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Housing Benefit

On behalf of the Work and Pensions Committee, it is a pleasure to open the first debate that we have held in Westminster Hall. We have published two full reports up to this point in time. One is ““Youth Unemployment and the Future Jobs Fund”” and the other is the report that we are discussing today, ““Changes to Housing Benefit announced in the June 2010 Budget””. We had hoped that the Government response would have been with us a bit earlier, but it arrived a bit close to the wire. We were able to agree it in our Committee meeting yesterday morning, just after we had grilled the Minister, who is here today, on his pensions policy and thrown him out. The members of the Committee now have copies of the Government response. Obviously, part of the reason for the debate today is to discuss the report in general and the Government response. I will give a bit of history about the genesis of the report that we are debating today. We decided that it was important to produce the report after the announcement about housing benefit in the Budget last June. However, as soon as we announced the inquiry and published our terms of reference, the debate about housing benefit and local housing allowance moved on. So this report is quite narrow, in that it looks almost exclusively at the LHA and the situation in the private rented sector. That is because at the time that the report was produced, it had not been recognised that there might be implications for the public rented sector, and particularly for local councils, due to the changes to housing benefit. That became clearer as we carried out our inquiry, but by that time we were already tied in to the terms of reference that we had sought evidence on, and we were not in a position to change those terms of reference. However, I am fairly sure that the debate about housing benefit and the LHA will continue, and hopefully this afternoon we can tease out some of the additional issues that we were unable to cover in the report. We need to begin with the items in the Government response that we welcome. We made a number of recommendations in our report about the need for robust data and robust independent research. That was because when we took evidence, we found that charities working in the homeless sector often said that the changes to housing benefit would lead to mass homelessness and were unlikely to lead to private landlords reducing their rent, whereas the Government said, ““No, they won't. There might be a bit of homelessness, but not really that much, and yes, the whole point of this policy is to force private landlords to reduce their rent.”” Until the policy is in place and has been working, it is impossible to test which of those two diametrically opposed views is the right one. That is why we are pleased that the Government have recognised the need for good, solid, independent research, because that will be the only way in which we can tell whether the policy has had the intended consequences and ensure that it does what it says on the tin. I do not know whether this was a success for our Select Committee, but many people were delighted that the Government decided to drop the 10% sanction on housing benefit for people who have been on jobseeker's allowance for more than a year. That proposal caused a huge amount of angst among a large number of the people from whom we took evidence, and the issue was raised on the Floor of the House and in debates in Westminster Hall. It seemed grossly unfair, and it certainly would not have done what the Government alleged it would do, which was to act as a work incentive—if anything, it would have acted as a work disincentive. That proposal woke up the public rented sector—particularly the housing associations—to the full implications of some of the proposals that the Government were coming up with, because a large number of housing association residents are on JSA. The housing associations faced the prospect of losing 10% of their income at a stroke as their residents were sanctioned. The residents might have done everything that the Government asked them but have been unable to get a job, because the labour market in their area was such that they could not find one, yet they would still lose 10% of their housing benefit. It seemed strange to us that housing benefit would be sanctioned for actions in relation to a completely different benefit. I am pleased that the Government have seen fit to drop that proposal, which is incredibly important. Much of the debate about housing benefit has focused on the caps or on the situation in London, which has helped to obscure what could happen elsewhere in the country, and some of the knock-on effects for the public rented sector. That was because it was much easier for the tabloid newspapers to latch on to stories about ““£1,000-a-week housing benefit claims””, when in fact such claims were a small minority of all claims. It is often the case that it is not good practice to introduce policy based on the few rogue examples rather than on the position that most people find themselves in. Despite that, and despite the fact that the LHA was increasing and in general covered rents, there were already shortfalls for some residents. Many claimants were already making up the shortfall between what they qualified for with regard to what they could get in the broad rental market area and what their actual rent was. As part of our inquiry, we visited a citizens advice bureau where we met an elderly gentleman who was already having to supplement his housing benefit to the tune of about 10% of his very limited pension. He was a prime example of someone who had found it very difficult to get a tenancy in the private rented sector, because as soon as landlords heard that he was on housing benefit they turned him away. ““Lying”” might not be quite the right word to use, but he ““failed to inform”” his landlord that he was actually an LHA recipient when he signed the lease on the accommodation that he was in at that time. He knows that he probably would not have been able to get that lease if he had told his landlord that he was an LHA recipient. That is one likely problem with the Government's approach. The assumption is that people will be able to move and that they will be able to find accommodation within the bands that they can claim for, but that is not necessarily the case. Although the Government response says that landlords will reduce rents in many areas, it is definitely the case that in large numbers of areas—my area, for example—demand already outstrips supply, and landlords will quite easily be able to get tenants who are not dependent on housing benefit to live in their properties. Therefore, the choices of those who are dependent on housing benefit will be squeezed and become ever narrower. They do not have the choice to go into the public rented sector, because there is already a shortage of supply there. The Government's response is a bit complacent in saying that landlords will reduce their rents. Even if they do so in one or two areas, I suspect that in the majority of the UK they will not, and it will be very difficult for people to find anything to rent. In places where there is very little choice anyway, such as rural areas, choice will be further narrowed, and it might be impossible for people who are on housing benefit or local housing allowance to get anything with a rental price anywhere near what they can claim in benefit.