk their home by entering employment.

The Chartered Institute of Housing has produced excellent work on the matter. I share its view that the reform would not increase the complexity of benefits and would be easy for claimants to understand. It stated:

Those whose incomes are low enough to qualify for both tax credits and housing benefit are those who benefited least from tax credit reforms. Although there have been huge improvements over recent years, about 200,000 families still face marginal withdrawal rates in excess of 80 per cent., and I suggest that many of them live in high housing cost areas such as London and the south-east.

The Minister indicated that, in principle, she was sympathetic about the issue of housing credit. The Social Security Committee's report strongly supported it because it would float many people off dependence on housing benefit. They would not, therefore, have to make claims, and that would have the positive knock-on effect of easing the administrative burden on local authorities.

It is important to maintain an individually sensitive top-up in areas of high housing cost because that enables people on lower incomes to remain resident in high-housing-cost areas. It would be bad for local economies if they had to move away.

It is impossible to separate the various strands of administration and delivery of the scheme from policy reform issues. The Select Committee report made several proposals to enhance the policy objectives of tackling poverty, improving work incentives and, in the longer term, helping to facilitate the best use of the housing stock and encouraging mobility between housing sectors.

The last thing that we need is a big bang response. Several fairly inexpensive proposals could be introduced in relation to poverty, work incentives and easing administration of the system.

In the immediate term, close monitoring is necessary. The proposals that the Government brought forward before Christmas must be delivered on so that the threat to people's homes and security that are implicit in the maladministration of benefit in some areas can be lifted. We can then turn our attention to creating a system of which we can be proud. It would be marvellous if the next Labour Government were able to achieve that which Beveridge, 50 years ago, could not.

3.34 pm

Mr. Jeremy Corbyn (Islington, North)

I welcome the debate. I feel a sense of déjà vu in debates on housing benefit, and I remember the days of Haringey council in the early 1980s, when we earnestly debated whether we wanted to administer housing benefit. Indeed, it was slightly peculiar that the then Government decided that local government should administer housing benefit, which is after all a social security benefit like any other. I suppose that the assumption was that the majority of the recipients of housing benefit would be local authority tenants. Although that may still be true, the world has moved on a great deal since 1981. Many local authorities administer housing benefit moderately well, some do it very well, the majority do it not especially well and some do it downright appallingly.

I am a former member of the Select Committee on Social Security, which investigated housing benefit fraud. Most housing benefit fraud is committed by private landlords who, for example, create fictitious tenants and fictitious tenancies or double-occupy places. Any number of highly imaginative scams take place that result in millions of pounds going to landlords who do not deserve a ha'penny. I have no sympathy for them or for anyone who deliberately defrauds the system. However, another form of fraud is committed when people who are entitled to benefit do not receive it and as a result lose their home. That is the tragic experience that I shall briefly recount.

My borough, Islington, like many other boroughs, administers housing benefit. From the 1980s onwards, the council was run largely through a large number of neighbourhood offices, from which housing benefit was administered. The idea was that all services were local and officials were therefore more locally accountable and in touch.

Some evidence suggests that that system helped cut housing benefit fraud. Local officers tended to know the 20 or 30 streets nearest the office, and if they had an unusually large number of claimants from one address, they would spot that. They realised that it was impossible to have 20 or 30 tenants in a four-bedroomed house and that fraud was perhaps being committed through double accounting. That is not necessarily spotted in a much more centralised system. I do not pretend that the system was overwhelmingly efficient, but it was possible for councillors, advice agencies and people such as me to achieve a result and to contact the appropriate official

The council turned its back on neighbourhood offices some years later. It centralised the system, and housing benefit efficiency got worse. The housing benefit factory that the council set up proved a bit of a nightmare, and the Conservative Government did not allow the council the capital necessary to invest in new IT equipment to improve the service. The council therefore did what many other local authorities have done, and outsourced the administration of housing benefit—in Islington's case to a company called ITNET. The circumstances worsened considerably, and the council acted according to the current contract culture and appointed a consultant to liaise between the council and the private contractor and to send reports to the council about how bad the service was. The reports were interesting. The circumstances are completely mad. A Government benefit is being paid via a local authority and an outsourced company, ITNET, and reported on by an independent consultant.

I asked for a copy of the contract signed between Islington borough council and ITNET. I am sure that my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck) has asked for exactly the same for the company that runs housing benefit in her area, Centra—or rather, Capita; the other runs buses, and the matter gets confused.

I received an interesting variety of responses, including that the contract was commercially confidential, that it was private, that it was not a public document and that I had no right to see it. Councillors are not sure whether they are allowed to see it. After I put a lot of pressure on the council, I was finally told that I could see the document, but that I could read it only under supervision and could not have a copy to take away, as it was commercially sensitive. That is barmy, baloney and nonsense. We are dealing with a public benefit paid to the public under social security rules by a company that is doing it with monumental inefficiency and, because of the terms of the contracts, making huge profits along the way. The result is absolute misery for the people whom I represent.

At the high point of ITNET's inefficiency, there were almost 21,000 unopened envelopes it its office. I invited myself down there and it thoughtfully opened all the envelopes before I got there: it had put them through a letter-opener, which sliced off the top of the envelope, but no papers were taken out. I was assured that it had opened the envelopes. When I said that it looked as though the boxes contained the misery of 21,000 people's lives, I was told that that was a gross exaggeration because many people wrote in several times when they did not receive their housing benefit and so it might be as few as 10,000 people whose lives were made a total misery. It is not right for one person's life to be made a total misery, let alone however many thousand.

I have reached the end of my tether with this company, as have the majority of people in Islington. The misery that it causes is unbelievable. My advice surgery, like those of other hon. Members who represent inner-London constituencies, is full of people who lead stressful lives. They are bringing up children, holding down a job or in some cases two jobs, and all the rest. Some are unemployed. To have problems getting housing benefit is bad enough, but when the council sends out a legal notice for eviction from a council property because its agency is so incompetent that it cannot pay the housing benefit that that tenant is due, one wonders where Franz Kafka went wrong.

The situation is bizarre. The council has an agency the job of which is to pay rent to people. It is simply incapable of transferring £61 a week from department A to department B. The result is that the tenant runs up huge arrears. The case then goes to court. A judge rarely, if ever, grants an order for eviction of local authority tenants, but a county court order may be issued against them, with the result that they cannot obtain a credit card or borrow money. Any check on their character will show them to be of bad character in some way. We end up almost criminalising people because they have the misfortune to deal with a housing benefit company that is so inefficient that it cannot deliver the benefit that people need. That is disgraceful.

Pensioners often come to my surgeries. They are respectable people who have worked all their lives as cleaners, nurses, postmen and all the rest. They have religiously paid their rent throughout their working lives. To them it is a badge of honour that they have never been in rent arrears. They find it deeply hurtful to receive a letter telling them that they are £700 in arrears and asking what they intend to do about it. As my hon. Friend the Member for Regent's Park and Kensington, North pointed out, for people who are tenants of registered social landlords, more commonly known as housing associations, or private tenants, the situation is quite different and in some cases much worse.

Some of the smaller housing associations have a terrible cash flow problem. One of them in my area was £1.5 million in arrears of rent income due to the incompetence of ITNET. The larger registered social landlords can bear that for a while, but they must pay interest on a bank overdraft in order to pay for a benefit that should have been paid to them. For private tenants, the situation is dire. I am not surprised that there has been a reduction in the number of private tenancies that are paid through housing benefit. I have seen a copy of a circular issued by one of the larger letting agencies in my constituency which said that it would no longer let to anyone entitled to housing benefit from the London borough of Islington because it did not believe that it would ever get the money.

Other north London Members of Parliament will bear witness to that process. A steady stream of tenants and landlords come to my advice surgery saying, "For God's sake, please get us some money to ensure that the rent is paid." In some cases, they are very small landlords; someone may let a flat in part of his own house and depend on the rent to pay the mortgage on the rest of the property. If the landlord gets into arrears, matters get worse and worse.

We have seen the benefit fraud inspectorate report. The report of the director of housing to the Islington housing committee dated December 2000 states: A seven-year contract with ITNET was let in October 1998. The contract provides for a possible break at year 5 (October 2003) if the 2002/3 key performance indicator is 6 per cent. or more below the benchmark performance. The council feels absolutely stuck in a contract with that company, which threatens to sue any local authority that breaches the contract. The company has threatened the London borough of Hackney, which is also a recipient of ITNET services, if that is not a contradiction in terms, with legal action for breach of contract. Any tenant who lost his property or home as a result of the company's actions would have a moral right to sue the company.

The number of outstanding cases has reduced to about 5,000, but there are probably enormous arrears. I compliment the Select Committee on its report, which suggests that the performance of the contractors who handle housing benefit should be examined. We are talking not just about a financial relationship between local authorities and the Government but about an immediate, direct, absolute payment to which people are entitled. I dread to think of the misery that would be caused if income support were outsourced to companies such as ITNET.

Angela Eagle

The Government have no plans to outsource the administration of income support.

Mr. Corbyn

I was not for a moment suggesting that that was the case. I was merely drawing a parallel between the misery caused and the horrendous result of inefficiency in benefit delivery for the people who receive it.

The BFI report stated: The Council is also seriously criticised for under-resourcing the work of the fraud investigation and ITNET is criticised for its lack of commitment to overpayment recovery. The report contains a large number of detailed recommendations designed to improve the administration of benefits…A detailed action plan…has been drawn up…the council will advise the DSS of its full commitment to implement that action plan as part of its overall housing benefit recovery strategy. Again, I invite the Minister seriously to consider the performance of the company, the cost of its inefficiency to the public purse and the social and emotional costs to people who may be thrown out of a private rented flat, with little chance of finding anywhere else to live. That is an absolute scandal; I know that the Minister shares my concerns about the matter and I hope that she will be resolute in her dealings with the housing benefit companies.

I represent an inner-London borough, an area of high housing stress, high housing costs and a massive property boom. Indeed, one sometimes feels that one is living in the midst of people who see everything in terms of liquidating assets: in other words, selling property. The philosophy of everyone, including the council, is to get rid of whatever property they have because it is a way of raising more money.

The inefficiency of housing benefit is compounded by rising rent levels in the private sector, which means that unless people under housing stress are nominated for a local authority or housing association property they have no chance whatever of staying in the borough. A two-bedroomed flat in my constituency, even on a major thoroughfare such as the Holloway road, costs £150,000 to £200,000 and those prices are going up rapidly all the time. Buying a house is impossible even for someone on double or treble average income in London—never mind the country as a whole. If people can get a nomination to a council or housing association property and keep it, that is fine—they will have some security and, one hopes, a reasonable place to live—but the shortage of housing means that many people are living in overcrowded council flats that are often damp and in some cases poorly maintained, with limited possibility of a transfer.

I invite the Minister to reflect on our housing strategy, perhaps not today but as part of a wider consideration. I compliment the Government on the fact that a great deal of money has been invested in housing improvements and repairs. The quality of life for many people on estates has improved dramatically over the past three years as a result of new roofs, new windows, new drainage systems, new central heating systems, anti-crime initiatives and so on. All such improvements are welcome. Estates are more habitable than they were three or four years ago, and I compliment the Government on that. However, if we are to prevent London from becoming a two-class city, in which the rich live in expensive central London and the poor are exported to the most distant suburbs or even further away, we must invest more money in affordable rented housing. I understand where the Government are coming from when they say that they want specialist housing for teachers and police officers, but we also need specialist housing for postmen, hospital cleaners and so on. One cannot restrict such housing to a few groups.

We are spending vast amounts on housing benefit for people in private rented accommodation. I gave an idea of the cost of buying property in my constituency; to rent, one is talking about £200 or £300 a week. Councils often pay £500 a week or more for leased property and, if tenants are on housing benefit, we end up paying that through the public purse. In the longer run, it would be much cheaper to invest in purchasing and building new property for affordable rent than to subsidise private landlords through housing benefit. The Select Committee has looked at that; I understand that rapid and sudden changes could have the perverse effect of reducing the amount of available property. However, we must look at our desperate social housing needs. Unless we do, London's housing problems will be ignored and great numbers of people will be forced out of London. It is a serious issue. I recognise that that is the flip side of the experience of other hon. Members, particularly those representing constituencies in the north-east and northwest, where council accommodation is often under-occupied. We cannot tell the poor of London to move somewhere else: they have families, jobs and commitments. I invite the Government to think about that.

The 1974 Labour Government were concerned about housing and did a lot to expand council housing stock. My hon. Friend the Member for Edmonton (Mr. Love) and I were members of Haringey council at various times in the 1970s and 1980s; it routinely completed up to 1,000 new dwellings a year. Indeed, my hon. Friend was chair of the housing committee at one point.

Mr. Andrew Love (Edmonton)

It was a long time ago.

Mr. Corbyn

It was not that long ago. All things are relative.

We need to look at the level of private sector rents and whether housing benefit could be improved by some form of rent control such as that which the 1974–79 Labour Government introduced. Many people are purchasing properties in London to rent out because the rental income is so enormous. That is forcing up prices in London, which can have a knock-on effect on housing benefit.

I hope that the Minister will understand that we expect her to put pressure on inner-London local authorities that suffer from the inefficiencies of contractors, to ensure that our constituents get a fair deal and have the security of knowing that, if they are entitled to receive benefit, their rent will be paid.

3.55 pm

Mr. Jeff Ennis (Barnsley, East and Mexborough)

I am delighted to participate in this important debate and to follow the previous three hon. Members who have spoken. I associate myself with many of the comments made by my hon. Friends the Members for Islington, North (Mr. Corbyn) and for Regent's Park and Kensington, North (Ms Buck) and by the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood).

Housing benefit is a crucial plank of the Government's social policy. Housing and council tax benefit provide support to 4.5 million people throughout the country. As the report outlines, in May 1998, just over 2.6 million of those were council tenants, 840,000 were housing association tenants and 970,000 were the tenants of private landlords. About 64 per cent. of housing benefit claimants were in receipt of other benefits such as income support or jobseeker's allowance. Of the 4.5 million claimants, 1.8 million—41 per cent.—were aged 60 or older, 1.4 million—32 per cent.—were from households with children and 930,000 were lone parents.

Housing benefit undoubtedly helps some of the most deprived parts of the country. We have spent most of our time focusing on London, so it is appropriate for me to outline the profile of my constituency in South Yorkshire. You will be aware, Mr. Deputy Speaker, that it has a GDP per capita level of 62 per cent. of the European average—the lowest in the UK. No wonder South Yorkshire qualifies for objective 1 funding for the first time. One in three households in my constituency have at least one disabled person living in them—a direct consequence and legacy of the former mining and heavy engineering industry in the area.

Of the two local authorities that I represent, Barnsley has approximately 25,000 people on housing or council tax benefit, and Doncaster about 31,000. It certainly provides a lifeline in such vulnerable communities. The system is and should continue to be operated by local government. It needs to be delivered locally and provides a rebate against the local council tax or the charge for housing accommodation.

There are two current problems. First, the process for claiming housing benefit is becoming increasingly complicated. Secondly, are we reimbursing the full cost to local authorities? I recognise the need to drive fraud out of the benefit system—one of the key ways of modernising it—but there should be a balance between robustly reducing the capacity for fraud and avoiding excessively complicated administration. Claimants should not be put off bothering to claim and the administrative overheads should not be prohibitive.

The report recognises that many local authorities are experiencing difficulties in managing the housing benefit system. As hon. Members have said, numerous local authorities have significant backlogs of payments. Obviously, that causes additional hardship for some of the most hard-up people in the country. That is not always because local government cannot manage those services properly. The problems exist whether the services are managed in-house or outsourced. Many of the problems that London is experiencing have to do with outsourcing rather than internal local authority systems. My hon. Friend the Minister needs to take on board that important point. The fact that both local government and the private sector are struggling with the issue must tell us something. There is no doubt that there are examples of good practice by local authorities, on which we need to build. Indeed, paragraph 114 of the report, with which I entirely agree, specifically refers to that.

I shall take an example to give hon. Members an idea of the proportions of the complications. One of my local authorities, Barnsley, recently needed to take on 20 additional staff to deal with the growing backlog. Why do such backlogs exist? One major reason is that there are endless amendments to the process. I recently discussed that subject with the borough treasurer in Barnsley, who showed me a thick file full of changes that have been made to the regulations over the past few years.

The treasurer advised me that there are about 90 major changes to the benefits system each year—a pattern which has persisted over the past three to four years in our attempts to deliver our social policy or to reduce the possibility of fraud. Both are desirable aims, but they put an immense strain on the staff working on the systems, which are all heavily computerised for obvious reasons. Amendments to the computer systems must therefore be made, and the time spent inputting documentation on a claim has increased by 50 per cent. over the past few years. The additional information requirements also need to be considered. Currently, we ask for the national insurance numbers of claimants and partners, proof of identify of claimants and partners, tenancy types, landlord details, information on subsidy matters and rent officer details. Obviously, some of that information needs to be uploaded on to the computer, but I sometimes wonder whether it is all necessary.

Local authorities have been provided with a new standard form, which has taken about 12 months to prepare. Authorities are encouraged to use the form, which has 24 pages and is twice as long as the existing one. In our desire to ensure that we target and deliver the benefits to the most deserving cases, we might be in danger of creating a bureaucratic nightmare that could bring the system to a grinding halt. We must not allow such a situation to arise, and I am sure that the Minister will not allow that.

Local authorities provide social housing, and I firmly believe that there should be a future role for local authorities as direct housing providers. They provide decent, affordable housing for those in our communities who are disadvantaged and quite often vulnerable. In Barnsley, 15,300 local authority tenants are on benefits. The real question is whether the Government are properly funding local authority housing or asking, through the housing revenue subsidy system, the poor to pay for the poor.

The housing revenue subsidy claim system is extremely complicated. I am not an expert, but I will try to deal with its general thrust. In 1980, the previous Government introduced the basis of the system for revenue funding for local authority housing services. I think that the House has accepted that the system of funding for local authority services, the standard spending assessment formula-funded mechanism for local government services in general, is not only unfair but implausible. We are considering doing away with the current system.

The introduction of the housing subsidy system in 1980 led to claims that local authority housing tenants might be asked to bear the cost of rent rebates for council tenants. By and large, that system remains unaltered. The system for the housing revenue account works on the basis of a notional revenue account that must balance. Within the system, we claim that the cost of rent rebates is funded 100 per cent. but, at the same time, we withdraw from local authorities subsidies that would have been used to maintain and repair houses. That clawback is carried out on the basis that the notional housing revenue accounts are in surplus, because we have either increased the rents or given derisory increases to the authorities for management and maintenance.

Local authorities are reaching crisis point, and in future only a handful will not be in deficit and repaying housing subsidy directly to the Government. It is estimated that local housing authorities will return £1 billion to the Treasury this year. How can that be right, when we have identified that there is a backlog in repairs to local authority housing of some £20 billion? The simple answer is that, although we try to convince ourselves that we are fully funding housing benefits, we are not.

To give an example from one of my authorities, once again Barnsley, this year's estimate for the total cost of benefit payments is £24.5 million. The total benefit subsidy notionally received from the Treasury is also £24.5 million. The calculation of total subsidy payable to the authority, using the current system of notional housing revenue account, gives the authority £14.6 million, which leaves a funding gap that is repayable to the Treasury of £9.9 million. Next year's position will be disguised by the introduction of the major repairs allowance, paid through the subsidy system rather than through capital allocations. That was the case with credit approvals, which have virtually disappeared with the introduction of the MRA.

Even with an estimated MRA of £11.6 million, Barnsley forecasts that it will be in negative subsidy for the next two years. However, that authority is not profligate. As you will be aware, Mr. Deputy Speaker, we always spend our money wisely in Yorkshire. A survey of tenants found that the housing service is good, and the Government continue to rate Barnsley as above average, with a good management service. A recent certified valuation of the housing stock revealed that nearly £90 million needs to be spent on repairs and replacements over the next five years, which is more than double the likely available resources in that period. Despite that, we as a Government ask authorities throughout the country such as Barnsley to repay, to the Treasury, money that should be spent on maintaining the housing stock. Clearly, we cannot do both: we either fully fund housing benefit or take money away from local authorities that sorely need the subsidy for investment purposes.

We need a housing benefit scheme that is neither so complex, nor subject to continuous change. We must simplify and stabilise the housing benefit system. The Social Security Committee report contains several positive proposals, and I congratulate the Committee on its work. I hope that, in the fullness of time, most of the points will be given full consideration by the Government for inclusion in a new housing benefit system that caters more for housing benefit recipients.

4.8 pm

Ms Glenda Jackson (Hampstead and Highgate)

My hon. Friends the Members for Regent's Park and Kensington, North (Ms Buck) and for Islington, North (Mr. Corbyn) painted graphic, if depressing, pictures of the desperate situations in their constituencies because of their local authorities farming out to a private company the delivery of housing benefit to their residents. In the light of those contributions, I should say that my borough—the London borough of Camden—has received two charter marks for the excellence of its delivery of the housing benefits system.

I am somewhat bemused that neighbouring authorities with similar problems did not ask my borough of Camden for advice or hints on how best to administer the housing benefits system. Perhaps there was a different Government in office when the change in benefits delivery came in, and they were not allowed to go to a local authority.

In his opening remarks, the Chairman of the Select Committee referred to his shock at some of the rents that are charged in London. My hon. Friend the Member for Barnsley, East and Mexborough (Mr. Ennis) made a contribution that was not London-based. I join him in congratulating the Chairman and the Select Committee on an excellent report. I sincerely hope that the Government will take on board its recommendations and, as far as London is concerned, that they will process some of the changes more expeditiously than they seem to be doing at present.

I am grateful for a handy little booklet about London that was published this year by the National Housing Federation and entitled "A Tale of Two Cities". It contains many facts that I imagine most London Members are familiar with, but I thought that it might be helpful on the subject of rent levels. The London Research Centre rents bulletin, which was published in March 2000, indicates that a two-bedroomed property costs on average £285 a week in the private sector. One would expect to pay nearly £380 a week for three bedrooms. I am dealing with a case in my constituency involving a studio flat that is currently renting for £390 a week; the landlord wants to increase the rent to £650a week.

Another point that may be useful with regard to London—I do not think that I am overly stressing London's housing crisis—is that more than 70 per cent. of all new lettings by London housing associations are to households that have no wage earner. That fact is from National Housing Federation statistics released in January 2001. Yet London's population continues to grow. In common with my hon. Friends who touched on the point, I strongly welcome the Government's commitment to affordable social housing, the release of capital receipts and the money for local authorities to enter into partnerships for new build, refurbishment and rehabilitation of properties. However, for a considerable time to come, the majority of people in London will find homes for themselves and their families only within the private rented sector and with rents at the levels that I have elicited, housing benefit will clearly be vital.

My hon. Friend the Member for Regent's Park and Kensington, North highlighted the fact that housing benefit is claimed by some of the most vulnerable in our society. We know who they are: pensioners, people with disabilities and single-parent families. I hope that the Government will attack with some speed the issue of how people are kept in poverty by the present structure of housing benefit. The Government have introduced policies to encourage single parents back into the work force because of the benefits that that can provide. Those benefits are not exclusively financial, but include a sense of worth and dignity and a model for children of how life could be. I hope that the Government will examine the situation where a woman —it seems to affect women particularly—finds a job, but the minute that she starts work, she is in danger of a reduction in housing benefit and of losing the family home. That must be tackled with some speed.

I wish to mention some issues in my own constituency. The London borough of Camden's delivery of housing benefit is excellent. However, some constituents who come to my surgery will never be housed by a local authority because they will never fit into the statutory categories in London. They are exclusively dependent on the private rented sector, and are finding increasingly that, due to failures in the delivery of housing benefit, private landlords are unwilling to let to tenants who—perhaps only in the first instance—may need to pay their rent via the housing benefit system. I believe that to be true throughout London.

The issue has also impacted on several housing associations that are responsible for properties in a much wider area of London than my constituency. A housing association in my constituency that has worked in the sector for a considerable number of years, and which has a high reputation for being efficient, innovative and practical, at one stage was looking at a cash shortfall of £6 million. That is almost unsustainable in a sector where those who are engaged in such matters and who are subject to pressures on the ground and from London Members of Parliament must be able to concentrate their efforts on increasing the affordable housing stock. They have to spend hours, if not days, tracking down local authorities to find out when they will receive rent for the properties that the housing association is managing well. That is unacceptable, given the level of human commitment and the costs to housing associations. It is not the only housing association that I know of in London that has suffered such a serious shortfall because of the inadequacies that its tenants have experienced in obtaining housing benefit.

The problem has severely affected those mainly voluntary organisations that operate hostels for rough sleepers who are temporarily in that position. It should be possible to ensure that such people are not, as one administrator said, almost hung out to dry because of the failure of housing benefit to reach their coffers. The hostels are improving all the time; none the less the available bed space or room space is known. Invariably, because of London's housing crisis, they are full. As my hon. Friend the Member for Islington, North said, housing benefit is part of the social security system and, in a sense, it is paid by the state to individuals in that way. Why cannot such establishments receive annually the cost of the total housing benefit? If, at the end of the year, a couple of rooms or beds were not used 365 days of the year, a repayment could be made to central Government or the money could be rolled on into the payments for the following year.

Angela Eagle

Does my hon. Friend recognise that, when the verification and identification requirements were introduced—in other words, housing benefits could not be accessed without there being a national insurance number or identification to stop fraud—we realised that problems arose because of people who had difficulty with identification? Such people were often rough sleepers and the homeless. We introduced an exception for the hostels, which say that that has very much helped homeless people access the system. We are aware of some of the difficulties of applying the full rigour of the system to those who are most vulnerable.

Ms Jackson

I am most grateful to my hon. Friend for her intervention. I would not want her or the Government to believe that organisations that deal directly with rough sleepers and the homeless are not immensely grateful for the changes that have been introduced to the benefits system. The changes have enabled such individuals to make a claim. None the less, that is only one part of the picture. The other part of the picture—the money being delivered to the organisation running the hostel—is not as smooth or immediate as it should be. As it is extremely likely that such establishments will be full for a considerable period, additional benefits might accrue if the Government were to fund such establishments for, say, a year, with safeguards in place.

When I floated the idea at a conference of rough sleepers, a rough sleeper said to me, "That would be entirely wrong, because it would take away the right of the rough sleeper to turn down a hostel if he did not like it. He would have to go where the money was." I understand that point entirely, but it begs the question of why the pavement is more acceptable to rough sleepers and homeless people as a bed for the night than the hostel. That is a wider issue than housing benefit, and relates to wider social inequities in this country.

The other issue on which I would like to touch stems from a report conducted by the London Housing Unit for and on behalf of the Brent private tenants rights group, which was briefly touched on by my hon. Friend the Member for Regent's Park and Kensington, North. The issue detailed in the report is the shortfall between what is agreed by a rent officer as the acceptable rent for a property and what the private landlord charges for that space. I admit that the report examines only a small group in Brent. However, it is abundantly clear that, in that part of London, it is the tenants of the poorer, less well-maintained properties—which have fewer facilities, poorer decoration and, in some instances, less security—who face much greater shortfalls than tenants of properties in the same area which are better-maintained and for which the rent may be higher. That warrants the Department of the Environment, Transport and the Regions and the Department of Social Security examining the guidelines and rules within which rent officers are working.

My hon. Friend the Member for Islington, North highlighted the fraud that everyone knows is being perpetuated by some, but—I hasten to say—not all private landlords. The most grievous fraud, however, is when a rent is charged that bears no relation whatever to the value of the property concerned, and when an individual has to pay a sizeable proportion of that rent because the housing benefit does not meet it in total. I repeat that the people whom we are considering are, almost exclusively, some of the most vulnerable people in our society. As I said, I trust that the two Government Departments that are most involved in this area will conduct a joint examination of the matter.

The Government's commitment to affordable social housing, their attempt to make the benefits system infinitely easier to understand and the changes that they have made to housing benefit, as well as other initiatives, are intended to begin to break down social exclusion and to afford equality of opportunity for everyone. As my hon. Friend the Member for Regent's Park and Kensington, North said, how can people participate in the wide variety of programmes stemming from the Government if they do not have a home of their own? I would hate to think that the huge thrust of the Government's policy in those areas would run into the sand on the issue of housing benefit not being paid.

The Government have invested a considerable amount of money in the rough sleepers unit, for example, and, through the ideas of Supporting People, a new approach to some of the most vulnerable people in our society is being contemplated. It would be a complete waste of public money and of the best possible intentions if housing benefit within London were not tackled even more urgently than at present. If it is not tackled, more people will become homeless. I am sure that no hon. Members would want to see a return to the numbers of homeless people on the streets of London that were seen in the early 1980s. That was a shame and a stain on the city and society.

4.25 pm

Mr. Paul Burstow (Sutton and Cheam)

I understood that I would be called alongside other Front-Bench speakers, but I am happy to speak now. The measured speeches of hon. Members have built on a very good report that makes criticisms, yet has the support of all parties.

Housing benefit will celebrate its 18th birthday in April. However, as the National Housing Federation rightly said in its report of this week, that is not a cause for celebration because, for many people, it is a cause of great despair. Let us hope that some of the 34 recommendations made by the Select Committee will lead to serious change. More than 4 million people claim housing benefit, which costs more than £12 billion. Evidence from the report, from other literature and from practical casework—certainly in my constituency—shows that the system does not deliver. It puts people in debt, makes people homeless and causes landlords and tenants much grief, so today's debate is very timely.

I shall discuss regulations and reality. Housing benefit regulations state that claims can be processed within 14 days.

Angela Eagle

Does the hon. Gentleman recognise that the processing time of 14 days is a target for local authorities? However, the clock does not start ticking on the target until the local authority has gathered all the relevant information. Part of the problem of the claiming process is the need to create a situation in which that can occur sensibly. The target does not tell the whole story.

Mr. Burstow

One can conclude from the Minister's intervention that the target is meaningless and does not help in understanding how local authorities discharge their responsibilities under the rules and regulations set out by the Department.

The reality is somewhat different from the target. The average delay is more than 20 weeks and in London it can be as long as six months. The National Housing Federation states that average arrears are £1,102. Nationally, 1.5 million people are in arrears because the system does not work, and that costs £1.6 billion.

The hon. Member for Islington, North (Mr. Corbyn) mentioned costs incurred by housing associations, in addition to the costs faced by individuals. The associations estimate that they bear costs of £84 million as a consequence of failures of the system.

I am sure that other hon. Members have seen the letter from the Places for People Group, which is a large organisation that covers a number of registered social landlords and housing associations. It wrote to a number of hon. Members who they believed might participate in the debate and cited figures that graphically demonstrate the point made by the hon. Member for Islington, North. The letter said: NBH is dependent on Housing Benefit for 60 per cent. of its rental income. Our annual turnover is £140m. Conservative estimates from our staff estimate that £2.5 million is owing in housing benefit. This represents 31 per cent. of current arrears, 2.3 per cent. of our rent roll. The following demonstrates the financial impact of Housing Benefit delays on NBH in the last year were as follows: impact of four week rule—extra £1.75 m arrears; verification framework—£0.5m arrears; poor local authority administration—£0.25m. Those figures may be borne out by many other housing associations throughout the country.

The system is failing for several reasons with which the report deals. It is too easy to blame local government, but today's speeches show that criticism is levelled not simply at local government but at the system with which it has been lumbered and of which it must try to make the best. Governments of any hue must take the responsibility for sorting out the mess. The hon. Member for Barnsley, East and Mexborough (Mr. Ennis) is right to recognise the complications and costs that local government faces in administering the system. Some 12 per cent. of the social security budget is expended on the housing benefit system. The matter must be addressed seriously and as rapidly as possible.

Performance varies throughout the country. Hon. Members have provided anecdotal evidence of how yariable practice is. Performance can be poor but, on the other hand, we should acknowledge that some councils provide an excellent service from which we should learn.

The Select Committee's central conclusion was that housing benefit was far too complicated. In the past year, 80 circulars and regulations were issued by the Department to make changes within the system. The hon. Member for Barnsley, East and Mexborough referred to his chief financial officer's comment that, on average, 90 changes had been made in a year. It is no wonder that it is a sheer nightmare to run the system. Will the Minister say whether, at least in the short term, greater stability could be given to the system?

The report rightly advocates a change to a simpler system. I shall refer to a few issues raised in the report, in the hope that the Minister will respond to them. First, the report refers to the possibility of creating more stability for the housing benefit recipient by introducing fixed entitlement periods. In "The Way Forward for Housing" Green Paper, the Government said that they were willing to take that direction in respect of pensioners, to give them more certainty that they could meet their housing costs. The paper produced by the Chartered Institute of Housing on the subject makes the point that that policy would allow us to target resources better in dealing with the more risky claims and ensuring that they were processed fairly, efficiently and quickly. The policy of fixing the period at six or 12 months needs to be considered, but the Government, despite claiming that they would consider it, have given no commitment. Will the Minister tell us what the time scale is for that consideration and when we will see the outcome? The year 2003 has been suggested as a possible date for those changes to be brought in. Given what we have heard about overall fundamental reform, that sounds a long time away. Perhaps something could happen sooner than that.

The second issue relates to discussing with social landlords their role and establishing how they can play a part in verification procedures. The Places for People Group has invested a large sum of money in assisting and working alongside housing associations to ensure that their tenants receive their housing benefit as soon as possible. Surely, however, a further role could be discussed and appropriate standards set, monitored and delivered to accelerate the verification of various documents. I take the point made by the hon. Member for Islington, North that some smaller housing associations may not be able to do that. I hope that in the discussions that the Minister said would take place with registered social landlords the Government will pursue the possibility of giving them some role in bringing the process up to speed. Results can then be delivered more quickly, and we can avoid problems whereby people lose or do not receive their benefit in time and lose their property.

Thirdly, I welcome the initiative to establish housing benefit help teams to assist in areas where there is failure.

Angela Eagle

It is important to put it on record that the help teams have been established not to go into areas where there is failure but to help local authorities that are experiencing difficulties and request access to extra managerial and strategic help. If we were to use the term "failure", no one would want a visit from an expert help team. The concept relies on joint partnership and local authorities being sufficiently confident to ask for assistance. I would therefore prefer the hon. Gentleman to use another word.

Mr. Burstow

I accept that point, which relates to the point made by my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) about how we choose our language in respect of fraud. The point relates to how we raise the standards of all to those of the very best, and make use of the skills and expertise of people in local government, in the Department of Social Security and elsewhere. In that regard, it would be helpful if the Minister told us by what criteria Bristol city council, East Ayrshire council, Kingston upon Hull city council and the London borough of Lambeth were selected for inclusion in the first tranche of the exercises. It would be useful for other local authorities that may want to take part and to benefit from the housing benefit help team if she clarified that.

I understand that, when the Minister launched the initiative at the London borough of Camden open day, reference was made to the possibility of teams supporting bids for additional resources for housing benefit units in local authorities. How much scope will there be for that? Dare I say that that may further encourage local authorities to participate in the scheme?

The fourth issue has been touched on by several hon. Members today. The Minister knows that I have raised the single-room rent restriction at the Committee stages of legislation in the House, and I remain concerned that we are not moving as far as we should. The Committee recommended that the restriction should be scrapped because it undoubtedly causes a great deal of difficulty for the under-25s, especially in high-cost areas. The restriction applies to the lower end of the market and excludes properties that have their own toilet, kitchen and living room. It must exclude an awful lot of housing. It would seem that one would have to be living in a tent before the single-room rent restriction applied.

The single-room rent restriction causes hardship and homelessness, and it is time that the Government embraced the need to do away with a nasty change to the rules made by the previous Government, and which the current Government should have reversed by now. We approach the end of the Government's term of office, and it behoves them to outline when we will see an end to that set of restrictions. The cost of returning to the previous position would be 0.25 per cent. of the housing benefit budget. Although that is not a significant cost, it would make a significant difference to the lives of a great many people.

Housing benefit problems are not simply matters for local government. It is easy to take pot shots at local councils for not delivering the system that we would like. It is our responsibility, and ultimately the responsibility of the Government to remember that the rules that are set and the methods that are employed can either contribute to or hamper the way in which local government delivers the benefit. Reference has been made to local public service agreements in respect of housing benefit as a way of strengthening and deepening the partnership between local and central Government. Will such an approach be taken, and if so, on what time scale?

The fundamental reform called for in the report is a long way down the track. It will be fully implemented in seven to 10 years. During the intervening period, it will be necessary to rely on a succession of fine-tuning adjustments and tweaks to the existing system. The weaknesses of that system will keep people in areas of high housing cost, and they will be trapped on benefit and in dependency, instead of being able to get back into work. During that period, people will face, at best, doubt about their housing, and at worst debt, eviction and the stigma of losing credit ratings and all that that entails.

The hon. Member for Regent's Park and Kensington, North (Ms Buck) is correct: there will not be a big bang. There will be a long, slow fizzle over a seven to 10—year period. I hope that the Minister will say that a fundamental reform of the system, which guarantees housing for people who need it, will be implemented sooner rather than later. That would be a cause for celebration.

4.40 pm

Mr. Andrew Love (Edmonton)

As I was reading the Select Committee report, I was reminded of the size of the housing benefit budget. It is the largest single support for low-income tenants. It amounts to 12 per cent. of the social security budget, or 1 per cent. of GDP. It is a massive annual budget, and it is the most complex.

Table 1 of the report describes the estimated and outturn housing benefit expenditure. It shows that the Government have restrained expenditure in the past few years, from an underspend of £470 million in 1997–98 to an underspend of £1,700 million in 1999–2000. Those savings have occurred for several reasons, and they will continue. The claimant count has been reduced to below 1 million, which is a Government success, as is the introduction of the working families tax credit, which has had an impact on housing benefit. There has also been much comment on the verification framework and the rent restrictions that were introduced by the previous Government in 1996.

The present Government's success in restraining expenditure allows for flexibility under the budget. It also gives scope to implement short-term changes in anticipation of the longer-term changes that the Minister mentioned, which will be delivered in seven to 10 years.

Such matters should be examined in terms of overall Government strategy in this policy area. Their priorities are to reduce poverty, to restrain increases in the social security budget—and there is not necessarily a contradiction between those aims—and to make work pay. In that context, there are three important issues concerning housing benefit, on which hon. Members have commented. The first is simplification, which is crucial because housing benefit is complex. The second is work incentives: if they are to achieve their aims, housing benefit must be reformed. The third is administration, which is causing great concern at present.

In the Green Paper, the Government highlighted the fact that simplification is one of their priorities. I have several suggestions to make about that. First, all changes to people's incomes, however small, immediately lead to a redetermination, which clogs up the system. I understand that the Government have been examining the possibility of a 12-month fixed period for pensioners. The suggestion of a six-month fixed period for working tenants has much merit, as it would bring things into line with the working families tax credit. However, if we intend to introduce a fixed period, safeguards must be provided for people whose circumstances change so as to reduce their income and, perhaps, place them in difficulty. With the proviso that safeguards must be provided, that would be one way of improving or simplifying the benefit.

A second approach relates to non-dependant deductions. The Select Committee report refers to the six different rates that currently apply, and suggests abolishing the higher ones. Some people have called for a limit on deductions, perhaps up to a maximum of 50 per cent. of the rent, and some have called for abolition, which I understand would cost about £230 million. That would be the wrong approach, but we should consider limiting non-dependant deductions, and we should restrain future increases, which have resulted in problems and increasing complexity. It would be sensible to restrain increases, perhaps to the rate of inflation of the rate of increase in wealth in the country. That would help simplify the administration of housing benefit.

The third approach relates to rent restrictions, which create complexity and, sadly, as has been attested to by every hon. Member this afternoon, increase hardship. I could cite many examples, but we need only refer to the research carried out by the Government on single-room rent and local reference rents to know the hardship that has been created. I am well aware from the Green Paper and the response that the Government are seriously considering reforming single-room rents. They should reconsider the matter.

Controversy surrounds the cost of abolishing single-room rents. Shelter's estimate is considerably different from the Government's. I understand that changes such as behavioural effects must be taken into account, but will the Minister discuss the Government's thoughts on single-room rents and the likely consequences of a radical change or of abolition?

I could cite lots of statistics on local reference rents. My hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck) and others have already eloquently discussed the impact that such rent is having in their locality. It is contributing massively to a drying-up of tenancies for low-income people in all our constituencies, and especially in high-rent areas. Hurdles are now being introduced, such as the requirement for a high deposit before people can access a tenancy, which is as much of an exclusion as not allowing someone to take up a tenancy.

It is a fiction to believe that in areas such as London, where demand is high, tenants can negotiate with their landlord a limited reduction in rent. The reality is that tenants do not have a genuine choice in Greater London and other high-rent areas, as evidence from Shelter and other housing organisations and, indeed, the Government attests.

Most organisations active in the field suggest a Government review of local reference rents, which urgently needs to be undertaken. Such rent has had a dramatic impact on low-income tenants, and reform is on the cards.

Work incentives are, rightly, a high Government priority, but the interaction between housing benefit and earnings and other income is complex. It is certainly not an aspect that I understand well. Housing benefit is also poorly integrated because it is difficult to reform in any radical way; the Minister commented on that several times this afternoon.

I understand the problem with rents. They do not have the necessary coherence and they are certainly not fair across the country. The seven to 10-year time scale that we are talking about to reform rents in this country is too long if we are to deliver a change in housing benefit that will assist those who are most in need in high-rent areas such as my own.

Angela Eagle

When I was asked about the likely time scales for the radical restructuring of housing benefit—in other words, the introduction of flat-rate benefits that was mentioned in the Green Paper—I said seven to 10 years because there is no point in going ahead before we have a coherent rent structure. People cannot be expected to trade down, if that costs more because rents are all over the place. I did not mean that we would not make any changes to housing benefit in the interim. I said earlier that the tax credit agenda forces us to look at the structure of housing benefit and how it integrates with tax credits.

Mr. Love

I am pleased to hear that. I shall talk about the tax credit agenda later. I am well aware of the comments that were made in the summary of the Green Paper. I should first like to refer to earnings disregards, which the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) mentioned. There has not been a change since 1988. The cost of restoring earnings disregards to the figures for 2000 would be roughly £35 million to £40 million. That is a relatively limited sum. It could be done in other ways. The earnings disregard is a simple change. It is easy for those who implement it and those who receive it to understand. It does not add anything to the complexity of housing benefit but, perhaps most important, those who have benefited least from the introduction of the working families tax credit and who also receive housing benefit would gain the most from such a change.

The next area that I should like to focus on is greater reform of housing support, which was mentioned in the summary of the Green Paper. The Minister talked about looking at a flat-rate element as a possible way forward. Because of the high combined marginal tax and benefit withdrawal rates, it is extremely difficult in current circumstances to introduce a taper that would make a significant difference or would not have the effect of extending withdrawal to a massive range of income. After the introduction of the working families tax credit, 200,000 families in this country still experience withdrawal rates greater than 80 per cent. In other words, the difficulty of amalgamating the current housing benefit scheme with the working families tax credit has been enormous.

A number of organisations, including Shelter and the Chartered Institute of Housing, have therefore suggested the possibility of some form of tax credit. I do not know whether that is what the Minister was referring to when she spoke about a flat-rate element. One of the advantages would be that, if it were introduced as part of the working families tax credit, it would take a large number of people and families out of the poverty trap. I accept that there will be winners and losers in any of the changes that are introduced, and perhaps a cost to the Exchequer. Looking at the Minister, I am sure that the Government have pored over the problem for many months. It is worth further consideration, however, because people on the lowest incomes are very badly affected by the current interaction between housing benefit and the new tax credits—and the problem may get worse as the tax credit scheme is developed over the next couple of years.

Hon. Members have already spoken about administration. I am aware of the pleasing charter marks received by the London borough of Camden for its housing benefit administration. Sadly, not many others in Greater London or the rest of the country have received similar awards. The picture is extremely bleak.

The hon. Member for Sutton and Cheam (Mr. Burstow) spoke about the decline in response rates when housing benefit is claimed. A response is supposed to be made in 14 days. We know that that target is not achieved, but do we know how badly the response rate has declined? Statistics from Shelter suggest that, in 1997–98, 79 per cent. of recipients received their benefit within 14 days, but by 1999–2000 the figure had dropped to 67 per cent. We are witnessing an overall decline in administrative standards, which must be dealt with urgently. I was pleased that the Minister highlighted that problem in her response. It featured prominently in consultation and the Government have taken it into account.

Some important issues arise from the Select Committee report and from the comments of housing organisations that are directly affected by the administration. Local authorities have received an increase in support, but because of the additional burdens it must continue to increase. Extra support should, however, be linked to proper training of local authority staff, and performance must meet the Government's targets. Performance service agreements could be a way forward and are being actively discussed. We should focus on local authorities with the worst record. It is nice to talk about Camden, but there are far more authorities with a bad than a good record.

Most controversially—my background is in local government and I know how unwelcome this will be—the Government should assume more powers to require local authorities to get involved in the changes that we want to promote. When local authorities start to get it right, it will greatly benefit their local populations.

My final point is about fraud and error. As a member of the Public Accounts Committee, I have scrutinised the matter in detail. We must get the methodology right. We have not got it right in the past because of confusion between fraud and error. Complexity is another problem. We must sort out the difference between "confirmed fraud" and "suspected fraud" before we bandy figures about. It has become a party political issue and is likely to become an election issue. The argument is based on the flimsiest of evidence at the moment.

The Public Accounts Committee was told that, under the present complex income support system, 10 per cent. of adjudications will always be wrong. That applies equally to housing benefit. Unless we simplify the system, it will be difficult to eliminate fraud or, more especially, error. I am sympathetic to the aims of the verification framework, but we must recognise its partly negative impact. It is slowing down the process, which cannot be good for anyone, and the most vulnerable customers are reacting badly to it. We may be deterring people from making legitimate claims.

The relationship between registered social landlords and local authorities and others is also deteriorating. Landlords are taking advantage of their tenants in an effort to get local authorities to improve the system. Much has to be done.

I hope that the Minister responds to all the pertinent concerns expressed by hon. Members of all parties. I accept her estimate that it will take seven to 10 years to achieve radical reform of housing benefit, but we cannot stand still. We need to move forward and help the most vulnerable in our society. Some of the changes suggested in the report and in our discussion will help to achieve that.

5 pm

Mrs. Jacqui Lait (Beckenham)

I will be brief. I apologise to members of the Committee for having stood up from time to time—and thank you, Mr. Hood, for having allowed me to do so. I am sure that anyone who has had an attack of sciatica will sympathise with me.

I congratulate the Select Committee. One always expects a high-quality report from Select Committees and this report is indeed high quality and thought provoking—so much so that it probably had the good effect of provoking the Government into producing their Green Paper. There has been much agreement among hon. Members in their analysis of the problems facing the housing benefit system. I am an outer-London Member and I join hon. Members representing inner London in reporting problems with the administration of housing benefit. The hon. Member for Barnsley, East and Mexborough (Mr. Ennis) pointed out that there had been some 300 DSS circulars and 85 new regulations since May 1997. I have slightly different figures, but all those changes cannot have helped lessen the complexity of the system.

I was glad to hear from the Minister that a standard form—I see that she has a copy—has been sent to local authorities, which they have been encouraged to use. I would be most interested to know how many of them had indicated that they had taken it up. It might be a bit early to get a return on that. I do not know whether she is planning any sanctions if they do not use the form, but I encourage them to do so. As we all know, at the moment, there is a different form for every local authority. As I said, I too have experienced administrative problems.

Capita are the people who look after housing benefit in Bromley. Like the hon. Member for Regent's Park and Kensington, North (Ms Buck), last summer was a fairly gruesome time for me in my surgeries and I received letters from people who were having enormous difficulty. I came to a slightly different conclusion on the matter to Opposition Members, but like the hon. Member for Islington, North (Mr. Corbyn), I suspect that the contract is at fault. The problem reminds me of early contracts for, dare I say, grass cutting which tended to specify that grass must be cut twice a week rather than saying that it must be kept to a certain length and the grass cuttings swept up; in August the grass needs to be cut only once a fortnight whereas in May it has to be cut more often. The text of the contract is often the core of the problem, which was the conclusion to which I came in my discussions with Bromley about the difficult situation with Capita.

I confess, as could other people, that in working with the various housing associations in Bromley we have tacitly adopted a system that helps alleviate the problem. As soon as a piece of paper turns up with the portcullis on it—surprise, surprise, things are fixed. It is of great sadness to me that so many people with so many different problems, across the spectrum and not just in housing benefit, have to rely on that piece of paper before anyone takes them seriously. That is perhaps one of our advantages as Members of Parliament, but it is sad that systems work like that.

Some hon. Members have said that housing benefit should be centralised and brought into the DSS or tax credit system. I should be interested to hear the Minister's view. We need to consider carefully whether it is advisable to go down that road. Do we want local authorities to be no longer involved in housing benefit? If that is a conscious political decision, we can probably have a good political argument about it, but I should not like it to emerge as the way forward without our having had a thorough discussion about the role of local authorities.

Interestingly, one issue that has not been discussed is the effect on the housing benefit budget of the reduction in unemployment. A number of people have talked, rightly, about the read-across from housing benefit into the working families tax credit. Several people have come to my surgery because they are having difficulties with the working families tax credit and the rigid six-month rule used by the Inland Revenue, which is not proving as flexible as perhaps it needs to be when there are changes of circumstance. I have had constituents who, through no fault of their own, have suddenly had to repay six months' worth of working families tax credit. That can make as big a hole in their finances as not receiving housing benefit and then being pursued for arrears. We need therefore to consider the interaction between working families tax credit and housing benefit, the tapers and administration. We also need to consider whether it is a good idea to go down a straight six-month route or whether any fixed period of time is the most effective way of delivering housing benefit to those who need it.

There has been some discussion of fraud, but I am mildly surprised that no one has talked about the Social Security Fraud Bill, which will have its Second Reading in a couple of weeks. Some of the measures in it are designed, as I understand it, to reduce fraud in the social security system, which includes housing benefit. As the Minister will know, there were constructive discussions in the other place, and many of the concerns about fraud were taken on board. I look forward to further discussions to ensure that the Bill is as effective as possible at minimising fraud.

Apart from simplifying the administration of housing benefit, we need to consider how we can encourage best practice. It is not just a question of being able to use the standard form; local authorities should be encouraged to talk to one another and adopt best practice. We also need to consider whether we can move down the route of simplifying regulations, which everyone agrees is needed. We could annualise them, so that at one point in the year—perhaps 5 April, to coincide with the tax year—the changes in the year's housing benefit come in as one piece rather than as a constant dribble of changes that cause administrative hassle every time.

The hon. Member for Edmonton (Mr. Love) talked about the need to eliminate errors and complex regulations from the system. Errors, delays and complex regulations have certainly created a situation in which those who wish to defraud the system can flourish. Those problems need to be removed from the system, so that those who are behaving fraudulently find it more difficult to do so.

I do not know about the situation in other hon. Members' constituencies, but we have a number of people in Bromley who, perhaps because their children have left home, would like to downsize. They find it difficult to do so and the housing benefit system does not help them. Perhaps a way forward could be found by sharing with them any savings to be gained from moving downwards in terms of property size. People can manage a smaller house or flat more easily than a large one.

With those few words and queries to the Minister, I have broadly set out our views on a good report, and I hope that there is sufficient time for her to answer the questions that have been asked.

5.9 pm

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle)

I am not sure that there will be sufficient time to answer all questions in great detail because, as we know, housing benefit is complex to debate in public policy terms and, more crucially, in administrative terms. If any benefit is likely to fail in delivering help, it is housing benefit because it has been so complex to administer since its creation. Its management and administration was fragmented to form 409 local authorities, so the primary legal responsibility for administering and delivering housing benefit now falls to local authorities.

As the Minister in Whitehall who is responsible for housing benefit, I have limited powers to cajole local authorities into following certain policies. We can make things compulsory, but it is not always possible, when one is sat at the centre, to realise the effect of doing that in every one of the 409 authorities. As we know, there are large authorities with big housing benefit case loads, tiny ones with small case loads, and everything in between. We must look at the administrative doability of the suggestions that we come up with. The debate has been a good one but, as always, it has been much easier to analyse what is wrong with housing benefit than either to design a brand spanking new system to solve all our problems or to come up with deliverable changes that would work on the ground.

That is not to say that we will not make changes, but there is a tension between having too much upheaval, and the widely shared view that change is necessary. We have heard complaints today about too many changes, a plea for radical and urgent reform and one for stability. That encompasses the tensions that I have to deal with, day in day out, when I examine the problems of housing benefit. We must have a balance between change and stability, especially when the entire welfare structure is changing.

People say, rightly, that there have been many circulars, and we are looking at how we can brigade them more effectively. The Conservative party suggested that we have one day per year for change, but what would be done with upratings, the introduction of joint claiming for the jobseeker's allowance and other changes? It would be difficult to arrange everything that impacts on the housing benefit system from different Departments to change on one day. In some ways, it would be simpler, but it would be a big bang in the year and it would make it harder to change housing benefit quickly, because we would have to wait for the change date.

There would be practical difficulties in having one mega-circular that appeared on 1 April rather than a string of them through the year. Some circulars, for example, inform local authorities of the new telephone number of an official who has moved job. They are counted in the official numbers, but do not cause huge administrative problems. Others make beneficial changes that the Social Security Committee would support; presumably, they are not the ones that are causing the complaints. I agree that there is an issue, and we are trying to make the production and distribution of the circulars timely, more predictable and easier to deal with from a local authority's point of view, particularly when benefit changes or redesigns involve computer reprogramming. When that happens, it can be difficult for local authorities.

Many of the hon. Members who spoke pointed out that delivery and administration of housing benefit throughout the country are patchy. My hon. Friend the Member for Hampstead and Highgate (Ms Jackson) has the good fortune to represent one of the authorities that does it extremely well. Other hon. Members, notably my hon. Friends the Members for Regent's Park and Kensington, North (Ms Buck) and for Islington, North (Mr. Corbyn) do not have that good fortune. I will say no more about that.

We want to find out why those variations exist, as my hon. Friend the Member for Hampstead and Highgate pointed out, in places that are close geographically and that share similar social structures, demands and issues. We have noticed that, if local authorities think that housing benefit is important and give it priority at both officer and member level, it tends to be better. In many authorities, housing benefit is off at the side, something on which people do not focus. As with anything, if those who work in it and those who are responsible for administering it give it priority, it tends to be better done. Clearly, we need to raise the priority of housing benefit in those areas where it is not given priority.

We have moved from the laissez-faire system of administration that we inherited—409 authorities that were largely left alone—to one that is more prescriptive and demands higher standards. We are asking for changes to be made, not only because of welfare changes, but because we want to tackle fraud and to drive up the standards of administration. Those changes have been a shock in some areas. There has been a gap—I will put this gently—between what some authorities have been doing as standard practice and what the law says that they actually should be doing. To some extent, the verification framework has pointed out such discrepancies. In a benefit where there is a rent test and a means test, it is expected that the means test will be done. When the verification framework was put into effect in some local authorities, we discovered that people were simply taken at their word for the means test. When claimants are told that they will have to confirm what is in their bank account, the process inevitably takes longer. By securing the gateways, delivery of the benefit will be slowed up in some instances but, once through those periods, administration will be more effective and harder to defraud.

I am not complacent about some of the difficult effects that the changes have caused—we heard them eloquently described today—in the lives of individual claimants. It is unacceptable that administrative failings, whether by an outsourced company or a local authority, are visited upon claimants. In many ways, the claimants are used, piggy in the middle, by landlords who say, "If I issue a notice for eviction, perhaps they will pay faster and I will get to the front of the backlog queue." I have constituents who have been treated in that manner. That is not an acceptable standard practice. It is not acceptable that claimants' security and peace of mind is affected in such a manner. I condemn that.

We are working on a new partnership with local authorities to try to improve housing benefit administration. We have a responsibility to improve the design of the scheme and its delivery. We began that with some of the administration changes that were announced in the aftermath of the Green Paper, particularly the help teams that are now available. The announcement of extra resources for administration—for the first time since 1993—is for three years; local authorities can make plans knowing what their funding will be.

We must also ask why some local authorities do a good job and how we can spread best practice. Best value itself will achieve some of that. The benefit fraud inspectorate, although it is not fantastically loved, is producing reports that demonstrate what works and what does not and where things need to be tightened up. The inspectorate has led us in its investigations to produce the form. It does not look much, but it is a template of a housing benefit claim form. It is 20 pages long, but it is easy to read and to fill in. It passes all verification framework standards.

I do not know whether hon. Members have read some of the current housing benefit forms. At present, local authorities produce their own. The forms range from pretty good—Camden, again—to absolutely atrocious. It may not seem important, but I regard it as such. The template has been made available to all local authorities. We are translating it into the 12 ethnic minority languages, which will save a lot of local translation costs and problems. We will also make that available. It is too early to say how many local authorities will use it, but I cannot force them to do so.

Mr. Corbyn

That is exactly my point. I realise that the Minister cannot force local authorities to use the form, but as housing benefit is a national benefit that is paid by local authorities, surely there should be scope to put more pressure on them to produce identical forms. There is no basis for local variations.

Angela Eagle

I agree with my hon. Friend. I hope that local authorities will consider how they can make use of the form. All the artwork is available. They can just send the form to the printers when they run out of their current forms. I hope that the template will be used widely. We shall see. Clearly, we shall decide whether we should set out other such proposals in the light of the popularity of the form.

I wish to deal with rent restrictions. The single-room rent definition is being widened. We have consulted on the new definitions which involve shared-room rents. Such properties exist in the market and the regulations will be on their way to the Social Security Advisory Committee—if they are not there already. We hope that they will be in force soon. We are considering June or July for implementation, although local authorities consider that that period is quite tight. The changes to the single-room rent restriction will not abolish it. They will ease the difficulty, and we are trying to get the changes on to the statute book as soon as possible.

We are also introducing regulations that will change the nature of the discretionary housing scheme, something that the Social Security Committee was particularly interested in when I gave evidence to it. It will make the scheme discretionary at a much more local level. It will make it clear that exceptional hardship is not what some local authorities considered it was, but is largely within the bounds of the definition. The scheme will be much more discretionary.

However, as I said to the Social Security Committee, we will be creating a system whereby if local authorities do not spend the money given to them for discretionary housing awards on a year-to-year basis, we will take it back off them. There will be no incentive for them not to spend the money in the new scheme whereas there was in the old discretionary payment scheme. We are hoping that the change will be implemented alongside that on the single-room rent. As we speak, big changes are happening in connection with the move from housing benefit appeal boards. There will be an independent right of appeal to the Appeals Service. I accept that that is a big work load for local authorities. In the next few months, they will have their work cut out dealing with such issues.

I was interested that the Conservative party's proposal to create one day for circulars to come in would save £250 million.

Mrs. Lait

We are not suggesting that there should be just one day when all circulars arrive in a great thump from the Department, but as happens with social security benefit upratings, we want the changes to housing benefit to happen on one day.

Angela Eagle

That is fine, but I am still not sure how £250 million will be saved by cutting error and overpayment. I was interested in what the hon. Lady said about nationalising housing benefit and bringing it back within the control of the Benefits Agency.

Mrs. Lait

Centralising.

Angela Eagle

The hon. Lady says centralising. Well, we considered the matter and concluded for several reasons that it would not be a good idea in the current circumstances. First, there is a huge change under way at the Department of Social Security, so such a proposal could not probably be accommodated even if we wanted to do it. Secondly, announcing that we would bring in such a change, but being unable to do it for a long time would blight the administration of housing benefit when it is important to drive up the standard of that administration. Thirdly, such a proposal would probably cost a great deal of money.

Mrs. Lait

My point, which I probably did not make clearly enough, was that underlying other people's comments was the centralisation of housing benefit. I was not suggesting it. I was merely pointing out that such a suggestion had been implied by others.

Angela Eagle

Yes, but the Conservative party is suggesting that housing benefit administration be taken away from the worst performing councils—I do not know how that would be defined—and moved to the Benefits Agency. It says that that would save £40 million, but I do not understand how.

I want to end the use of the argument, "Oh, it's their fault. It is nothing to do with us. It is the Government's fault," about housing benefit administration and to work in partnership with local authorities to drive up standards. We want to be helpful by providing the nationally designed claim form, more money, the help teams and by working closely to solve administrative problems. That is the best way forward rather than saying that, at some time in the future, we may take administration away.

We are also taking other action to help on a day-by-day basis. I keep referring to remote access terminals—RATs—when discussing housing benefits. They give a window on the Benefits Agency systems. We are developing the integrated inquiry service, which is a super-RAT with batteries. It enables local authorities to have a wider look at our systems. The fraud Bill will enable much more joint fraud working, such as the national fraud hotline. There will be more ability to swap and check information to ensure that housing benefit claims are put into place much faster. We hope that we can develop a single claims process for some linked benefits, such as housing benefit, jobseeker's allowance and income support. Those are some of our ambitions.

Ms Buck

I am aware that my hon. Friend is coming to the end of her remarks, but will she respond to the proposals about rent restrictions from the private tenants and landlords group and comment on the review of the mechanism for establishing local reference rents?

Angela Eagle

It is probably best if I write to my hon. Friend about that, given the amount of time that we have left. Although it is not my ministerial responsibility, it is important to note that the rent service has undergone some changes to centralise it recently. Clearly, it is beginning to look at how the system can be organised reasonably. We would not rule out considering the local reference rent, but changing it is not a priority at the moment. We need to ensure that the rent service and the rent officer service are as efficient and effective as they can be in all localities. I shall reply to the representations made by the organisations to which she referred.

Getting housing benefit right is extremely important. We are considering carefully fixed-term awards, particularly for pensioners, to see whether we can remove much of the senseless administration that surrounds them. I hope that an announcement will be made shortly. We are also considering the working age and how housing benefits take away the incentive to work. The solutions in that regard are different from those in respect of people of pensionable age. That is why we believe that disaggregating the DSS, so that we have a working age agency and a pensions directorate, will provide some solutions to the different needs of housing benefit recipients.

There is a lot of work to do. We are not complacent about the problems that exist. We welcome the Social Security Committee's report and I personally welcome the debate that we have had today. I am sure that such debates will continue. We want to work together in partnership to get such an extremely important benefit right.

Question put and agreed to.

Adjourned accordingly at half-past Five o'clock.