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Housing: Spending Review

Volume 721: debated on Thursday 4 November 2010


Moved by

To call attention to the impact on housing need and provision of the Budget and the spending review 2010; and to move for Papers.

My Lords, I declare an interest as chair of Broadland Housing Association and I thank organisations, from the Chartered Institute of Housing to the Royal Institution of Chartered Surveyors, led by Michael Newey, for their helpful briefings.

Effective markets depend on a rough balance between supply and demand. The prosperous have a housing market; for others, like dominoes, the pressures at the lower end of owner occupation cascade down through the private rented sector and collapse onto social housing—each displaces the vulnerable on to the tenure below. It is going to be carnage and it is utterly indecent.

I start with owner occupation. Given unemployment fears, muted wage growth, the increasing fiscal squeeze and deteriorating consumer confidence, Ernst & Young expects a double dip housing recession. Why? Most lending bodies now require a 25 per cent deposit—£40,000 on an average home—which people with university debts as well will find impossible to obtain. In 2006 there were 245,000 mortgages with a 10 per cent deposit; there are now 28,000. Without parental assistance, the first time buyer will now be 38 and will have lingered 10 to 15 years longer in the private rented sector.

He will be joined by a second group—owners who have become unemployed. Why? Because now, of all times, the Government are effectively halving the mortgage support they give to families on benefit; halving the interest rate from 6 per cent down to 3.65 per cent; halving the capital covered; and doubling the wait before support kicks in. Many families will face arrears and repossession and be forced back into the private rented sector without the hope of ever rejoining owner-occupation.

As a result, the private rented sector stops being a transitional tenure for young people and becomes a decade-or-three stay for them and for hundreds of thousands of poorly paid professionals who cannot buy, joining the many hundreds of thousands of the low-paid who may be on housing benefit but who cannot access social housing. How will private landlords respond? Rents in the private sector will probably rise, according to the National Landlords Association. Yet housing benefit will fall, not just capped at the top end but also, far worse, capped to cover not, as now, the average rent of 50 per cent but only rent of 30 per cent. So 70 per cent of rents will be higher than that and unaffordable in the market.

It gets worse. Let us project that forward. For the decade 1997 to 2007, rents increased by 70 per cent and CPI, the new inflationary index for benefit, by around 20 per cent. By 2020, housing benefit based on CPI will have fallen so far behind private rents that it may cover only 10 per cent of available property. In Manchester, it will cover only 5 per cent of available two-bedroom flats. In Ashford and Winchester, not a single two-bed home could be affordable on HB within 10 or 12 years. Yet, say government, reduced housing benefit will press down on landlords’ rents. That is key to their case. But it will not, because landlords have so many alternative tenants that they can raise rents. Most landlords do not have to let to private tenants on HB at whatever the price.

Only some 20 per cent of those in the private rented sector are on HB. It is not enough to have market leverage—not when surveyors report some five or six applicants for every rented property. The DWP’s own recent research quotes a major landlord in Bradford, saying, “Seriously, the next people I get in won’t be from DSS. I can’t do this any more”. The NLA says that in future 54 per cent of landlords will not rent to benefit claimants, half will not reduce their rents and nine in 10 will avoid taking anyone on HB. The result? Alex Fenton’s Cambridge research shows that if tenants try to meet that shortfall not covered by HB, perhaps 60,000 families with some 40,000 dependent children will be in severe poverty, below the poverty line. Instead, he expects around 200,000 families to face eviction, including 31,000 pensioners and 72,000 families with children. It is indecent.

Yet the Government say that the cuts to HB are essential to cap a soaring HB bill. Let us unpick that, because it is a myth. HB is not being pushed up by a few high claims but because more and poorer people are claiming. There are a few large families—refugee families, reconstituted families—who may need homes with more than four bedrooms. In Hackney, the Guardian reports that, of those 32 families in five-bed properties who will lose on average £1,200 per month, 31 are from a long-established Orthodox Jewish community. Will they become severely overcrowded in a smaller home? Will they instead be rehoused in two four-bedroom houses at higher HB bills? Or will they be scattered? It is indecent.

However, despite the grandstanding of senior Ministers, the DWP’s own stats show that, since 2000, over half of the increase in the HB bill—it is 54 per cent—comes not from the few high claims but from more private, poorer tenants claiming. They are in low-paid work, disabled or elderly. The 52,000 of them who are on pension credit stand to lose £11 a week, or four years’ worth of future pension increase. That is not decent. So, over half the increase in HB is coming from more people claiming. A sixth, or 18 per cent, comes from the rise in private sector rents, although that is by far less than house prices. Another 18 per cent comes from the Government pushing up, by policy choice, social housing target rents and the last 10 per cent comes from more social tenants claiming as the job market tightens.

There may be greedy landlords but the key driver behind increased HB has been more, poorer people coming into the private rented sector together with the Government's own demand that RSLs raise rents—full stop. Scare stories about vast bills make headlines; they should not make policy. Shelter estimates that 82,000 families may have to move. As families arrive in a spiral of debt and distress, the receiving authorities do not have the jobs, services, health or school places for them. Camden may lose 800 families, some to Enfield, which consequently expects an increase in overcrowding in its private rented sector. Slough says that there is no point in families going there when it has 6,000 on its waiting list. They would,

“push up costs and cause massive distortion to local prices”.

The truth is that homes are cheap only where there are no jobs, so I would ask the question that the noble Lord, Lord Tebbit, asks: should the jobless from Middlesbrough move to London where there may be jobs but no homes, or should the homeless from London move to Middlesbrough where there are homes but no jobs?

Added to this is the pressure for those people allowed only the shared room rent until they reach 35, not 25 as at present. Even before the cuts, Shelter had shown that, in much of the country, there was no such accommodation. Half of it explicitly bars DSS and 87 per cent of people already in a shared-rent room have a deficit on their HB bill of £35 a week. In future, if you are in a one-bedroom flat and lose your job, you lose your home. If you share a flat with an abusive partner and get him out, if you are on HB you lose your home—think of the power that gives him. Now you have to find a shared room, if you can, with strangers who you fear may threaten or abuse you, or thieve. It is indecent. Private rents will rise, HB will fall and evictions and homelessness will soar, while the safety net of social rented housing tears apart. All of the downward pressure—the falling domino effect of owner occupation going to private renting with private renters facing eviction—has made the need for social housing even greater. I now turn to that.

For decades, social housing has broken the link between poverty and poor housing—and I have been so proud of it. Inside Housing, the trade magazine, headlined on its front cover of 29 October, in huge capitals:

“The End of Social Housing, 1945-2010”.

How? First, the Government are savagely reducing by over 60 per cent the new build programme—at the cost, incidentally, of thousands of construction jobs. Half of the allocated £4 billion will go to the 60,000 to 70,000 houses already in the pipeline, with £1.9 billion going to new build at 80 per cent of market rent to provide insecure, intermediate tenancies. A billion quid builds 10,000 houses, plus land, so in all that is 80,000 or 90,000 new build. The Government say that we will have 150,000. Where is that coming from? It is coming from the increased rents of new, insecure and intermediate tenants who, nationally, will see their rent for a three-bed house treble from £83 a week to £249 a week. Only those with well above-average earnings can pay an unassisted intermediate rent, and they will be expected to move on and out quite quickly from that tenure because it is insecure.

There will be some; but virtually every tenant going into my housing association is on benefit. So the DCLG’s capital programme is paid for by the rents of a few transient non-HB tenants, alongside the increased HB bills for the DWP churned through the rent book. It is smoke and mirrors.

To add to the folly, the higher the new rent—and, therefore, the higher the housing benefit—the harder it is for any tenant to re-enter work. Cheap rents help people back into work. If, however, housing benefit is deliberately reduced by tying it to CPI while rents rise with the market, then arrears mount. Where will people be evicted to? More expensive bed and breakfasts? Vandalised cars? Street doorways? It is indecent, and it gets worse.

The non-dependent adult deduction rate will double up to £90 a week, netted off parents’ housing benefit and their council tax benefit because a low-paid adult son lives at home. If he leaves, his parents will underoccupy and be required to move. If he stays, he may be better off not working. Stable estates? Stable families? Nye Bevan’s “living tapestry of a mixed community”?

Even more vicious is the proposed 10 per cent cut in housing benefit for anyone on JSA for 12 months or more. Why? If people refuse work preparation now, let alone a job, their JSA is already sanctioned. If unemployed claimants are respecting the JSA rules, you cannot sanction them, and that does not suit the Government. So instead the Government are attacking an unconnected benefit, housing benefit, to give the longer-term unemployed a further whipping even though their lack of a job may be none of their making. It is horrifying.

Just over one-third of those on JSA are also on housing benefit—the rest either are owner-occupiers or live at home. Let me unpick the stats for two places. Wolverhampton has six claimants for every job, and if they were to be sanctioned tomorrow on housing benefit, 1,116 families would lose 10 per cent of their benefit. In Norfolk the figures are 5,000 jobs, mainly casual, and 15,600 claimants, and under these rules 1,254 families would be sanctioned tomorrow.

What does my housing association do? Evict them in due course? Into what? Severe overcrowding? Squatting? Cardboard boxes, perhaps? Or we could let the arrears mount and instead balance our books by cutting out retrofitting to lift pensioners out of fuel poverty. Evictions or increased fuel poverty—that is not a decent choice.

To conclude, we are looking at mortgage lending being at its lowest in 10 years, house-building and the construction industry in crisis, private rents rising as the sector gets swamped, housing benefit cut to 30 per cent, then 20 per cent and then 10 per cent of private rents, social housing as we know it ending—all the dominoes falling over as misery cascades down the tenures. And what really matters is that thousands and thousands of families in just a few months will face debt, stress, eviction and homelessness. Weeping children, desperate mothers, defeated fathers—how dare we do this? It is carnage among our own people, and we should be ashamed.

My Lords, I start by declaring my interest as an elected member of Pendle Borough Council and thanking the noble Baroness, Lady Hollis, for introducing this extremely important debate at this time. I do not want to talk about the issues that she mainly talked about, although other members of the Liberal Democrat party will do so later. However, I have considerable sympathy with many of the things that she said. We are in the middle of a consultation debate on these matters and I hope that the Government may amend some of the proposals before they are finally put to Parliament for agreement.

I will talk about local regeneration, particularly housing regeneration, and the prospect facing many local authorities—particularly shire districts in more deprived and disadvantaged areas—of the removal of virtually all their capital investment resources. This will mean that they will find it extremely difficult to carry out housing regeneration work. The RDAs, which have provided considerable investment in regeneration, are going. The so-called regional housing pots, which replaced the capital allocations to councils, are disappearing. Grant Shapps, the Housing Minister, has announced that the housing market renewal programme is being done away with. I want to talk specifically about the housing market renewal programme because this is where the problems will be most acute. I speak from five years’ experience—to last May—as the executive cabinet member of Pendle Borough Council for our housing market renewal projects.

The scheme was introduced in 2003 in nine main areas, including Hull and the East Riding, NewcastleGateshead, Oldham and Rochdale, and East Lancashire, where I live. It has resulted in a substantial investment in the regeneration of areas of old housing and low-priced housing. The amount of money that has been spent in the areas this year is some £364 million. The scheme, if one believes the circular that Grant Shapps has sent round, appears to be closing down, although it is not clear whether there will be transitional arrangements next year. That is the first question that I want to ask.

It is being suggested, as it was in the White Paper Local Growth: Realising Every Place’s Potential, that there will be some funding available via the regional growth fund, but this is only £1.4 billion over three years and the amount of money that is available to the housing market renewal areas to wind up their schemes is not known. That is my second question: to what extent will that fund be available? It is suggested that the Homes and Communities Agency may help to contribute to these schemes but, again, it is all very vague.

The housing market renewal schemes were set up as 15-year programmes. They are just over halfway through; I think we are in year eight now. They were based on local master plans—programmes for neighbourhoods, working closely with residents. There is much of what some people might call the big society going on in those areas, which it appears will all be closed down. As somebody who has been closely involved in them, I am the first to admit—in fact, I am the first to criticise—that they have been bureaucratic in how they have carried out their work. They have wasted a lot of money: in East Lancashire £3 million a year has been spent simply on administration, research and schemes by the so-called partnership Elevate, which was set up to co-ordinate and run the schemes, rather than this being done directly through local authorities that knew what they were doing. The way in which it happened was a typical new Labour way, which wasted a lot of money. Nevertheless, there are schemes taking place now that are halfway through. The Government say they will honour committed schemes. My third question is: what are committed schemes? Are they those that have contracts at the moment, or are they the schemes for neighbourhoods that might have been partly bought up by the council, partly pulled down and partly boarded up? Are such neighbourhoods simply to be abandoned now?

There are regeneration schemes under HMR in all the areas, where derelict factories and mills have been bought. They may have been cleared. Remedial work is needed on the land before private developers will come in and find it profitable. Because these are, by definition, areas of low housing prices, gap funding is often needed to make the schemes profitable. The private sector will come in and build but it will not do so if it is not going to make a profit, so all these things require funding from the public purse—there is no other way in which they can be done. They have been done, and promised, through the housing market renewal programme. If this is coming to an end, are we to be left, as I said, with streets which are half boarded up and half purchased by the council, where the council no longer has the money to buy the rest of the houses—there is such a street in my own ward, and there are much bigger similar areas in other places—or are brownfield sites which have been bought up for redevelopment to regenerate and create new life in these areas now to be abandoned as the remediation cannot be afforded because the gap funding is not there? These are the kind of problems we are dealing with.

The Whip is looking at me to indicate that my time is up, and he is quite right, but I will say one more thing. Are we to be able to complete the schemes in a satisfactory way or are they to be abandoned and all we are going to be able to do is to fulfil existing contracts? This is a very serious matter. I do not expect the Minister to have all the answers to it today but perhaps she can provide them to me and the House in writing.

My Lords, I shall be brief. I want to make four points, two of which are of particular concern to the Equality and Human Rights Commission, of which I am a member.

First, I am aware that Her Majesty’s Government are committed to ensuring a high level of employment in this country but I have particular concerns regarding the impact of housing benefit reform on many people’s ability to engage in paid employment. The noble Baroness, Lady Hollis, went into this in great detail, but it is important for us to take into account that only about 12 per cent of all housing benefit claimants are unemployed. I hope that the Minister will clarify this.

Secondly, will the Minister say why the Government feel that it is necessary to cut the capital investment in housing by 63 per cent in real terms—more than in any other part of the economy—at a time of record housing need, chronic lack of supply and increasing numbers on the waiting lists?

Thirdly, as regards people who are no longer working, will the Minister say how many older people will have to use their pensions to make up the difference in their rent if housing benefit is cut? I remind the House that pension rates specifically take no account of housing costs because these are supported by housing benefit paid by local authorities and that certain housing costs may be awarded only if you are eligible for pension credit.

Fourthly, the changes announced to housing benefit in the spending review, the emergency Budget and prior to that are complex. Will the Minister explain whether the whole package of reforms has been, and is being, considered as a package? Will she advise me whether an analysis of the cumulative impact of these measures on the protected groups for whom the Equality and Human Rights Commission is responsible will be undertaken?

My Lords, there is a story of a man being audited by a tax inspector. “How have you managed to buy such a luxurious villa when your declared income is so low?”, asks the inspector. “It’s like this”, replies the man, “While I was fishing last summer I caught a large golden fish. When I took it off the hook, the fish opened its mouth and said, ‘I am a magical fish. Throw me back into the sea and I’ll give you the most luxurious villa you have ever seen’. So I threw the fish back into the sea, and got the villa”. The tax inspector was not impressed. “How do you expect to prove such a ludicrous story?”, he asked. “Well”, the man replied, “you can see the villa, can’t you?”.

In the light of the comprehensive spending review and its implications for social and affordable housing in both urban and rural contexts, many would wish for a magical fish. Sadly, this is unlikely to be the case. The proposals before us will affect not just housing supply, but the whole culture of housing provision.

It is likely that cuts to the national affordable housing programme are likely to be more than 60 per cent, while new tenants will be paying higher rents. In addition, these cuts will be accompanied by changes to the social housing culture, as tenants will be assessed on need—no more “council houses for life”.

Having lived in London for more than 20 years, I am well aware of the fact that most people do not live in expensive properties or luxurious, five-star accommodation. It is easy to achieve a soundbite with exceptions—less so with the reality of the vast majority of people living in ordinary houses. Equally, many such people have lived in a locality all their lives. Besides such people upon whom the proposed cuts will fall are those suffering a temporary blip in their fortunes, others who have fled from violent partners, or refugees dealing with the trauma of war or real ethnic cleansing, as the noble Baroness, Lady Hollis, said powerfully in her address. Above all, such cuts will come upon people with little or no savings—now one of the requirements of eligibility for benefits. Undoubtedly, this will affect tens of thousands of people in London and other major cities.

However, my diocese is rural and, as my good friend, the right reverend Prelate the Bishop of St Albans commented in his address this week to the Faith in the Countryside conference, the 50 per cent cut in capital investment for affordable homes announced last week could leave nearly half a million rural households without housing in the next quarter century. It is with regret that I note in a report from Shelter that none of the councils in Somerset, where my diocese is located, has met any of the affordable housing targets. The highest in the Shelter ranking met 28 per cent of the target, while the lowest met a mere 9 per cent. Viewers of BBC television this morning will have seen the savage cuts made by Somerset County Council in so many areas of public and corporate life.

The decision to end the “council house for life” will be a real problem in rural areas, where there is simply not the flexibility and availability of housing for people to move on in a way that they can in urban areas. The continuing unregulated purchase of second homes in rural communities raises questions as to where the skilled trades people—plumbers, carpenters, builders and farm workers upon whom we rely—will buy or rent a house. All this leads to the ebbing away of community, with the closure of schools, village shops and pubs, and much else besides. Fishing for the magical golden fish is not a serious option. Families who may be key players in local communities will lose their long-term security, and individuals will lose their social networks and relationships of mutual support and care if they have to move. Where will they move to? It is these very communities and networks that provide the relationships for a civic society, whether “big” or not.

The New Homes Bonus scheme will not give any priority to affordable housing, or particular provision for encouraging affordable homes in rural areas. At best, some provision for the edges of towns and cities will be made. Grant Shapps, the Housing Minister, has argued that rural housing development can go ahead, providing that in locally held mini-referendums, 75 per cent of those voting agree. Many believe, and I include myself among them, that this will be difficult to achieve. As the right reverend Prelate the Bishop of St Albans said in his speech yesterday, this is not so much nimbyism as bananaism—“build absolutely nothing anywhere never again”.

Finally, much has been made of the role of churches and voluntary organisations in the big society. Readers of the Tablet, that notable Roman Catholic journal, were asked last week whether they had spare rooms that they could let to single homeless or young people. Is this really to be role of churches and other voluntary bodies?

In 2008, Iain Duncan Smith, attending a Salvation Army conference, observed a growing undercurrent of “chaotic and dysfunctional” people who are unable to play an active part in society, and he went on to attack social housing policy as “ghettoising dysfunction and poverty”. Is not the coalition’s policy on housing benefit and the insecurity of council house tenure likely to work against the idea of mixed living, and create exactly the kind of ghettoisation that he spoke of in opposition?

If ever we needed a big-society solution to affordable housing, given the unavailability of the golden magical fish, this is the time.

My Lords, it is a pleasure to follow the right reverend Prelate the Bishop of Bath and Wells, who always makes thoughtful and well informed speeches, enhanced on occasion by an Ulster flavour. I congratulate the noble Baroness, Lady Hollis of Heigham, on having secured the debate and on her predictably expert speech. In an act of political chivalry, I congratulate her, too, on her timing in inserting the speech into the parliamentary diary before the forthcoming White Paper. Clearly, her speech will deserve close study.

My late noble kinsman was for four years in the late 1950s Minister for Housing and Local Government and Minister for Welsh Affairs. I do not think that it was because he took the trouble to learn the Welsh national anthem in Welsh that Nye Bevan, in the Attlee Government, asked him, although he was a political opponent, to chair departmental working parties on aspects of housing policy. I do not know as much as 1 per cent of what my late noble kinsman knew about housing; but I do know that, while the noble Baroness, Lady Hollis, has chosen her moment well, it would be wrong for my noble friend the Minister to be left naked of Conservative support behind her today, even though our coalition colleagues have turned out in force and, although it is a Labour debate, exceed in number the Labour speakers.

I am grateful for the comprehensive briefing afforded to speakers in this debate by the National Housing Federation. I shall tick off the relevant questions that it believes need asking as opposition speaker follows opposition speaker, so I shall not spend my six minutes asking them myself. Nor shall I spend my time hypothesising about what a Labour Government might have done in the present circumstances. “What if” questions are fun as a social game—for example, asking, at this moment in American history, what would have happened if Wolfe had not taken Quebec—but they are not a good use of time when the Labour Government are no longer in power, for reasons associated with their recent policies, and when another Government are proposing a massively important welfare programme that embraces housing but goes far beyond it. I shall rest on a paragraph from Labour’s 2010 manifesto, which was drafted by the present leader of the party and which states:

“Our goal is to make responsibility the cornerstone of our welfare state. Housing Benefit will be reformed to ensure that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford”.

I could not put it better myself.

The programme that the coalition Government are pursuing is a wholesale reform of 21st-century welfare from the foundations that Beveridge laid two-thirds of a century ago when Nye Bevan was Minister of Health. It is not a policy that the Opposition would have adopted, for they drove my noble friend Lord Freud—as he then was not—from their ranks when he sought to persuade them to adopt it. Of course, I realise that they believed that tax credits would resolve the dilemma, in an era when they also believed that they had banished boom and bust from economic history. The difference today is that the former Chancellor of the Exchequer and Prime Minister, Mr Brown, is by instinct a complicator, whereas my noble friend Lord Freud is a simplifier. I am pretty sure that DWP and HMRC, despite their loyalty to any Government, would prefer the latter instinct to the former.

I have personal experience of the complexity of tax credits. A member of my family was given, no doubt in good faith, appalling tax advice by the HMRC hotline. My relative brought it to me and I brought it first to my own tax accountant and later to a relevant Lords Minister, who, coincidentally, will speak for the Government later in the debate. The Minister very generously and kindly researched it with the Treasury. Both the latter consultees agreed that the hotline advice was wholly ill founded. However, think of what effect, in all senses, the advice of the hotline would have had on many other inquirers. I say that because of the complexity of the matter.

It is worth saying a word about housing provision. The words appear on the Order Paper, although I appreciate that they are in their context ambiguous. Housing costs are a function of the amount of provision, and I will not go into why the previous Government failed to reach their own targets. However, I will remark that twice in Grand Committee in the second half of the last Parliament—once on a planning Bill and once on a housing Bill—I asked why the Government believed, as an underlying premise for their legislation, that the economy would go on behaving as it had in the preceding 10 years. On the second occasion, I quoted the then very recent first comment by the Governor of the Bank of England that the possibility of a recession could not be ruled out. On both occasions, the Minister expressed confidence in the economy, noting that there was not a recession in progress. I also remark that the growth in housing targets over the period 1996 to 2006, with the interim projections of 2002 and the final Kate Barker report of 2004, was most recently not in the south-east—a key arena for the issue that we are debating—but in the north-west, Yorkshire and Humberside, and the west and east Midlands.

Much of my own housing experience comes from representing for a quarter of a century an inner-city seat with considerable street homelessness. I do not associate myself with the emotive language of the Mayor of London, whom I generally and genuinely admire, but I am conscious that I was representing what was not only in part a rich seat, although not as rich a seat as the EU statistics imply, but also in significant part a poor seat. When I left the other place, it was the 48th poorest seat in the country by British statistical criteria. That remarkable social balance is necessary to the way that London works. There has to be low-income housing at the centre to serve the practical needs of a great city, and I shall watch the outcome with what is currently confidence that for pragmatic reasons that balance will remain.

My Lords, I, too, thank my noble friend for bringing this vital subject before the House today and for the characteristically knowledgeable and caring way in which she spoke to it. I do not have anything remotely like her depth of knowledge about these matters, and my purpose in speaking today is simply to draw the attention of the Minister and the Government to examples of people whom I know about personally whose lives are likely to be severely, even devastatingly, affected by these measures. Both the cases that I shall be referring to are of single people who, in the difficult economic situation of north-east England, have been repeatedly trying for jobs for a considerable time. Both could well fall foul of the new rule that full housing benefit will be cut by 10 per cent after a person has been on jobseeker’s allowance for 12 months.

My noble friend made a compelling case the other day in the debate on the comprehensive spending review about the perversity of such a rule. In the cases that I know of, because the persons concerned have repeatedly tried to obtain work, surely, rather than be penalised for their efforts, the system should recognise the efforts that they have made. If the Government are trying to differentiate between genuine claimants and others, why not recognise those who are known to jobcentres for having done everything they possibly can to gain employment? Underlying the Government’s proposal is obviously a belief that, if you are out of work for more than 12 months, it is always your own fault and therefore you should be penalised. However, even a cursory glance at the history of areas such as my own in the north-east of England must reveal that this is far from being the reality.

I say to the Minister that, from my knowledge of these cases, it can be very dispiriting applying for jobs, particularly when you have to use scarce resources to telephone or visit employers and send off applications. It is even more dispiriting when so few employers even acknowledge the applications. I am beginning to think that it should be a legal obligation both to acknowledge applications and to communicate to applicants when a final decision has been made.

One of the cases to which I refer is a young person who lives in a modest one-bedroomed flat but risks losing this by falling foul of the change being introduced whereby the age threshold for the single room rate is to be raised from 25 to 35. Therefore, in addition to losing a percentage of the jobseeker’s allowance, despite having done everything to gain employment, that person now risks losing their home, and I find it almost incredible that we should treat people like that.

One of the two people I am referring to came to Britain as a genuine asylum seeker and has now obtained British citizenship. In the course of this process, he has enthusiastically immersed himself in British history, learning about our society and culture and adapting to it, including by dramatically improving his language skills. Although he has had work, it has been very difficult to find permanent employment, despite all his efforts to do so. If his efforts continue to be unsuccessful, he, too, could fall foul of the harsh and indiscriminate changes to the housing benefit system to which I referred. It would indeed be cruel if the Government of the country of which he is now so proud to belong decide to blight his prospects in this way.

Not surprisingly, the situation in London has been referred to because of the high cost of accommodation in the capital. However, all parts of the country and all categories of jobseekers will be affected by these proposals.

We know that the whole area of benefits is a difficult one. Ever since the beginning of the welfare state, it has been difficult to devise rules that help those who genuinely need it and make sure that there is no unfair exploitation of the system. No doubt the Minister in replying will try to defend what is happening by citing excessive claims, but my examples are also real. These are people whose lives will be cruelly affected by what is proposed. Therefore, I implore the Minister and the Government to listen and learn from such examples and change course as a result.

My Lords, I congratulate the noble Baroness on the timing of this debate, and also the noble Lord, Lord Brooke, on answering the question “what now”, rather than “what if”. That is the question that faces us all. Unlike the right reverend Prelate, I shall not use a golden fish as my metaphor; I shall use simultaneous equations—the need to bring into balance a number of competing factors, each of which has a set of variables and a number of unknowns. That describes the situation with housing; both sides of the equation need to be understood. At its heart is the need to balance the degree of support which the state can provide to individuals and families to meet their housing needs and the need to provide adequate numbers of homes at affordable levels. One side of this equation is the responsibility of the DWP, with its reach right across the United Kingdom, and the other is a department, the DCLG, with responsibility for England only. As the accompanying documents to the CSR helpfully point out, the responsibility for housing for large parts of our country—Wales, Scotland and Northern Ireland—does not lie with this Government or Parliament. In this new era of joined-up government, it is important that the DWP particularly takes note of that firmly when trying to bring the matters we are debating today into balance.

Is the present system in balance? Does the state's support funding for individuals and families match the stock of affordable housing? Clearly not, because between 1996 and 2010 the stock of affordable homes fell by a net 45,000. Meanwhile, the bill for supporting individuals and their families has ballooned to £5 billion extra in the past five years alone. As the number of affordable homes available has dwindled, so the cost to the country has risen. Using my equation metaphor, the factors on one side of the equals sign have grown more as the other side has diminished. This Government, and any Government in the current financial circumstances, are therefore constrained to do more for less, making available more housing at prices which people can afford, replenishing and building more homes so that the net stock grows, with a smaller public resource available to achieve that growth. Neither can it be in the public interest to see housing benefit costs balloon in the way that they have, yet our society should expect and demand that we can support those in need who need a proper and decent home.

This complex equation needs planned resolution, avoiding the dangers of perverse outcomes. The complexity of the equation has in the past driven changes which have made the system more, not less, complex—more difficult to understand and more susceptible to those perverse outcomes. The challenge for government is, first, to build more homes and, secondly, to create a benefits structure which is simpler and fit for purpose. I welcome the Government's ambition to deal with these very large-scale issues. Of course, there are a number of icebergs in the water around which they have to steer.

I am a recent rented-property searcher in London, working within the parameters of your Lordships’ expenses regime. It is quite clear to me that the London housing equation has a quite distinct set of factors. It is a market with prices attached which, in most parts of our country—where I come from, for example—would make people stagger with amazement. I have to admit that I have been priced out of Kensington and Chelsea. Do I find that strange? Indeed I do not. There are many parts of the country where I, like many others, would like to live but find it impossible to do so. I also find it strange that some politicians in London are surprised that the rents in some areas price many people out of them. But that is the reality. Fundamentally, can it be right that some claimants for housing support can claim more than £100,000 a year to live in large houses in expensive areas when many hardworking taxpayers would find it impossible to do so? Indeed, they are subsidising those who receive those high rates of benefit.

London is not the whole of the United Kingdom and it would be wrong to see the vision of change through the prism of the capital city. Admittedly there are some other hotspots, some of which have been mentioned already—some university towns, for example—where prices in the private rented sector have been driven up by the demand. However, the rental cap is appropriate for many parts of our country and, with appropriate provision, could work for London and those other hotspots. But there are other, localised problems of a different kind, one of which has already been alluded to—the demand for affordable housing in our rural areas in order to retain local families in their communities. That is a massive problem which again requires a tailored solution. The Government will face a major challenge on that matter, particularly on the 30 percentile figure that they are introducing.

There is not a uniform picture across the country, and a uniform solution may not always be appropriate because that may lead increasingly to further market distortion. That is why a more discrete definition of housing areas—in fact, a much more clear map—would perhaps make solutions more appropriate. After all, market rents, as I have discovered, can vary considerably within a couple of miles and even within a couple of streets. However, the universal benefit changes will make a significant difference and improvement to the current arrangements on housing. But the timing of these housing allowance changes means they will be put in place before the universal benefit changes begin to bite. I therefore think that, at all levels, this set of equations will be more tricky to resolve than the simultaneous ones that I did at school. A large number of changes all coming down the tracks together requires greater co-ordination and planning. I hope that the Government will have success and, more than anything else, certainty of action.

My Lords, I am grateful to the noble Baroness, Lady Hollis, for securing this debate and for her very important speech. In my few minutes I shall concentrate on the key issue of housing benefit. I have been able to draw, with gratitude, on the invaluable guidance of experts from the Chartered Institute of Housing, Shelter, Citizens Advice, Crisis, the National Housing Federation and the Local Government Association, with input from the Residential Landlords Association and individual private sector landlords as well as the top academics in the field: Professor Peter Kemp from Oxford and Professor Steve Wilcox from York. I declare my housing interests as in the register, and shall pick up one or two of the issues that have not been fully covered so far.

My first question is whether these cuts will achieve the desired savings in public expenditure. First, if there are a lot of evictions—which I feel sure, regrettably, there will be, and which will produce costs for landlords—the resulting homelessness will lead to huge cost increases for the state. Secondly, and related, if there is a return to putting people in bed and breakfast hotels—and in one London borough it has been announced that 20 such places have just been taken, the first time those hotels have been used for some years for this purpose, because a major private landlord has pulled out of catering for those who are on the local housing allowance—then the cost of B&B in place of private rented sector flats will produce additional expenditure for the state.

Thirdly, an influx of new tenants from high-value localities into lower-value areas could cause rents for all local housing allowance tenants to rise, not just for the new tenants moving in. Those rent increases could wipe out savings from the movers. Fourthly, if people move from higher-value areas where jobs are plentiful to low-value areas where they are not, it may be more difficult for the movers to find employment, and costs to the state may well be higher. This is to say nothing about the ill effects on aspirations and life chances of concentrating poorer households in the same place, rather than having a mix of income levels and tenures in all areas.

It is worth noting that the power of cuts to galvanise recipients into taking up employment may be quite limited. Only one in eight housing benefit claimants of working age is unemployed. The others include pensioners, the 26 per cent who are in low-paid jobs, single parents and disabled people. Finally, if there is withdrawal and disinvestment by private sector landlords in homes that might have been occupied by those on housing benefit, a corresponding increase in government funding will become even more necessary for the social housing to which those people will have to go.

What can be done to ease the potential hardships that these reductions in housing benefit seem destined to create? First, surely we cannot hit households next spring with a new cap based on the number of bedrooms in high-value areas and then again in the autumn when the change from the 50 to the 30 percentile maximum kicks in. One October start date for both these changes would surely be far less disruptive and far less expensive to administer. Secondly, the new caps expressed in cash—for example, £290 a week for two-bedroom flats—need to be uprated annually or they will gradually cover more and more tenants.

Thirdly, the enforced move out of central London for several thousand families could be eased through concerted efforts by the local authorities involved. Advice and guidance, help with moving costs and deposits, negotiating with landlords in the recipient areas to ensure that the rents and conditions are satisfactory, which could achieve better rent levels in return for security of income for those landlords—all this effort by councils could make moves more bearable and will be well worth funding.

Fifthly, through use of much enhanced levels of discretionary housing payments, those administering benefit, local housing allowance, should enable households with a clear local claim to stay put for the time being. I refer, for instance, to a family with a child regularly attending a central London hospital; to a working mother in a low-paid, local job who could not cover lengthy travel costs and extra child care if moved well away from the area, and so on.

Sixthly, I want to echo the point made by the noble Baroness, Lady Quin, that 10 per cent cuts in benefit for those who do not find a job within 12 months should be moderated to exclude those for whom the jobcentre declares that the claimant has done everything in their power to get a job.

Seventhly, some people up to the age of 35 who lose their job will have to move from their flat where they may have lived for many years to a place they can share with others. Bearing in mind the total absence of such accommodation in large parts of the UK, and also that 87 per cent of those currently in single rooms of this kind—that is, single tenants under 25—already have to find an average of £27 per week from their microscopic incomes because the local housing allowance fails to cover their rent, surely the overarching reduction in the maximum from the 50 to the 30 percentile rule should not be applied in those cases.

I hope the Government will give some indication of whether they can accept these and perhaps other ways of reducing the burden of these fierce cuts so that they can be explained, phased, moderated and mitigated. I look forward to hearing the Minister’s response.

My Lords, I fear that there will be a certain amount of repetition about housing benefit, especially after the speech of the noble Lord, Lord Best. I, too, shall focus on that point. Never has this subject hit the headlines so much as it has in the past month.

As soon as the changes were made known in the summer, many of us on these Benches felt uneasy, particularly at the haste with which they were announced. As far as I know, there has been no consultation with stakeholders and precious little real evidence of the impact that the changes will have. The Government simply seized on the increase of £5 billion in the housing benefit budget over the past five years as the rationale behind the whole policy. I am sorry to say that the resulting attempt to start to bring down the cost of housing benefit so quickly—starting next April with the cap—has the hallmarks of a panicky, Treasury-driven exercise done on the back of an envelope rather than a well thought-through DWP exercise, looking at a much wider picture of the impact of the changes.

As my noble friend Lord German said, it is all too easy to point to housing benefit claimants in central London and say that it is unfair on working people that those who are out of work can, only thanks to housing benefit, afford to live in a big house well out of the reach of hard-working families. Everyone is guaranteed to feel outraged about this, and I fear it is used almost as a proxy for the more widespread but far less colourful changes that will affect the whole country. I echo the paradox that others have mentioned that if all unemployed people are forced to move further away from our city centres, they are moving further away from areas with good employment prospects and may thus stay on benefit for longer. However, of course we must never forget that housing benefit is an in-work as well as an out-of-work benefit.

Staying with the private rented sector and the regulations soon to be tabled—they affect only the private rented sector—perhaps the most worrying of the imminent changes is the switch from rents being calculated as the 50th percentile of rents in a broad rental market area to the 30th percentile, which could result in a quite significant drop in local housing allowance; on average about £9 a week. This change will begin in October next year, and from then tenants will be affected at the date at which their tenancy agreement comes up for renewal. I hope that they will have the maximum time possible for this change, because in housing hotspots the drop could be a lot more than £9 a week. The worst-case scenario would be a huge increase in homelessness. Here I declare an interest as a patron of the Winchester Churches Nightshelter.

Of course, there are strict rules about who the local authorities can classify as homeless for rehousing purposes, and a tenant without children on local housing allowance whose income suddenly drops may not qualify. I gather that not all local authorities interpret the intentionality guidance in the same way, and I urge the Government to clarify the position. The welcome fourfold increase in the discretionary housing allowance budget surely will not stretch very far around all the country’s housing hotspots to help keep many tenants in their homes, particularly if unemployment rises significantly. Before leaving that point, I see no good reason why the cap on the four-bedroom rate and the upper limit for all property sizes should not be aligned with the change to the 30th percentile rate, so that the families who are affected by all three changes do not have their lives disrupted twice over.

The growth in the private rented sector is, of course, the result of the severe shortage in the provision of social housing over very many years, so it is little wonder that the housing benefit bill has been rising inexorably. I know that the Government believe that housing benefit has inflated rents, and that dropping the percentile should have the effect of lowering rents, but this is a terrible gamble with people’s homes, particularly when potential house buyers are continuing to rent because they cannot find the high deposits now demanded. What may happen is that many landlords simply will not let to LHA claimants if they can find richer tenants.

One change that the Government could make that would improve the situation straightaway would be either to give tenants the choice to go back to the system of direct payments so that landlords are guaranteed their rent, or for direct payments to landlords after the tenant had defaulted on their rent for just one month rather than two. We hear that 68 per cent of landlords in one survey said that this would make a huge difference to the decision whether to let to LHA tenants. We must also remember that not all buy-to-let landlords can themselves afford tenants to default. I gather that there are many repossessions in that sector.

What is needed more than anything else is a clear-headed look behind the ballooning housing benefit figure. I urge the Government to set up a short commission into the whole subject of housing benefit that would report back in no more than six, or even three, months. In spite of the increase in the discretionary housing allowance and the welcome news of an extra room for a non-resident carer, I have no confidence that the housing benefit changes announced will do anything more than increase homelessness and cause many vulnerable families to fall into poverty. I hope I am wrong.

My Lords, I, too, thank my noble friend Lady Hollis for securing this debate today and congratulate her on the not at all unexpected forensic way that she approached this subject with her wide knowledge and experience. I declare an interest in this debate as a former chairman of the Housing Corporation and a current member of the board of Taylor Wimpey housing developers. We are talking about housing benefit and how it impacts on people, but what we are really talking about is people’s lives in the round. It is a fact clearly established by academic research and natural observation that the kind of housing you are brought up in helps dictate your life chances because of the profound impact that the kind of housing they live in has on people’s health and, particularly, on children. That spins off into their ability to learn at school and to be able to do their homework at home and their future life expectation, so we are not talking about housing just as accommodation.

Over the past three decades, we have seen our population increase as a result of demographic changes and family breakdown and an increased demand for housing in our country. It was not a failure of either Government’s housing policy, but we just could not keep up with the demand. As a result of family breakdown and living longer, the demands are higher. That brings us to the situation that we have today with insufficient supply for what is needed in the country and in the middle of that issue, we have this financial crisis.

That long-term demand was recognised by the Conservative Government in the 1970s. They recognised that the state would not be able totally to fund affordable housing for those who could not buy on the private market. They enabled housing associations to raise money from the private sector to match, quite often, the grant given by government so that today private investment in the housing association sector is well in excess of £50 billion. When elected in 1997, the Labour Government recognised that that would still not support the housing need and doubled state investment in housing with huge benefits and effect. The decent homes policy and the supporting people policy were both Labour Government policies, and I am delighted that this Government’s changes are not going to affect them substantially.

The core issue of housing shortage is a dilemma for any Government. My question is therefore, if housing has such a profound effect on people and the lives of our citizens, why have this Government, in a situation where we recognise that we have to have public expenditure cuts, cut CLG back probably the most of any of the cutbacks of any government department? Capital expenditure in housing will go from £6.8 billion this year, as defined by the previous Government, to around £2 billion in 2014 against a background of ongoing demand. That must have a profound effect on people who cannot afford to buy their own homes.

Against that background of reduced capital expenditure by the state, can the Minister explain to me, if not today at the end of this debate perhaps afterwards in writing, what financial model has been used to try to justify the outcome of the reduced capital expenditure? How will the increased rents that are being talked about fund the gap that will deliver 150,000 houses in the Government’s target over the next four years, linked with their other measures? I cannot find any evidence anywhere that supports that argument. Whether you are looking at the vested interest of the housing associations and the National Housing Federation or at the Royal Institution of Chartered Surveyors, anyone who has looked at this has said that they have substantial doubts that the target of 150,000 will be met.

The abolition of housing targets has been put forward as liberating local authorities. We have had this before. The reason we had local targets was because some local authorities were appalling at providing housing for their local community. We know what can happen and what probably will happen: a good local authority will build, a bad one will not but will send its homeless over the border to the next town to provide housing for them.

We are talking about money, investment and people’s lives. What is this Government’s vision for housing in the future for this country? I do not understand it any longer. Housing issues have always been top of the postbag for MPs. I suggest that this Government’s policy will increase that. We have talk of the big society. I suggest that this perverse and almost vandalistic approach to housing for people will not bring about a big society; it will bring about a more divided society and under the policy for housing we will see a rerun of the “Cathy Come Home” film which had such an impact on all of us.

My Lords, I shall make a brief comment on intermediate housing. I must declare an interest because I have a son-in-law who is active in a company that provides low-cost housing in the private sector.

There is a very large gap between the provision of social housing and private housing in the open market. There is a very large cohort of people who do not qualify for housing benefit but who cannot buy. In London, for example, in October 2009, the average cost for a first-time buyer was £248,000. An LSE study shows that the main reason why teachers in London schools leave is housing. Overall, 35 per cent of working households aged 20 to 39 find themselves in this category. One of the results is that there are some 3 million people aged 20 to 34 who now live with their parents and in addition some 2 million people aged over 18 live rent-free with their families or friends, a figure that is four times higher than 10 years ago.

One of the needs is houses to buy for those on modest incomes who cannot afford market prices and who do not qualify for housing benefit. In London, it has been possible to persuade a number of councils to sell plots for development at below market prices since they provide a start on the ladder of owning a house for key workers such as teachers, nurses and the police, and for those on modest incomes in the private sector. There is a limit on the earnings of those who qualify under this scheme. In London, as a result of this attitude by councils, it has been possible to provide one-bedroom flats in Camden, Hounslow and Ealing to be sold for £190,000 compared with the market cost in Camden of £305,000. Who are the beneficiaries? Their average income is some £30,000 per year. The average deposit they pay is some £20,500 and their average age is 31. It seems clear that where this has been achieved, it is of considerable benefit to society. The Government could help here. One obstacle is the planning process. At present, there is no focus on intermediate housing as a use class in its own right, so I hope the Minister will take note and initiate the appropriate action.

My Lords, I congratulate my noble friend Lady Hollis on securing this timely debate and on her excellent and devastating speech. I declare my interest as a patron of the Foundation for Lifetime Homes and Neighbourhoods.

Good housing that meets the needs of all sections of society is not only the answer to many of the social, health and employment problems, but it can prevent many of them occurring in the first place. Lord William Beveridge summed it up best when he said, in 1944:

“The greatest opportunity open in this country for raising the general standard of living lies in housing”.

I therefore welcome this opportunity to debate housing policy.

What I do not welcome are the Government’s housing policy proposals, which, as we have heard from around the House, will profoundly damage the delivery of housing, particularly social housing, in this country for many years to come. The drastic changes to the housing benefit system will have a particularly negative impact on the lives of disabled people—and the effect on disabled people is the focus of my contribution.

I accept that the previous Labour Government, and many Governments before them, did not give sufficient priority to housing, as I am sure the Minister will note in her reply. The previous Government certainly did not build enough houses, particularly accessible ones, but the current proposals will just make things much, much worse, and if the housing situation is bleak for the general population, it is doubly so for disabled people, who are disproportionately dependent on social housing and housing benefit. Disabled people are twice as likely to live in social housing because of their poorer economic position, and they are more likely than any other sector of the British population to live in a dwelling that does not meet decent home standards.

As we have heard, the Government have stated that between 2011 and 2015 there will be a real-terms cut of 63 per cent to the national affordable housing programme compared with the 2008-11 period, and that this is a far greater cut than the cuts imposed on many other parts of the economy. The Government will no doubt trumpet the 150,000 new homes that they estimate will be built using public subsidy in the next four years, but I invite noble Lords to look behind this figure; to achieve this heroic build, the Government are relying on all the new social housing that is funded by the Government’s housing programme, and on one in four re-lets in the social housing sector being let at 80 per cent of market rent, making them unaffordable and driving people into poverty. My noble friend Lady Dean has just thrown considerable doubt on the Government’s plans.

Will the Minister say what the outcome was of the equality impact assessment that was conducted on this new rental policy with respect to disabled people, who, as I said, are twice as likely to live in social housing as non-disabled people? How will new supported housing for vulnerable people be funded under this regime? Do the Government expect tenants living in supported housing to pay 80 per cent of local market rents? Is this realistic in central London, or will people be driven to live somewhere cheaper, far from their existing social networks?

I welcome the news that disabled people claiming disability benefits will be exempt from the housing benefit cap due to the extra costs that they face. However, DLA reforms mean that many disabled people with lower-level needs will not receive the benefit by 2013 and so will not be protected by this exemption. Their needs will not disappear, so the cap will simply deepen inequality, as commentators have noted, creating yet more poverty among disabled people. The funding for an extra bedroom for a non-resident carer from next year is welcome, but will the Minister outline a few more details about how this new scheme will work? Will it just be for paid carers or will unpaid family carers also count?

The Government plan to limit housing benefit for working-age claimants in social housing to the size of accommodation they are deemed to need. How will the size of a property be calculated for people like me who are wheelchair users, and for disabled people who may have to have medical equipment due to their disability? Will a child's disability be taken into account, and the fact that his or her space needs may change over time?

This huge rise in rents and cutting of financial support will force disabled people to move from their accessible homes, but where to? There is a dearth of accessible accommodation, as this House has been reminded many times. Landlords do not routinely keep records of their accessible or adapted property, so finding cheaper accommodation will be hard, if not impossible. What of the resulting cost to the state? There will be far more demand on the health and social services, because, as repeated surveys show, living in non-accessible housing makes disabled people more dependent on other people and less able to take advantage of employment, training or other opportunities. What if the disabled person has a care package? The lack of portability means that they cannot look outside their borough for housing without incurring all the personal and social service costs of re-assessment all over again. If it is impossible to move, the result will be progressively to cut financial support and drive the disabled person further into debt and utter misery.

Housing let at a subsidised social rent is one of the central pillars of the welfare state. It offers people who are unable to enter the private housing market a way out of squalid housing, overcrowding, slums and grinding poverty. Lord Beveridge would be weeping in disbelief that a Government—any Government, let alone one supported by his Liberal Democrat successors—are putting forward a package of reforms that spell the end of social housing as part of the welfare state that he helped to create. I urge Ministers to reconsider.

My Lords, I, too, congratulate the noble Baroness, Lady Hollis, on securing this debate at such a good time. Despite sitting opposite her, I must say that I agree with much, if not all, of what she had to say. I also declare an interest as the chairman for just under two years of One Housing Group, which provides housing, supported housing and general housing for poorer people, largely in London and Berkshire.

I have three short points to make. First, how in the new regime that has just been announced can we ensure that spending on housing the most vulnerable people is protected? Could we, for instance, exempt from the caps on housing benefit families and formerly homeless single people in London or elsewhere when they need to remain in their home because of their need for support? That support might come either informally, from family and friends, or indeed from statutory services. When it comes to support, what will central government do to help ensure that local authorities do not raid the local Supporting People settlement to pay for other programmes. Many local authorities suggest that their members and executives will disregard the national settlement for Supporting People and reduce spending in this area by anything up to 25 per cent; it is not ring-fenced.

We need to ensure that access to care and support for the most vulnerable does not become a postcode lottery. If we do not succeed, the costs will be borne, as many speakers have already said, by Justice, the National Health Service and social services. I have for many years been a keen advocate of supported housing, and we know that it can save many of those services considerable amounts of money. This proposed new system will make supported housing much more difficult to fund. Take the example of young people leaving care. If the local housing benefit cap is applied, many housing associations will have to reduce their rents and will never be able to build another scheme for very vulnerable young people without additional subsidy. It cannot make sense to apply the LHA route to supported housing for vulnerable young people and others in need of support. These are just the young people whom we are trying to support to stand on their own two feet and get into work. This is hard enough for young people anyway, and these particular young people will have had a very rough ride. We want to help them to be independent, yet cutting support from them now will make that more unlikely.

There is a strong argument for all supported housing to be exempt from the caps on LHA. Residential care or health alternatives are hugely more expensive than any form of supported housing. It seems to me that the Government should welcome the opportunity to make radical efficiencies in care by having a significant building programme aiming towards the new 150,000 target, if that is reachable, which also allows services to come out of the more expensive health and care sector into supported housing.

Secondly, as my noble friend Lord Brooke of Sutton Mandeville, said, we need affordable homes in London. I learnt at the knee of my father, who used to work for his noble kinsman in housing and local government, about housing issues when I was living in a flat under controlled rent as a child. He is absolutely right about that need. People working unsocial hours, including many who work in your Lordships' House, and those who work shifts, or whatever, need to live nearer to their workplace. Will the Minister assure the House that there will be a serious second look at the situation in London and that, at the very minimum, some transitional arrangements will be put in place? What has been proposed thus far just will not work.

Thirdly, I do not think that anyone else has made this point about the banks, but I know that others will have experienced it. Many registered social landlords are collapsing their structures to save money so that they can spend more on housing for vulnerable people. This requires renegotiating bank loans at no real extra cost to the banks, other than administrative. Yet, time and again, I have heard from other RSL chairs and chief executives that the banks, often largely owned by the nation, are trying to charge large amounts of money for rescheduling loans. My own RSL has no longer got such an issue, but many others have.

Banks are also being reluctant to fund mortgages on shared ownership schemes, which is one way of getting people who do not have much money into home ownership. These are clearly of less risk to the banks than most standard mortgages. However, anecdotally I am told, they are regarding them as sub-prime, when the mortgage is on the whole property and the RSL owns 60 or 70 per cent of it. This means that a lot of people who could otherwise get into owning their own property cannot do so. Will the Minister assure the House that the Government will take a close interest in this area?

I believe that supported housing is the way to support the most vulnerable people in this country. I hope that the Minister will assure us that the Government will look again at what these financial arrangements will mean for the most vulnerable and at what the consequences will be for costs for health and social care.

My Lords, I too applaud the noble Baroness, Lady Hollis, for her outstanding contribution and for bringing the attention of the House to these profound changes and their social consequences.

In view of the valuable contributions made by many noble Lords, I will focus most of my remarks on a specific client group; that is, some of the most mentally and physically disabled people with fluctuating disorders, such as uncontrolled schizophrenia, severe bipolar disorder and, in the physical field, latter-stage multiple sclerosis. It would be thought that such clients would be in the support group and thus, to some extent, protected from some of the ravages of these cuts—but that is not so.

I want to make three points, one of which is general and two of which are specific to these groups. First, right from the start of these changes, tenants will need to know what the full impact will be, since we know that these changes will be introduced in stages across a number of years. The first change, which was referred to by the noble Lord, Lord Best, and others, is the introduction of the caps in April 2011, followed by the introduction of the 30th percentile rule in October 2011.

Imagine a tenant moving into a smaller flat in April, only to find that they have to move again in the autumn. If they have not been told about the linking of LHA to the consumer prices index, which will come in in 2013-14, they will have to move perhaps every year as the rent becomes further and further removed from the housing benefit or LHA to which they are entitled. Will the Minister give the House an assurance that Ministers will revisit the timing of the introduction of the caps scheduled for April 2011? Is there any reason why those changes should not be rescheduled for the autumn to come in at the same time as the 30th percentile rule?

Secondly, these housing benefit cuts need to be related to other changes going on in the benefits system. There are lots of points that one could make, but there is very little time. I want to refer specifically to the revised medical assessment process. That process and the form together are resulting in large numbers of severely unwell, mentally ill and physically ill people being placed on jobseeker’s allowance. We know that the medical assessment takes no account of diagnosis and fails to make allowance for fluctuating conditions. To make that point, I will give two examples, because this relates to housing benefit. St Mungo’s claims that 90 per cent of its hostel tenants have been excluded from ESA and have been put on JSA. These people are so unwell that they cannot cope with independent living. The result is that those hostels may have to close. The next stop could be street sleeping.

An even more extraordinary example is a psychiatric patient on an in-patient ward who was in error invited to a medical assessment. Not realising that this was an error, the patient turned up for the assessment. This patient was given no points for their mental health condition. I repeat, they were given no points. Therefore, that patient was placed on jobseeker’s allowance. I should like to present an invitation to the Minister and her colleagues to come to one of my units—I was on one this morning talking to patients—to meet some of my in-patients, which could be very helpful. It would make the point that something is terribly wrong with this assessment process if one of those patients could be assessed as fit for work and required to take a job. What job, I cannot imagine. We have that rather major problem.

The related point is that jobseeker’s allowance will, as the noble Lord, Lord Best, and others have mentioned, be reduced by 10 per cent after 12 months. If one thinks about the types of people now claiming jobseeker’s allowance, the reality is that none will be able to be placed in jobs within 12 months. Of course, with the employment situation, many non-disabled people will be in a similar situation. I would be grateful if the Minister could give the House her assurance that she will revisit the planned reduction in JSA by 10 per cent after 12 months. I also ask her if she will seriously consider with her officials the morality of the totality of these benefit changes given their impact on just one individual very severely disabled person.

My Lords, I, too, am grateful to the noble Baroness, Lady Hollis, for giving us the opportunity for this debate. It is reasonable that the amount that the taxpayer pays on housing benefit is controlled, given that it has risen by an average of £1 billion a year for the past five years and could carry on growing by a similar amount in the next five years. It is also reasonable to try to reduce the level of rents, which have risen strongly in the private sector, partly as a consequence of the failure of the previous Government to build enough social housing. Furthermore, it is reasonable in principle to impose a cap on the amount that taxpayers, many of whom are low paid, should contribute for a single household receiving housing benefit. This latter principle has broad political support, given the commitment in the Labour Party’s general election manifesto earlier this year.

However, none of this absolves us from the responsibility to examine the proposals for housing benefit changes carefully to establish whether the policies will deliver the outcomes forecast and whether those outcomes are ones that we should support. The private rented sector has been a cornerstone in stopping the use of bed and breakfast, as people have been provided with private rented housing as an alternative to waiting in B&B accommodation. In Newcastle, and here I declare an interest as a member of the city council, we have not used bed and breakfast accommodation since 2006, and I do not wish to return to the days when we did. In the past year, 205 households have been supported by the council to access private rented accommodation who might otherwise have been homeless. That gives a dimension of the scale we are talking about.

My concern is that the local housing allowance changes may restrict access to private rented accommodation and therefore limit the capacity of councils generally to resolve future housing need. It is also likely that the changes will increase the number of people who present themselves to councils as they lose private rented accommodation because of the reduction in the local housing allowance. Councils will still have a duty to accommodate households in priority need, mainly those with children under 18, those aged over 60, those fleeing a disaster such as a fire, the severely ill and the vulnerable. Meeting these duties may result either in an increase in gatekeeping barriers, leaving people in unsatisfactory conditions, or increased costs to councils in the form of subsidised access to the private rented market or through people waiting in bed and breakfast accommodation.

There is therefore uncertainty about the net value of the savings to the public purse by reducing the local housing allowance. Further, there is a real risk of cost shunting from the Department for Work and Pensions to councils, which will have to pick up the cost of assessing more people at risk of homelessness and then housing those accepted as being in need. Has the DWP conducted a cost-benefit analysis of the overall impact of housing allowance changes on the public purse? Has it estimated the gross cost to the public purse based on how many households will become homeless as a result of the changes, and deducted this from any savings made by reducing the local housing allowance? Also, what consideration has been given to the indirect impact of the local allowance changes? I cite, for example, the likely room blocking in supported housing as it becomes more difficult for people to secure independent accommodation in the public and private rented sectors. This may increase the risk of institutionalisation of those who cannot move on and increased rough sleeping for those who cannot access supported housing.

In conclusion, why did the DWP impact assessment not address the central question of how many people need to become homeless, with all the additional costs to the state that homelessness entails, before the projected savings to the DWP are eliminated by rising costs elsewhere in the public sector?

My Lords, we have heard some powerful speeches about the predictably harsh effects of the Government’s planned cuts to housing benefit, so I hope that when she comes to reply, the Minister will at least be able to tell us that the Government will think deeply about the advice and the warnings they have received. I will not dwell on housing benefit in my speech because I would prefer to talk about two other strategic issues: the need for a better balance of housing tenure in this country and the need for good design in housing of all sorts.

Owner occupation is a natural and decent aspiration. Through it, huge numbers of people have seen their personal opportunities, well-being and wealth increase. However, there are also disadvantages for the economy and society in a housing system as biased as ours is towards owner occupation. We should certainly not regard those who rent rather than buy as, in effect, failures, which I suspect they feel we do. We have lurched repeatedly from binge to hangover in the housing market. It is wrong to encourage people to climb on to the housing ladder who are liable to fall off it. Aside from the hurt to them, unsustainable mortgages wrecked the banking system and have well nigh wrecked our economy. By reducing mortgage interest support for vulnerable borrowers, the Government now risk not only causing them to lose their homes but further weakening of bank balance sheets. Better regulation of the housing finance market is needed. The moneylenders must not resume normal service if it means lending against unrealistic multiples of income, “liar loans” and seductive discounts before borrowers go on to variable rates. In every decade, we have seen another rake’s progress. Would it not be better not to repeat this history again?

The tax privileges of owner occupation have vastly distorted investment within our economy. If people can foresee a tax-free gain on the sale of their home, they are less likely to invest in productive industry. If they see their home as their piggy bank, they are less likely to save for a pension. If the banks can have the security of a charge on bricks and mortar, they are less likely to lend to entrepreneurs. Let us compare Switzerland with the United Kingdom. In Switzerland, there is no preferential tax treatment of housing. Two-thirds of the Swiss live in rented housing, and Switzerland has the highest wealth per capita in the western world.

Higher home ownership correlates with higher unemployment, as figures in both the United States and the United Kingdom show. In the UK, stamp duty is an additional obstacle to labour mobility. Productivity is impaired in an inflexible economy. Our VAT regime makes things worse, with new building zero-rated while the repair and rehabilitation of existing housing is taxed at 17.5 per cent—soon to be 20 per cent. That increases the tendency to urban sprawl and destruction of the countryside, which makes it impossible to provide an adequate public transport infrastructure and leads to more congestion and pollution. Suitable land for new building is running out.

Policy should promote diversity of tenure, but the Government’s decisions in the spending review will not do that. They plan to cut housing benefit while massively reducing investment in social housing. In the end, the only way to reverse the rise in the housing benefit bill will be to increase the supply of homes for rent; reducing supply will intensify the existing pressures for rent increases. Additionally to cut housing benefit in these circumstances will both increase hardship and make it unviable in many places for private landlords to provide homes for rent. We need new strategic policies to promote varied and mixed housing tenure instead of short-term improvisations in the face of an exaggerated fiscal crisis.

We also need to promote better housing design. Good design is not about taste, fashion or style but about fitness for purpose: functionality, sustainability and attractiveness. These are simple principles that were well understood, for example, by the designers of Georgian and Victorian terraces. They were lost sight of by too many designers of the high-rise blocks to which so many people were consigned from the 1950s onwards, and they are ignored by too many volume house-builders who flog poorly and badly built homes. There is no excuse for bad design, and the costs of bad design are enormous. There is a correlation between badly designed estates and low educational attainment, ill health, crime and poverty. We cannot afford not to invest in good design. The role of the Government here is to provide leadership in proclaiming the necessity of good design and in supporting decision-makers to achieve it.

Planning and regulation—not popular with this Government—represent the legitimate claims of the whole community for a high-quality built environment. Just as our children should not be burdened with debts improvidently run up in our generation, so we should not bequeath to them a heritage of shoddy and unfit building. The Government need to act to correct important market failures in housing. The market is not providing enough homes or the right kind of homes. Land in Britain being scarce, in normal times demand will exceed supply. That means that it is too easy for developers, trading on the price of land in a market fuelled by easy credit, to build and sell rubbish—and too many of them do so.

A survey by the Commission for Architecture and the Built Environment found that 29 per cent of new estates were so bad that they should never had had planning permission, while another 53 per cent had serious shortcomings. We need to strengthen the hand of planners. By all means streamline current planning guidance and improve it, as the noble Lord, Lord Taverne, suggested, but do not weaken it. Help the profession to improve its skills in design matters. Encourage local authority leaders to set out strong, clear visions for the built environment in their communities, and support them in insisting on quality and standards. Establish space standards for new housing. England and Wales are the only countries in Europe with no minimum space standards, and so we have the smallest average room sizes and new homes. Ensure that existing as well as new homes are as near carbon free as possible. Why are the Government withdrawing their funding from CABE? That £12 million provides superb value for money in averting the costs of bad design and gaining the benefits of good design through, for example, the Building for Life standard which CABE has developed as a tool to evaluate the quality of proposed new housing projects.

Will the Government, through the new homes bonus and community-led building, ensure that design quality is safeguarded, or will their philosophy of deregulation and decentralisation mean that they wash their hands of this responsibility?

My Lords, I share with others my thanks to the noble Baroness, Lady Hollis, for introducing this timely and important debate. I declare an interest as chair of the National Housing Federation.

I shall speak from a slightly different angle to previous speakers because I shall concentrate not on housing benefit in its own right but on the impacts that the proposed changes may have on the Government’s ability to deliver their targets for affordable housing. Contrary to what the noble Baroness, Lady Dean, said, the National Housing Federation’s briefing to its members states that it believes that the numbers can be delivered by a shift to a revenue-based system—that is, higher rents—from a capital grant system. Fundamentally, such a shift seems to underlie the Government’s decision to move away from the previous practice of a grant-based system to one in which higher rents are paid and more affordable housing is delivered.

However, that moves us immediately to the questions surrounding housing benefit. The truth of the equation is that previous Governments shied away from such a shift because of what they believed about how the long-term revenue support costs through housing benefit weighed against the short-run capital benefits. One reason for that was that the different way in which capital was accounted for made it more attractive for them to go down a capital route for reasons that might not have had a bearing on the real cost to Governments and individuals—not least because of the way in which that limited the likely number of affordable homes that could be delivered.

The core to understanding what is now happening is the conversations that took place—I certainly hope that they took place—between CLG and the Department for Work and Pensions on the underlying guarantee that housing benefit would be available to those who go into these new homes at 80 per cent of market rent. In the review of affordable rural housing that I conducted for the Government a couple of years ago, one of my recommendations was that the Government should examine the opportunities to deliver more intermediate housing because that would come at less cost in grant and meet the needs of many working people in rural communities. Such people cannot afford homes on the open market because of the very high prices but do not necessarily need social housing at low rentals. Intermediate housing to rent or to buy would perfectly address many of those needs and more housing could be delivered for less money. That recommendation received a broad welcome but no action. This Government have taken up the notion but, instead of trialling it or running it alongside a social housing programme, they have put all their eggs in the one basket in deciding to go down that route.

This begs the question whether this is intended for the people that I envisaged it for—working people who need little or no housing benefit support but who would be underpinned by the guarantee of housing benefit if they need it. Do the Government intend to introduce a nominations process that will target these new homes to those who can at least expect to afford them, or will there be an open nominations process in which many people on housing benefit who are likely to struggle to get work, or likely never to get work, will go into housing where they will have to retain access to housing benefit? That would then lead to the question about whether housing benefit will be available. The nominations process is key. Who is this housing intended for?

On the backstop of housing benefit, I would not encourage someone in my part of the world to go into a home on 80 per cent of rent if they are in a low-income job but can just about afford it. Many of those people would be at risk because they are in temporary employment, such as in tourism-based employment or in small businesses, and cannot be sure that in a year or two they will be able to afford such rents. Many of those people—perhaps with young children—could not be sure that housing benefit would protect them.

I chair the rural coalition—the position is unpaid but is another interest—and I have carried out work on the rental position in rural communities, where I hope the Government will conduct rural proofing. We have heard a great deal about London and the known issues around high rents, but what about rural communities? Local housing rental assessments take into account urban communities, where there is quite a lot of relatively cheap rented accommodation. However, rent is much more expensive in rural villages. How will working people be able to find a rented property in rural villages if restricting housing benefit to 30 per cent of median rent levels means 30 per cent or even 40 per cent in urban communities but nothing at all in rural communities where there is work to be done and people need to live close to their work on the farm and so on?

There also appears to have been no proofing of the impact in northern areas, where social rents are already 80 per cent or more of private sector rents. No money will be released to housing associations through this mechanism of higher rental incomes, so no housing is likely to be delivered by housing associations operating in these areas. There appears to have been a move to embrace only an intermediate affordable housing programme—which I always envisaged running alongside a social rented programme—and no work seems to have been done on the specific localised impacts on rural communities, London and the north.

Therein lies my hope that there may be an opportunity for the Government to respond to the concerns expressed today, some which are not about the principle. I believe that the proposed move can deliver the housing numbers. For my review I worked with Shelter, which also shared the point of view that more intermediate housing would reduce pressure on the social housing already in place and would be a good thing to deliver. I hope the Government can respond to the concerns expressed in the debate. If they do not, the high hopes for this housing scheme that they have—even if they are not shared around the Chamber—cannot be delivered.

My Lords, I shall follow the now well established practice and thank my noble friend Lady Hollis for introducing the debate. I also thank her for her devastating critique of government housing policies and for exposing the awful hardship—“indecent”, she called it—that the Government will visit on many of our fellow citizens.

We have also heard many other knowledgeable and wide-ranging contributions. From the noble Lord, Lord Greaves, we heard about regeneration issues and the importance of being able to carry forward the regeneration that has happened in the past. We heard from the noble Baroness, Lady Greengross, about pensioners and the need for a cumulative impact assessment. The right reverend Prelate the Bishop of Bath and Wells talked about rural housing, as did the noble Lord, Lord Taylor. The right reverend Prelate also reminded us that, by definition, with housing benefit we are dealing with people who do not have lots of savings because, if they did, they would not qualify for the benefit in the first place.

The noble Lord, Lord Brooke of Sutton Mandeville, reminded us that a welfare reform programme was under way. Indeed, we broadly supported the thrust of the universal credit; we can claim to have initiated it, in part, in government. He divided the world between simplifiers and complicators, but for me it is not whether it is simple or complicated but whether it is fair—that is the important issue.

My noble friend Lady Wilkins referred to the particular impact of housing on disabled people, who are disproportionately dependent on social housing and housing benefit, and talked about how devastating these issues can be for them. The noble Lord, Lord Howarth, took a rather broader view about the need for a better balance of tenure and the need for better design. I agree with him on the second point in particular. The fact that, somehow, poor people should have to make do with rotten design is simply not acceptable.

The noble Lord, Lord Taylor of Goss Moor, made a very interesting contribution about the funding arrangements, how the revenue would work and how housing benefit would impact on it. One of the consequences of intermediate rents is that people able to access housing benefit are likely to be closer to the overall £500 benefit cap, with all the dangers associated with that.

Ensuring that people can access decent, secure, affordable housing should be the business of government. The availability of housing, especially affordable housing, is integral to tackling poverty and promoting well-being. Where and how it is provided influences the shape, cohesion and sustainability of our communities. My noble friend Lady Dean developed this point, as did my noble friend Lady Wilkins.

The need to protect Supporting People was touched on by some noble Lords. I wholeheartedly agree with that. It is a sign of the times that we see that budget as being reasonably well protected when in fact there is a 12 per cent real-terms cut over the period.

The noble Lords, Lord Shipley and Lord German, made reference to the previous Government’s record. Progress has been made: 2 million more homes being built in England since 1997, half a million of which were affordable; and 1.5 million social homes being brought up to a decent standard. But with the number of households increasing by 1.3 million, this was simply not enough—I acknowledge that. Waiting lists for affordable housing are rising. There is an acknowledged requirement to build in the order of 240,000 to 250,000 new homes every year to deal with the existing shortfall and the continuing growth in households.

As we have heard, part of the strain of coping with this has been taken up by a dramatic increase in the number of private-renting households—an extra 1.1 million in the past decade. This has put pressure on rent levels and consequently on levels of housing benefit—my noble friend Lady Hollis stressed this point. It is an issue that, as we should acknowledge, any Government would have to address. Long-term rising house prices and more restrictive mortgage finance, making home ownership more difficult, have added to the pressure. The noble Lord, Lord Taverne, gave us some interesting insights about the need for those who do not access social housing but cannot afford to buy on the open market to have some intermediate arrangements for doing so. There have been shared ownership and shared equity schemes, but an interesting point was raised about whether planning classes could improve matters.

It is against this backdrop that we should examine the Government’s approach. With the focus very much on the private rented sector, the Government were unwise to scrap our proposals for a national register of landlords and for regulation of letting and management agents, designed to give more protection to tenants. My noble friend has examined how the Government’s approach to housing and housing benefit sits with the wider welfare reform agenda and has explained how it undermines incentives to work.

What about the supply side? We have heard of the dramatic cut in resources for the affordable housing programme over the CSR period—63 per cent in real terms. To deliver their planned new 150,000 homes, the Government are relying in part on the availability of an additional source of finance, the so-called “affordable”, but perhaps better named “intermediate”, rents, which are up to 80 per cent of market rents. My noble friend Lady Dean spoke about the need to understand better the model that drives the conclusion that that is deliverable. Can the Minister confirm—I ask her specifically—that, across the four-year spending review period, the funds generated by intermediate rents will be allowed to be used only for more new homes subject to such rents? If so, it would imply that, apart from the programme that the Government inherited from us, there will be no further construction of social homes until at least 2015. How could that be justified?

The signalling of the revocation of regional spatial strategies, together with the delay in producing clarity around new planning arrangements and how the new homes bonus will work, is causing the cancellation of planned homes this year and next. What is being done to address that issue?

Many noble Lords have concentrated their remarks today on proposed changes to housing benefit and the local housing allowance. The noble Baroness, Lady Thomas, spoke about the unseemly haste with which they were promulgated, challenging whether there was sufficient analysis underpinning some of the proposals. Eight savings measures, totalling £2.3 billion by 2014-15, have been signalled in either the emergency Budget or the CSR, with two small reliefs—which I am sure we welcome. Time does not permit me to comment further on all of them. My noble friend has shown how they do not support work incentives and, in the case of the increase in non-dependant deductions and the restrictions on property size for working-age claimants, how they create impossible dilemmas. The uprating of LHA by CPI will over time, as we have heard, open up huge disparities between real rent levels and what will be paid, driving many into poverty. Proposals to reduce JSA claimants’ support by 10 per cent after 12 months are unprincipled and cruel. I hope that they never see the light of day. We heard from my noble friend Lady Quin how perverse the proposals could be in practice.

What has been good about most of today’s debate is that it has shone a spotlight on the realities around housing benefit and the local housing allowance. Too often, the debate is characterised by a small minority of cases of very high levels of payment, generally around London. The reality is that there are about 1 million LHA claimants, nearly half of whom face a shortfall in their rent. Contrary to what one would assume from listening to the justification for these measures, only one in eight housing benefit claimants is unemployed—a point made by the noble Lord, Lord Best, and the noble Baroness, Lady Greengross. The noble Baroness, Lady Meacher, focused particularly on those with mental health and fluctuating conditions and the impact that the 10 per cent reduction in JSA would have on people being migrated from ESA and IB to JSA. It is a source of real worries.

Uncertainties remain about many points of detail. I ask the Minister to deal specifically with just some of them. Part of the thinking of the Government is that housing benefit has fuelled private sector rent increases. What evidence can be adduced to support this contention? On what basis do the Government repudiate evidence from, for example, London Councils, which points to landlords not reducing rents? If the one thing that might encourage some landlords to reduce rent is the reinstatement of direct payment, what is the Government’s view of this? How could it possibly work if housing support is to be included as part of the universal credit? Indeed, how could it work with the proposed overall cap on benefits?

The noble Lord, Lord Best, the noble Baroness, Lady Meacher, and others—and I agree with them—focused on timing. Why is it necessary to introduce the cap on rent levels with effect from April next year and the change to the 30th percentile in October? There is a real risk that some households will be displaced twice within a short space of time, with all the costs and individual traumas that this will entail. The reality is that many households will be making their housing arrangements now, not in full knowledge of what these proposals will mean. They may be making arrangements for their children to go to a local school, to sign up for childcare support, to get a job or to buy a season ticket for travel. It must be right to give individuals the opportunity and enough notice to work out what this first tranche of measures will mean for them and to ascertain whether they will be able to avail themselves of the discretionary housing payments. If nothing else is achieved by this debate, we hope that the Government will give very clear commitments today to aligning the two measures to be introduced in October next year.

Even though the caps may affect only 2 per cent of claimants, estimates show that some 15,000 tenants could lose their home in London. The effect of the 30th-percentile restriction will be much wider, affecting some 83 per cent of LHA claimants. Inevitably, thousands of households will be uprooted from their homes and communities. Families moving out of higher-cost to lower-cost areas are likely to place unplanned calls on local services—children’s services, social services and school places. What assessment of the costs involved has been made by the Government? That point was pressed by the noble Lord, Lord Shipley. What is their estimate of the increased homelessness that will ensue from these measures? As the Government have signed up to compensating local government for additional burdens placed on it, what discussions have taken place with local authorities on how that is to be evaluated? Indeed, how are these issues to be factored into the local government settlement for individual authorities?

There are many more questions. We are embarking on profound changes to a system that will affect the well-being of thousands, driving many into poverty. What definition of “fair” justifies this?

My Lords, I thank everybody who has spoken today and I accept that this has perhaps been a difficult debate on an important subject. I really have to start my response to it by looking at the other end of the telescope from the noble Baroness, Lady Hollis, and some others. The reason the changes have to be made, both to the capital programme and to housing benefit, is precisely that the Government have been left with a huge deficit. There is no point in people sighing and looking at the ceiling; this is a fact. It is also a fact that even if the now Opposition had come back into government, they would have had to face up to the fact that there was a deficit which was going to have to be dealt with. Indeed, Alistair Darling, the former Chancellor, has said that they would have had to introduce very serious measures which would, as I understand it, have been very much along the lines that we have to deal with it—first, to bring the deficit under control and, secondly, to try and put the economy back on a proper basis.

We have had many very detailed questions today and, inevitably, I cannot answer all of them. However, we need to look at what has been happening and why the Government have to take enormously tough decisions to reduce the public deficit. The Budget and the spending review have brought reductions across the piece, not only in the Department for Communities and Local Government. While it is fair to say that our department has had a quite substantial reduction in capital which will affect the programme for the future, we want to try to ensure that local authorities themselves can do as much as possible with the money available without too much direction from the centre. Some of the individual questions that your Lordships have raised will, indeed, be dealt with in due course by local government itself. Localism—the bringing down to a more local level—will in fact answer some of the questions raised.

It is clear that if we do not tackle the deficit, mortgage rates will rise, making housing even less affordable than it is now. The interest payments on £1 trillion of debt would also suck money away from front-line services and future investment. There was mention, too, of first-time buyers. They depend above all on the return to economic and financial stability, which the Government are seeking to achieve through debt reduction and a commitment to abolish the structural deficit. We hope that this will keep interest rates low and improve credit availability.

Despite the fiscal constraints—and despite what was said today in what I thought was a slightly apocryphal and apocalyptic introduction by the noble Baroness, Lady Hollis, for whom I have a great regard, because she produced a forensic speech, as I think the noble Baroness, Lady Dean, said, although it was far more apocalyptic than is necessary—there will still be £6.5 billion of taxpayers’ money put into housing. That includes £2 billion for decent homes. That program will continue and we will therefore have more accommodation coming through which that money has made decent. There will also be £4.5 billion to fund new-build homes over the spending review period. It has been estimated that that will amount to 150,000 homes. That will of course include—I think there was a question about this—the programme instigated by the previous Government. Those properties, amounting to about 60,000, will be part of that. It will also include empty homes which are being brought back into use by this money.

We are also prioritising services to the vulnerable. We had two or three speeches today on the disabled and their difficulties with accommodation. We will still be supporting the elderly, the disabled and the vulnerable with £6.5 billion in the Supporting People programme. That problem is already de-ring-fenced and local government already has access to it. We expect that it will be used for the programme already outlined. There will also be the homeless grant, which is maintained over the spending review period at a total of £400 million, while the disabled facilities grant is being protected over the same period. We are backing local growth and will introduce the new homes bonus, which we have not discussed much today. It will be a powerful fiscal incentive for local government to be able to build and generate the building of new houses.

Today’s speeches have focused mostly on the effects of housing benefit and the likely effects in the future. There is too much experience around this House for me to say that none of the case studies is likely to come about, and I would not dream of doing so. The reduction in benefit will have some impact. However, I am afraid that it will need to have some impact if the deficit is to be reduced, as it has to be. It would be fair to point out that we are currently paying more in housing benefit in one year than we spend on the whole of the police and universities. I think that the amount has actually doubled over the past five years. It was suggested that it has doubled not only because of the increase in property prices but because of the increased number of people in poverty. We will have to control it with the amount being spent on it and bring it back to a level that can be afforded.

We expect about 17,000 households to be affected by the cap in London, while 32 per cent of cases will experience no shortfall at all between their benefit and rent. A third of the properties in London—it will be better elsewhere—will still be affordable to people on the local housing allocation. I agree that housing benefit levels could mean that some tenants may need to move from the most expensive areas, but that is no different for working people who have to move if they cannot afford to live where they want. There are many people of working age who are living out of London and coming into it every day of the week, spending a fortune on travel, because they cannot afford the rents in London. I am sure that it is an extreme example—it is from my own previous local authority, which I represented—but the sum of £2,000 a week on housing benefit is far more than investment bankers earn in a year, and it is coming from taxpayers’ money. There is an equation here which we have to look at as regards the equitability of somebody working and paying rent or a mortgage subsidising to such an extent others who are not in jobs and are on housing benefit. There has to be a rationalisation of that, and some of that will come about as a result of the reductions in housing benefit that we have talked about today.

We are, however, putting transition money in place to support this where it happens. We have provided a substantial increase in the discretionary housing payments budget to allow local authorities to provide additional support where it is needed. Along with the additional £10 million that my honourable friend Grant Shapps announced last week, the Government have committed £140 million of additional funding for local authorities to provide support where they need to manage these changes. The suggestion that people are going to be left on their own to manage for themselves under these circumstances is not correct.

People worried about the changes or who are likely to be impacted by them will be able to get help from their local authorities to renegotiate their rents with their landlords. There is more than a suspicion that rents have risen quite substantially on the back of knowing that housing benefit will be paid. Rents are now very high; they rose substantially during the previous Government’s reign, and that is where we are now with the level that they are at.

I apologise for interrupting the Minister. Is she suggesting that the policy was built around a suspicion about the impact of housing benefit on rents, or was there evidence that supported that suspicion?

My Lords, there is a suggestion. I think I will put it like that. There will be help for these people to move to a new property, with the potential for relocation grants for more vulnerable households.

We are also protecting the vulnerable; we have had quite a few speeches about that. We are protecting the homelessness grant with over £400 million. We have also committed £6.5 billion of investment to the Supporting People programme, which will help also with tackling homelessness. This reflects the Government’s commitment to tackling homelessness and to protecting the most vulnerable groups in society.

We intend to support the mortgage rescue scheme so that it can remain open to support vulnerable homeowners. We are also talking to the Council of Mortgage Lenders about the question that was raised on intermediate housing and shared ownership to see whether we can free that up.

The right reverend Prelate the Bishop of Bath and Wells raised the question of rural housing and what can happen there. We hope that rural housing will be picked up by the community right to build, where the neighbourhood will be able to decide what it wants and where it is. That will also help to keep young people and local people in their own home area. We are also keen to see that the decent home programme is maintained; as I say, there is £2 billion of capital to support that.

The noble Lord, Lord Greaves, asked particularly about the former pathfinders and the areas where that programme has been carried out. Our expectation is that the current contracts, where there are any, will be honoured and carried out. Other than that, as he also suggested, access to the money will be from the £1.4 billion regional growth.

I have a few moments to go through some of the questions that I was asked. If I cannot provide the answers as quickly as I should within the next six minutes, I will ensure that I write to all noble Lords who asked them.

With regard to the question raised by the noble Baroness, Lady Thomas, people should not be found intentionally homeless if they are genuinely unable to afford the rent and no other reason is attributable. We intend to keep this practice under review and to reissue guidance if necessary, but the intention is that the support should be available so that people are not made unintentionally homeless.

The noble Baroness, Lady Dean, asked about the key priorities, including the affordable housing programmes and the regional growth fund. In many areas we are focusing on delivering existing commitments; as I said earlier, 60,000 of the 150,000 homes will be those that are already in the programme, and the figure of 150,000 also includes bringing empty homes back into use.

Regarding the equalities impact on affordable rent, which is the other measure of housing that we will be looking at in future, we will be publishing the equalities impact assessment as part of the overall impact assessment, which comes out shortly. The noble Baroness, Lady Wilkins, asked about affordable rent. It is a tenure that will offer people stability where it is needed. There will be affordable rent where there are flexible tenancies, where some people will need life tenancies but others will need only a short time before they move off into other areas. We think that that would be a valuable contribution.

On the question raised by the noble Lord, Lord Shipley, the Department for Work and Pensions, which I represent, will publish a full impact assessment alongside the regulations in November. Much of the impact will depend on how landlords and tenants respond to the changes, so I cannot predict entirely how many households will need to move.

The noble Lord, Lord Best, as I had expected, raised many salient points. I just underline the fact that the claimants of housing benefit of working age are 20 per cent working and 80 per cent not working—I think that those figures were said the other way round.

The noble Baroness, Lady Meacher, was concerned about the assessments for people moving from ESA to JSA. Clearly we cannot comment on individual cases, but the JSA will support people in hostels, often suffering from drug or alcohol addiction, to adjust to new circumstances, and they will be protected by the £400 million homeless grant.

I cannot tell the noble Lord, Lord Howarth, how much I agree with him, for once, on the need to have well designed housing. Perhaps one of the things that we have suffered from most from the 1960s and 1970s has been the delivery of unimaginably awful housing, and I accept that it is important that we see that any housing that is built now is built to a standard that we would all recognise as being for the future.

I think that I have answered the questions of the noble Lord, Lord Greaves, and the noble Baroness, Lady Greengross. If I have not answered all the points now, I will ensure that I do so in writing. I thank everyone who has taken part for their informed speeches, and I look forward to continuing this debate in due course.

My Lords, I thank all those who have taken part in today’s debate. It has been distinguished, illuminating and powerful, although so many questions remain to be answered that I am sure that the debate will have to continue over the months ahead.

It was quite striking that the Minister had little support from her own Benches. What there was was heavily qualified, even in the gallant efforts of the noble Lord, Lord Brooke. What came out of today’s debate for me was, first, the request from all around the House to slow down. As the noble Lord, Lord Best, the noble Baroness, Lady Thomas, and my noble friend Lord McKenzie said, let us take our time and defer the proposals—which are possibly due in April—to ensure that we reduce the misery of continuous hassle and movement for the families who will be on the receiving end of these changes. Let us slow down.

The second message for the Minister is to reflect, review and research. My noble friend Lord McKenzie asked the key question. The core of the Government’s policy is their belief that by cutting or capping housing benefit, they will reduce the level of rents in the private sector and thus reduce the deficit. When asked on what evidence that was based, the Minister said, “It is a suggestion”. A suggestion, my Lords! We are going to inflict carnage and misery on thousands of families on the basis of a suggestion. It is not acceptable for any Government to behave in this way.

Finally, the Minister must be aware from the temperature of today’s debate of the very serious reservations all around the House that these policies will need to be modified. I hope that the Government will modify them. If they do, they should have a much better evidence base from the relevant departments. If they do not, I hope that the House of Commons will modify them. I say to the Minister that if these policies come unmodified to your Lordships’ House, I very much believe—if today’s debate is anything to go by—that this House will insist that the Minister modifies her positions. We shall see. I hope it does not come to that. I hope that the Government will take today’s debate seriously. On that basis, I beg leave to withdraw the Motion.

Motion withdrawn.