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Housing Benefit (Amendment) Regulations 2011

Volume 730: debated on Wednesday 12 October 2011

Considered in Grand Committee

Moved By

That the Grand Committee report to the House that it has considered the Housing Benefit (Amendment) Regulations 2011.

My Lords, it is my pleasure to move the Motion standing in my name. I am grateful for the Chairman’s guidance about what we are doing today, which is exactly what I was intending.

The policy that the statutory instrument enshrines was first promulgated in the October 2010 comprehensive spending review, since when quite a lot has happened. Actually, it is my impression that the pressure group community and those in the wider world who follow these things actually think that some of these regulations are already in place. Because there was a nine-month transitional period, which was welcome, people perhaps do not recognise that the scheme enshrined in these regulations will not be implemented until January next year. Therefore, I think that it is apposite for colleagues to pause and reflect, and to tax the ministerial Front Bench with some questions that arise naturally from the proposed changes.

The first thing to say is that the economic circumstances have changed. I am certainly seized of the importance of deficit reduction, and it was obviously right of the incoming Government in 2010 to act quickly to make the savings that they have. You can have arguments about the degree, pace and scale of some of the changes, but I certainly think that, given the economic environment in which we now find ourselves and given the housing market changes that we have seen, particularly in the private rented sector, it is right to pause and look at the regulations carefully.

As colleagues will know, because it is clear from the regulations, housing benefit for single people under 25 who are in the private rented sector is currently restricted to paying for a single room in shared accommodation, rather than a self-contained, one-bedroom property. I remember well that quite a controversy surrounded the introduction of the original shared-accommodation rules in 1996, and it has been my sense that, ever since, the department has been hankering after the opportunity to make a change of this kind. However, there are cogent reasons for stopping and reflecting on why we need to think carefully about this.

First, it is now clear that the shared-accommodation rate tends to be significantly lower than the one-bedroom rate. In checking some of the facts in preparation for this debate, I was taken aback by the scale of some of the proposed changes. Indeed, in some areas recipients will see their benefit entitlement more than halved if their circumstances are caught by the proposals in these regulations. For some people, this will mean a significant change in January 2012.

Secondly, a worrying, but perhaps not surprising, degree of concern has been expressed on a number of fronts, which I think the Committee will want to reflect upon carefully. The University of York did an important survey that repays careful study called Unfair Shares. It came to the conclusion that this was potentially the most damaging housing benefit cut in terms of potentially promoting additional homelessness. The University of York is an experienced hand in these matters and its opinion should be taken seriously.

In addition, the Social Security Advisory Committee advised the Government that they should not proceed with these regulations and made suggestions to the Government about what they would need to do if they proceeded with them. The Government, I am pleased to say, came up with two additional exemptions and they are very welcome. I will come back to exemptions in a moment but I do not want to lose the point that the Social Security Advisory Committee, after mature reflection, thought that these regulations should not be proceeded with. That should give us pause for thought.

The Merits Committee, which does valuable work looking at the regulations as they come before us in this House, came to the conclusion that there were significant uncertainties about the wider consequences of these regulations. It went on to mention that it was uncertain about where any second-order costs would fall—for example, the cost of providing emergency re-housing for individuals who cannot find a room within the housing benefit budget that they are set. The Merits Committee was encouraging Members to look carefully at these regulations, and that is what we are doing this afternoon.

The pressure group Crisis did a serious piece of work in a survey. It judged that these regulations were going to cause major problems and increases in homelessness and rough sleeping. Crisis knows a great deal about that client group and their needs and its conclusions need to be respected too. We are in a situation where there is continuing and increasing concern because of the changes in the private rental market and the economy that we are now facing. These regulations therefore need some careful thought.

I turn to the exemptions. The two new exemptions are welcome but, because they deal with homelessness and people who have spent more than three months in supported accommodation and therefore are on the road out of rough sleeping and matters of that kind. By definition rough sleepers who do not have the three-month qualification will not be exempt and that is a concern. The ex-offenders’ extension of an exemption is welcome but, again, ex-offenders who are not considered to be a risk do not qualify for the exemption and that is a concern. People who have disabilities but do not qualify for the higher rates of DLA will not get the exemption that already exists under the shared accommodation rate exemptions, and that is a concern. Two obvious other groups that occurred to me are pregnant women, who I think should be the subject of an exemption under these regulations, and non-resident parents, whom I want to come back to briefly in a moment.

My third point is the lack of available accommodation. That is getting worse, for the reasons that I explained—the private rental sector is getting tighter and tighter. Households of multiple occupation are being much more rigorously policed by the local authorities and that is a good thing, but it means that there are fewer of them. In rural areas like the one in which I live, there is almost a complete dearth of any appropriate accommodation that would service the needs of people who would be looking for shared accommodation in rural areas, and I am sure that that is true of other parts of the United Kingdom as well. I want to tax the Minister of State with a question about what evidence he has that, when these changes are introduced, appropriate levels of accommodation will be available to people who will need to take account of it. Of course, by virtue of the fact that we are forcing more people into this marketplace, there is even more pressure on available suitable accommodation for shared occupation in future.

Of course, the Government are right to say that they have put extra money into the discretionary housing payment scheme, which is welcome. Some £190 million over the period of the comprehensive spending review is a significant sum of money, but the evidence is that it will not match the needs that will be generated, particularly by these changes.

I turn briefly to some of the problems—I hope that other colleagues will be encouraged to enter the debate and expand on them a little. My evidence is that there is an advantage to some people in sharing accommodation. In a “friendly” share, you get people’s support. If you are comfortable with your fellow inhabitants in the share, a lot can be gained and a lot of positive support can flow from that. On the other hand, in circumstances where your entry into shared accommodation is unplanned and you are working in a strange environment with people whom you do not know, that almost by definition increases stress and makes life a lot more uncomfortable. It generates questions of safety, particularly for young female claimants. It can also affect people’s ability to get to work. If they come from self-contained accommodation and go into shared accommodation where they are uncomfortable, it disrupts their state of mind to the extent that it may even affect their work patterns if they happen to be in work at the time. A general question of health and well-being therefore surrounds whether people are able to find friendly people to share with or whether they are forced into accommodation with strangers whom they do not really know and trust.

I would have been much more comfortable if we had taken the time to pilot the regulations. I do not have any recollection of whether we did so in 1996 but, given the circumstances that we find now, again in rural areas in particular, I would have been more comfortable if a little extra time had been taken to look at how the regulations might work out in practice. There are all sorts of divergences in policy provision in different social security areas. In Scotland, the policy that the Government are working towards is to give everyone an entitlement to settled accommodation by 2012. I do not know how these regulations will fit into that plan. I am not arguing that it is a good, bad or indifferent plan, but it is different and I hope that there has been proper consultation so that these regulations do not run counter to what the Government north of the border are thinking of doing.

A small but important legal point is that you can engage in a tenancy north of the border if you are 16 or 17; you cannot do that in England until you are 18. So there is the prospect in Scotland of a 16 year-old entering a shared tenancy with a much older adult, the potential risk in which is obvious for everyone to see. I would happy to see an extension of the regulations much lower down the age range to try to protect against inelegancies such as that. That is another example of how we have to treat the devolved nations of this United Kingdom with some care.

On shared accommodation for non-resident parents, I do not know how valid or strong the following legal point is, but I am advised that the right to maintain personal relations and direct contact with both parents could contravene Article 9.3 of the UN Convention on the Rights of the Child. I do not know whether that is so, but it is certainly an argument. I should like some reassurance that a lawyer in the department has looked at that. We will discuss non-resident parents, child maintenance and child support in another Room later in the week, and for weeks and weeks—we are looking forward to that—but I make that request for information today.

I have two quick final points. First, would it be impossible to start thinking about an exemption—it could be wider than just these regulations—for complex needs? I am really worried that the people who will suffer and fall through the net worst of all are those who are short of the high level of DLA that will provide them with the exemption. They can be people with all sorts of different circumstances, illnesses and conditions. I guess that it would be a bit of a nightmare to define complex needs in an exemption, but I would certainly like someone to think about that. I will do a bit more thinking about it to see if it would fly, because it could even fit into universal credit in a much more general sense and provide more protection than such people currently have.

My final point is a request. I am aware that we have an important housing benefit review that the Minister of State was good enough to set up after concern was expressed on the Floor of the House earlier this year. Can that review be partially tasked with monitoring some of these changes, come January 2012? I am also told that there is a DWP advisory group—indeed, a ministerial group—on homelessness. There are perhaps some mechanisms available to the department and the Minister. If he has any of these mechanisms available to him, can he try and work into their work the monitoring and tracking? The trouble is that once these people go off benefit you sometimes lose contact with them altogether and you do not know where they go. That is a real problem because they will probably turn up in prison or on the streets. That is not a good outcome for anyone—not for the client, the Government or anyone.

In the consideration and gestation of these important regulations, we need to be careful about all these subjects. If the Minister can provide some reassurance, the Committee would feel a little easier about allowing these regulations to be introduced in January. I beg to move.

My Lords, I support the noble Lord, Lord Kirkwood of Kirkhope, and I am grateful to him for giving us the opportunity to discuss these regulations. I shall speak briefly, which I am sure will be of great relief to the Minister.

I am very concerned about the potential implications for homelessness and rough sleeping that the noble Lord referred to, and also about the wider poverty implications, including food poverty. I have been catching up on my press cuttings while I have been away and there is information that more and more people are having to turn to charities for food. I fear that regulations such as this could exacerbate that situation. It is horrifying that in a welfare state we now have so many people turning to charity for their food needs.

Like the noble Lord, I welcome the fact that the Government have responded to some of what the Social Security Advisory Committee said with regard to exemptions, but I agree with the noble Lord that that does not go far enough. What he said about complex needs is worth exploring further. I want to draw attention particularly to some of the gender implications of the regulations, some of which the noble Lord touched on. The equality impact assessment shows that women are a minority of those affected. However, the SSAC makes it clear that there are issues here for women. It states:

“Women are specifically affected in two important ways. Pregnant single women”—

to whom the noble Lord referred—

“are restricted to the shared accommodation rate until they give birth, and face one of three undesirable situations. They can move home twice at a time when they may be financially, emotionally and physically ill-equipped to do so”—

we will be talking about the needs of pregnant women in the Welfare Reform Bill Committee tomorrow—

“into shared accommodation and back to self-contained accommodation when the baby is born. They can decide to move into shared accommodation and remain there after the birth of their child. Or they can try to make up the shortfall in their rent. The second group of women who are likely to be disadvantaged by the proposals are those escaping domestic violence, who may well find themselves having to live in insecure accommodation, putting them at risk of further abuse by their estranged partner”.

With regard to that, earlier research by the Joseph Rowntree Foundation showed the real concerns that younger women have about the prospect of having to share accommodation with strangers. Clearly, that is particularly the case where there has been domestic violence. It said that the prospect of having to share with older people was noted to be particularly daunting, especially for female claimants.

The Merits Committee had a subheading in its report entitled “Evidence-based Policy?”. The question mark says everything. I do not think that this is evidence-based policy-making. The Social Security Advisory Committee report, which is such a bible on these occasions, stated:

“The proposals that have been presented to us are essentially cuts to the Housing Benefit budget and we do not find the rationale for the change to be either convincing or compelling when set against the potential negative impacts. There is no evidence that these measures will improve work incentives or that those under the age of 35 have similar patterns of housing to those under the age of 25. The evidence from private landlords is that the market for private rented accommodation is buoyant, that few landlords will reduce rents as a result of these proposed measures and that many are increasingly excluding Housing Benefit claimants”.

It is not surprising, therefore, that the Merits Committee states:

“DWP has offered surprisingly little evidence to demonstrate the feasibility of its proposal, in particular whether the rental sector has capacity to accommodate the change”.

Given what the Merits Committee and the Social Security Advisory Committee have said, I agree with the noble Lord that we should think very hard before introducing such regulations. I remind the Committee that the Merits Committee suggested to us that it may want to press the DWP for further information on how the policy will work in practice and on its wider consequences. I hope that the Minister will be able to provide us with that information before the regulations go ahead.

My Lords, I, too, am grateful to my noble friend Lord Kirkwood for tabling the take note Motion. On the face of it, the proposal to extend the age range for single people who receive local housing allowance from 25 to 34 seems entirely reasonable. I, myself, lived in shared flats or houses at that age, as I could not possibly afford a flat or house in London on my salary from the Liberal Party. However, although my fellow housemates and I tried to be careful when interviewing potential new sharers, we did not expect them to belong to particularly vulnerable groups or be on housing benefit. The only tension came when boys wanted to get girlfriends in, or vice versa.

The Government, to their credit, have, as we have heard, made two exemptions. I shall mention the exemption for homeless people who have spent more than three months in a hostel, which is particularly welcome because of the difficulty of moving those in hostel accommodation on. Here I declare an interest as patron of the Winchester Churches Nightshelter, which has an especially impressive record of moving clients on to suitable accommodation.

However, even with those two exemptions, there is a great deal of concern among all the stakeholders who were consulted about the policy. In fact, we see from the consultation outcome that none of the respondents supported the proposed changes and the majority questioned the rationale for them. The $64,000 question is whether the proposals will save the taxpayer money or cause even more to be spent by local authorities having to find extra emergency accommodation. The SSAC report answers that in clear terms. Thank goodness, I have a different sentence to cite from that quoted by the noble Baroness, Lady Lister. The report states:

“The evidence we have seen points to this being a high risk approach to cutting costs that does not take account of potentially negative impacts on other areas of public policy and potential increases in other areas of public expenditure”.

The Government’s solution is to increase discretionary housing payments to local authorities to support those in the most vulnerable situations who do not fit the exempted categories, but the discretionary housing payments will be spread extremely thinly across a lot of housing hotspots because of the changes to the 30th percentile. Such payments can be regarded only as a temporary sticking plaster. An awful lot is being asked of this particular pot of money, which will not go very far when spread across the poorer boroughs of London, not to mention those of all the other large conurbations. In Winchester, homelessness is increasing dramatically, with evidence from letting agents suggesting that fewer than 10 per cent of properties are affordable. As I have said before, Winchester is a very expensive place in which to be poor.

As my noble friend said, are there really enough houses and flats available for multi-occupation in areas where there are likely to be jobs, particularly low-paid jobs? In a buoyant market, will landlords really be willing to reduce their rents to let properties to what could be a potentially unstable cohort of people, when landlords will have no difficulty finding tenants who will pay the market rent?

In my view, this is a worrying experiment. The Social Security Advisory Committee report states that,

“the Department knows very little about either the shared accommodation market”,

or those who live in that sector. As we have heard, that committee recommends that the Government should gather evidence as a matter of urgency with the proposals introduced gradually and evaluated. That sounds like a very good idea to me.

My Lords, I am very pleased to join in this debate initiated by my noble friend Lord Kirkwood. I declare an interest as chair of First Wessex Housing Group, which has a number of shared-accommodation facilities, and I am also chair designate of Housing 21.

Sadly, this is an example of government spending cutbacks whereby the broadest backs are not assuming the biggest burden—probably the reverse. Among the 62,000 people who it is thought will be affected by these changes, there are a lot of very vulnerable people. The fundamental problem is that we simply do not know how many.

I accept that this is a tough decision in very tough times, and there are a number of positives in what the Government have done. The transition period is obviously very helpful, extra money has been provided for discretionary housing payments and certain of the exemptions have been widened—although we have heard my noble friend Lord Kirkwood’s reservations on those. It is probably also true that, in these tough times and in the current climate, it is inevitable that we probably have to encourage older children to stay at home with their families. Obviously, people in the private purchase market are having to do that as well. However, one of the problems is that we are often dealing here with families of children where the family relationships have broken down.

There are a number of negatives to this change. First, as I mentioned, we simply do not know who these people are nor, as a result, do we know how they will adapt. What we do know is that there are certainly some very vulnerable groups here, as my noble friend Lord Kirkwood mentioned, including people with mental health issues and drug addiction issues, young offenders and people trying to regroup from broken marriages and broken relationships. We also simply do not know what pressures on other areas of the public purse will result from these changes.

Finally, there is a great shortage of shared accommodation in certain areas, especially in rural areas. One thing that has not been anticipated is the further market pressures that will result. For example, one of the hostels that I am familiar with is designed to encourage young people to become independent in the community and to get their own accommodation. By increasing the pressure in the marketplace from those aged between 25 and 35, we will make it much more difficult for landlords to accept people who are under 25, who are much more difficult to deal with, so landlords will go for the older people. That will mean worse problems in that market as well.

One of the principal objectives of the change is to improve work incentives. We know that, day by day, those options are drying up. In the current climate of no growth, it will be extremely difficult. I accept that the changes made by the regulations will almost certainly go through, but the Government should further examine whether 30 would have been a better threshold than 25. We should have looked at extending the transition. Some of the increases in costs, particularly in London, are staggering and may be as much as £100 per week. People in London will have to find an extraordinary amount of money unless they change their circumstances. Even elsewhere, the average amount is £50—in Winchester, as my noble friend Lady Thomas, said, it is £56. These are significant sums for people to find at a very difficult time with the labour market in the state that it is. I hope that the Government will make sure that local authorities once again face up to their responsibilities and help in this area. I hope that, if we end up overspending on the discretionary housing payments, which I well expect, the Government will match that. The Government should also encourage more development by housing associations of shared accommodation simply to increase supply.

This is very difficult legislation which is hitting people who are particularly vulnerable and least able to speak up for themselves. That is why I am speaking in this debate.

I am grateful to my noble friend Lord Kirkwood for initiating this debate, because it gives me an opportunity—my noble friend the Minister will not be surprised to hear me say this—to raise the case of people on the autistic spectrum, particularly in respect of the exemptions as outlined in the order.

Reference has already been made to the fact that there are exemptions. The exemption that would particularly affect people with autism is the one applicable to people who had been able to live independently and are entitled to severe disability premium. However, severe disability premium requires people to be in receipt of the middle or higher rate of the care component of disability living allowance, a benefit which is itself under review. The regulations are due to come into force in January next year. How will this timescale fit in with those people who are currently in receipt of the middle or higher of DLA care component but who may when decisions are being made about their eligibility for exemption under these regulations suddenly find that they are no longer in receipt of DLA at all or have been downgraded to a lower rate?

I know that my noble friend has great knowledge about autism. He has taken particular care to make sure that he understands the way in which autism manifests itself. He will therefore understand, I know only too well, that somebody who has been able to achieve independent living will have been through a journey to reach that point. For somebody on the autistic spectrum to be expected to share accommodation with another person would almost certainly be traumatic. It would affect their whole demeanour and well-being. The consequences of disturbing what for people with autism is very often a rigid way of life may be serious. Getting them to the point where they can maintain independent living is achievable and we are seeing more and more of it. It is sometimes but not always done with some external support—very often, voluntary support comes from family members and others; it is not necessarily an official package of care from social services. However, we aspire as a Government and a society to get more people on the spectrum to live independently.

I am extremely concerned about the impact of these changes, and I have made available to my noble friend’s officials a letter which I received only this week from the mother of a 32 year-old man who has been living independently for three years and who is in receipt of £93.45 a week. That is income support and the lower DLA rate, so he certainly would not qualify for the exemption. At the moment he is being paid £103.56 in housing benefit and it is calculated that he will lose £43 of that when this change comes in. Forty-three pounds out of an income of £93.45 a week is a significant amount. His mother is clearly aware of these changes and what the impact will be for her son. She writes a very moving three-page letter about what she thinks might happen to him as a result, concluding,

“local authorities will have available a pot of money that they can, at their discretion, use to help people make up the shortfalls in their benefit. Knowing this, though, will condemn those with autism to months of anxiety over whether they would be successful in benefiting from this. These months of anxiety will overwhelm many. The waiting is certainly causing James untold worry”.

I note that the Merits Committee report talks about the discretionary sum and expresses some concern. In paragraph 5 on page 5 it states:

“That increase must be used to cover all calls on the discretionary budget; no additional provision has been made to address any demands arising from these changes to the SAR regulations”.

My noble friend will understand immediately my concern about the way in which this might affect those living independently with a diagnosis of autism or Asperger’s syndrome. Many will not qualify for the exemption. The disruption to their lives will not only be severe in terms of their well-being and health but will, like a pack of cards, ripple out to other services that may have been involved in providing for them. Once you destabilise them in one area of their life, everything else starts to fall down like a pack of cards. So I hope my noble friend will take a look at this mother’s letter and perhaps take another look at how we might mitigate the distress that will almost certainly be caused to this very vulnerable group of people.

My Lords, I join the ranks of those thanking the noble Lord, Lord Kirkwood of Kirkhope, for bringing this forward for discussion, to make sure that it is aired, and for taking the opportunity to try to mitigate some of the effect of the regulation. The deficit has been mentioned. The point was made by the noble Lord, Lord Stoneham, that these are not the broadest backs that the pressure is falling on. The pressure is falling on these vulnerable people for an annual saving of £200 million. I believe in fiscal rectitude and I do not have any bother saving money, but with a group of people like this, whose vulnerability has been described by several colleagues, I think the deficit is the excuse for bringing out this measure. A colleague mentioned that perhaps it has been a long-term ambition of the department—not the particular individuals who happen to be here. But the consequences here are so drastic more serious consideration should have been given to pilots. I know that when a new Government come in, there is a determination not to be caught up in delays. The Government are in a hurry and they want to get things through. I have seen it happen and been part of it and I have the experience to regret some of it. I think that is what is happening here. They have been saying, “Get a decision. Get it made. Get it through”. I think it is pretty poor that people like these are in that position.

Although I have no intention of repeating the valuable comments made by colleagues, I will rely heavily on the reports produced by the Social Security Advisory Committee and the Merits Committee. The SSAC report makes a plea for delay by stating:

“We recommend that the proposals do not go ahead in their current form”.

In paragraph 23 of the Government’s response to the advisory committee’s report, after mentioning that the Government,

“does not accept the Committee’s view that the proposals are driven solely by the need to reduce the Housing Benefit budget”,

the Government claim that the changes will remove a “potential work disincentive”. Now, I have seen some daft and totally irrelevant things put into official documents—I might even have put in one or two myself—but what is a “potential work disincentive”? I do not know what that means. Perhaps the Minister could give us examples of where he imagines that might happen; it will be difficult for him to provide proof as there is very little evidence for anything in this measure. I would like to hear some examples of where this disincentive would take place.

Indeed, the Social Security Advisory Committee report states:

“On work incentives the Committee contends”—

and I think that normal life would confirm this—

“that the impact of the changes for Housing Benefit claimants already in work could result in a move to a location some distance from their place of work”.

Colleagues should be clear that, in many people’s lives, this could result in a big disruption, which should not be underestimated. A pilot would have been useful.

We are in danger of creating an itinerant population—a phrase that I have used elsewhere—who will be easily identifiable because they will be vulnerable for many reasons. As I have seen for myself, for people suffering from alcohol problems and from various degrees of mental ill health, security and permanence are very important. Moving people about in this way is not something that any British Government should be doing to part of its population.

I may be a touch cynical, but I wonder whether the reason that this particular group has been selected to bear £200 million-worth of cuts is that these people are not a very effectively organised part of the community: they are invariably not members of trade unions or interested in getting involved with trade union activity; they are not involved with community councils or politics; instead, they are on their own trying to cope with the situation in which they find themselves. Like the Government, I have no evidence for saying this, but it would be realistic to say that the percentage of these people who vote will not be too high, because not many of them will have any faith in politics—I would find it hard to argue with them when they say that. The Government would have picked an easy target for cutting £200 million, were it not for the Motion moved by the noble Lord, Lord Kirkwood.

Another interesting, and depressing, point is that, according to my reading of the Government’s response to the Social Security Advisory Committee’s report—if I am wrong, the Minister will contradict me—not one of the advisory committee’s recommendations was agreed to. Where is the listening to, or taking account of, the terrific experience of the people who serve on that committee? Not one of the committee’s recommendations was agreed to even partially. There is just a total blank.

Others will no doubt speak about their own areas, but I believe that the danger point here is likely to be the cities, where the drifters seem to congregate. For example, page 70 of the advisory committee’s report lists the number of claimants by area and the average amount lost per week. In the City of Edinburgh, 590 people, or 17 per cent of the caseload, will on average lose £37 a week. In Glasgow City—I am not a Glaswegian, but I live next to that city and know that it has many problems—800 people, or 25 per cent of the caseload, will on average lose £22 a week. In my own council area of South Lanarkshire, which does not have a big city but nevertheless includes some big towns, some 270 people, or 23 per cent of that sector of the population, will on average lose £11 a week. I know that some might say, “That’s up to them. It’s just £11 and they will manage with that”. However, as has been mentioned by the noble Lord, Lord Kirkwood, given the current situation in which utility costs and all the rest of it are rocketing up, losing £11 a week against that background of rising prices will be really difficult.

It will not make any difference to the Government, but a lot of us are worried about the availability of accommodation. Will they get accommodation? Will it be suitable? There is no evidence that the landlord sector will be able to guarantee availability of alternative accommodation. Folk will have to deal with that. They will face an upheaval in their lives plus cash losses. Collectively, we should not be proud of doing that to this sector of society. Having mentioned society, I shall finish with this statement. We are told by the Prime Minister—and the Chancellor of the Exchequer in particular—that they want to establish the big society. They say that we are all in it together. I do not see many people in society who will feel in it together with these vulnerable people.

My Lords, I thank the noble Lord, Lord Kirkwood of Kirkhope, for providing this opportunity to discuss planned changes to housing benefit that will affect certain young people currently living in the private sector in self-contained accommodation. These changes are contained in the regulations we are debating.

The change to the shared accommodation rate was announced last October as part of the spending review in the context of reining back welfare expenditure in general and housing benefit in particular. Difficult decisions have had to be made about spending priorities. At the heart of those decisions is fairness and affordability. We need to be fair to taxpayers and mindful of the choices those not in receipt of benefits make when considering what they can afford to pay in rent and the type of accommodation they choose to live in.

The shared accommodation rate reflects local private sector rent levels of accommodation where at least one facility is shared, for example a bathroom, kitchen or living room. The current rules for under-25s avoids the situation in which those in receipt of housing benefit could afford a level of accommodation that they would not be able to maintain were they employed. It also reflects the fact that sharing accommodation is common among younger people. We want work to be people’s first choice and do not think it unreasonable to extend the application of this rate from those aged up to 25 to those aged up to 35 for those who have recourse to public funds. This will realise savings of around £200 million per annum from 2013. That does not necessarily mean that people will have to move, although it is likely that some will need to do so—they will have to make the same sorts of choices about affordability as those who are not on benefits.

Many in this age group already share. Over one-third of the 25 to 34 year-old local housing allowance claimants who are potentially affected by this measure are already choosing shared accommodation and claiming the shared rate. In this age group, 40 per cent of private renters who are not on benefits also share. The Social Security Advisory Committee put forward the view that the majority of older sharers are either professionals or mature students, but the 40 per cent figure that I just cited specifically excludes students, and our survey data indicate that there are people sharing across all types of occupations.

The recent report by the Merits Committee posed the question: if savings are to be made, why choose the age of 35? Why not go higher? Such a move would not be supported by the evidence, which shows that sharing accommodation tails off significantly after age 35. Our equality impact assessment looked at the accommodation arrangements of all single and childless adults. Less than half of 25 to 34 year-olds have their own place, and a third live with their parents. When we look at those over 35, we find that 84 per cent have their own place and that only 6 per cent live with their parents.

We realise that, for some, it is neither desirable nor appropriate to live in shared accommodation. There are already a number of exemptions from the shared accommodation rate for those in vulnerable situations, such as care leavers below the age of 22, those entitled to the severe disability premium and those who have an extra bedroom for a non-resident carer with a home elsewhere who provides overnight care. Those living in social housing and in certain types of supported accommodation are also not subject to that rate. Those exemptions will continue to apply, where appropriate, to claimants in the increased age group of 25 to 34.

Since the announcement of the measure, we have been listening to people's concerns. I and my officials have met with interested parties, and the Social Security Advisory Committee has consulted and reported on the draft regulations. We decided to introduce two further exemptions for the extended age group. Those have been welcomed by several commentators and organisations, as well as by noble Lords who have spoken today.

The first additional exemption is for those who have lived for at least three months in a specialist hostel for the homeless and, while living there, received support to resettle in the community. That exemption addresses the concerns raised by several commentators about the impact of the changes on rough sleepers—in particular, the silting up of hostel accommodation. We accept that, without that exemption, it would be difficult to secure suitable move-on accommodation for that group to help them into a more settled way of life, which could undermine our ambition to end rough sleeping.

That exemption has been targeted at people aged over 25, who are at greater risk of rough sleeping. We believe that the current exemption is well targeted at people who are ready to move on to an independent life, but those people leaving hostels will have to have undergone some support and rehabilitation. That strikes the right balance between cost and fairness. We think that many former rough sleepers will be helped by that.

My noble friend Lord Kirkwood asked about the ministerial homelessness committee, of which I am a member. It was with that ministerial hat on that we framed this support, working closely with my colleague Grant Shapps.

The second new exemption is for those ex-offenders who present a serious risk to the public and who are subject to active multi-agency management under the multi-agency public protection arrangements—MAPPA—in England and Wales or are considered to present similar risks in Scotland. That exemption covers a very small group of ex-offenders who are to be excluded on the grounds of public safety. It is not extended to all ex-offenders because many of them pose no risk to the public. Perversely, the risk is that one might provide an incentive to commit modest crime, which we would not want to encourage.

Other specific groups have been put forward as needing exemption. They include people with disabilities, those with mental health problems, those with a history of substance misuse and those seeking to maintain contact arrangements with their children. The case for those who have shared care of children is complex. We estimate that, of those who will be affected by this measure, around 10,000 have some contact with a child who lives elsewhere. Of these, it is not known how many would normally stay overnight, so the numbers are relatively low. But living in shared accommodation should not preclude both parents from playing a full part in a child’s life. Parents living in hostels or other non-mainstream accommodation will, I am sure, be striving to maintain quality relationships with their children. Ultimately, it is for individual maintenance and custody arrangements to reflect living arrangements, and it is not appropriate for the state to fund two homes for a child. To pick up the question that my noble friend Lord Kirkwood asked, I can assure him that this arrangement does not contravene Article 9 of the UN convention.

We thought long and hard about other exemptions, but the blunt answer is that our analysis suggested that it is better to rely on discretionary housing payments than on specific exemptions because of the difficulty in defining and administering them. Our belief is that the local authority is best placed to consider individual circumstances.

The point raised by my noble friend Lady Browning about the autistic is very moving. I have had a chance to read the letter sent to her from Mrs—

I am sorry to interrupt the Minister, but I quite deliberately did not mention the person’s name.

I muttered it. The letter was very moving and was about a particular individual.

Clearly, people on the autistic spectrum who are receiving severe disability premium are exempt from this measure. But not everyone, as my noble friend pointed out, is categorised as severely disabled. The question is: how does one best get support? Our basic view is that the local authorities are best placed to identify this group. Indeed, they have a duty to identify this group, unlike other groups. It is our view that discretionary housing payments to that group are the way to go. Clearly, it would be hugely in the interests of local authorities to make sure that happened because, as my noble friend pointed out, the ongoing costs of getting this wrong in particular cases are much larger than the DHP support. So there is a real incentive for local authorities to get this right.

Looking a little further forward to the changes in DLA, we are looking very closely at how to afford the right levels of protection for particular groups in the personal independence payment. Within the universal credit, there will be an exemption that matches what we have now for those who receive severe disability premium. That is the forward-looking position.

In our response to the Social Security Advisory Committee’s report on the draft regulations, we acknowledged that we had listened to concerns from stakeholders, but it is very difficult to draw that out in regulatory form for people with multiple problems. Our approach is to go with the DHPs.

We have put in place, as a number of noble Lords have pointed out and welcomed, a substantial package of financial and practical support worth more than £190 million over the spending review period to help ease the transition for the housing benefit reforms, some of which will assist those affected by the shared accommodation rate changes.

The Merits Committee states that DHPs can provide only a temporary solution, but there is no limit on how long they are paid for. This is reflected in the guidance available to local authorities. We review the allocation of DHPs to local authorities annually and will continue to do so.

The noble Baroness, Lady Lister, raised two issues relating to women, the first of which concerned pregnant women. We are talking about a short-term adjustment between the time someone registers as pregnant and the baby arriving. It would seem an ideal use of DHPs to smooth that process to avoid women having to move twice. A substantial number of single women fleeing domestic violence will be exempted if they leave specialist homeless hostels. Again, we think that the numbers involved are small.

In our equality impact assessment, we estimate that 63,000 local housing allowance claimants would be affected by the regulations and lose an average of £41 per week. So, for those affected, we acknowledge that the impending change might be significant and it is vital that people are made aware of it. The regulations were laid just before the Summer Recess as soon as possible following the Social Security Advisory Committee’s report, giving local authorities, advisers and claimants nearly six months before implementation. We have issued guidance to local authorities. Posters, leaflets and draft letters have been made available, and I know that local authorities are working very hard to identify, notify and support those affected.

Introduction will be phased in over a year from next January, so, although claimants making new claims for housing benefit after that date will be subject to the shared accommodation rate immediately, those already claiming will be affected only gradually over the course of 2012. Those who have been claiming since before April this year are likely to have transitional protection from the April 2011 LHA changes, and this will last in some cases until December 2012. All others will see their benefit reduced on the anniversary of their claim. Individuals are being notified well in advance of the change as it affects them.

The noble Lord, Lord Kirkwood, asked why we were not piloting the change. The reason is that it is a small measure in terms of housing benefit and we do not think that a pilot is necessary. The letters being sent to claimants to advise them of the April 2011 changes and any transitional protection period are now advising those affected of the move to the shared accommodation rate at the end of that period. That is nine months ahead of the change affecting them. Local authorities are also advising them of the change towards the end of their transitional protection period, and some local authorities are also writing out with more detailed and tailored information where their computer systems allow. Many signpost their housing options department within the local authority and liaise with them closely to provide advice to those looking for suitable alternative accommodation.

On the point made by the noble Lord, Lord McAvoy, about these individuals being easy targets for cuts in benefit, not all of this age group have alcohol problems, mental health problems and so on. Some are in work or seeking work and are by no means all vulnerable. The data we have show that sharing is common practice, whether or not people are on benefit.

Much has been said about the current lack of suitable shared accommodation, and I fully understand that this is a key concern. However, it is too early to say how landlords might react to this measure and the changes made to housing benefit from last April. For example, some landlords may consider it more profitable to let a property as shared accommodation rather than to a large family unit. Some individuals we have spoken to recently have also indicated that they are looking into providing shared accommodation in order to meet the upcoming demand. There has been dramatic growth in the private rented sector in England, with the number of households living in private rented accommodation increasing by around 1 million between 2005 and 2009-10. We are not talking about a static market, and there is no reason to assume that the availability of shared accommodation will remain as it is now.

I apologise for not speaking in the debate. I did not do so deliberately, because I thought that we would go through a lot of these issues tomorrow, and it would be more sensible to wait until I had heard some of the arguments addressed. One quick point for the Minister is that, by the time that we have counted up the number of referrals to the local housing allowance of £60 million, I suspect that it will have been overspent by fivefold, but we will see.

The Minister made the point in response to the noble Lord, Lord Kirkwood, that a lot of people between the ages of 25 and 35 choose to share accommodation, which I entirely accept, and it is not right that people who are not in work should have separate accommodation when people in work cannot afford that. To my mind, the key question that has not been identified is how large that shared accommodation is. Clearly, it is reasonable for two people who are not connected to each other in an emotional or sexual partnership to share a two-bedroom flat, but the Minister seemed to be suggesting earlier that single people in a one-bedroom flat, rather than going down to shared accommodation, could take someone in and thereby go into shared accommodation. Can he help us with the statistics on how many instances there are of two people who are not sexually connected who share a one-bedroom flat, which is the obvious analogy, rather than a two-bedroom flat where they have separate accommodation within that flat?

My Lords, I do not have that precise information to hand, but if I can find it I will make it available and write to the noble Baroness. I can say that, in 60 per cent of cases, two people claiming the shared accommodation rate would be more than the two-bedroom accommodation rate. There are many areas where sharing gets the group of people more money than if they formally join up as a couple and go for the same accommodation.

Sorry, is the noble Lord saying that someone who is in single-bedroom accommodation and now finds that they are subject to SAR because they are 33, should, instead of going down to a shared room, actually seek a larger two-person two-bedroom flat with another person, thus possibly increasing the HB bill?

There will be quite a lot of flexing around, and people do accommodate to systems. According to the figures that I have, regarding shared rates, in 60 per cent of localities the two-bedroom LHA rate is less than twice the shared rate. In 90 per cent of localities the shared rate would cover the relevant share of the three or four-bedroom rate. The point is that, when you are looking at pressure on the market, which noble Lords and the SSAC have been concerned about, fundamentally we are taking pressure off the market by looking for more sharing. Clearly, there are local adjustments but, as I have said, this has proven to be a very flexible market in the past, and we have no reason to expect it not to continue to be.

The question raised by my noble friend Lord Stoneham about the shortfalls in London—the difference between the one-bedroom rate and the shared accommodation rate—reflects the generally higher rents in London. The ability of those not on benefits to live in self-contained accommodation in these areas is also very limited, and many, therefore, already choose to share. Indeed, as my noble friend Lady Thomas pointed out, it is for exactly that reason that such decisions have been taken for very many years in London. I think I can join her in that experience.

It has been suggested that the Government are doing little to encourage the development of houses in multiple occupation. Landlords make commercial decisions about whether to provide such accommodation, and government’s influence on those decisions is limited. We do, however, have a role in setting the planning framework and licensing requirements. Communities and Local Government Ministers have considered whether the licensing regime, which places added burdens on landlords to comply with various health and safety measures, should be relaxed. However, with more people likely to require this kind of accommodation, they do not think it appropriate to remove or reduce this protection.

We also have the rent-a-room scheme, which is an income tax relief introduced in 1992 intended to boost the private rented sector. It encourages individuals to offer spare accommodation in their own homes at affordable rents to low-income groups. Homeowners and tenants who let furnished accommodation in their own homes are exempt from income tax on rental income of up to £4,250 a year.

As I said earlier, it is too soon to know how claimants might react to these changes. Those who will be affected by this change will have to consider their alternatives and make decisions about where and how they live. Some may decide to share with others, move back or stay with their family, or they may manage to find employment that allows them to stay in self-contained accommodation. These are the decisions that people in lower-paid work but not on benefits have to make, and those on benefit should not be sheltered by the state from this sort of responsibility. Picking up the point made by the noble Lord, Lord McAvoy, on work incentives, there is clearly no incentive to work if someone is in a property that is unaffordable for those who are in work. We have at the same time the issue of fairness if someone who is not on benefits is unable to afford a house that someone on benefits can afford.

The Merits Committee expressed concern that those in low-paid work may be forced to move, which might affect their ability to remain in work. While we acknowledge that the availability of shared accommodation is likely to vary across the country, it is uncertain what the impact of these changes will be, but there is no evidence to suggest such an effect. However those in employment are placed, they should be able to meet any shortfall in rent and remain in self-contained property if they wish. They are also better placed to improve their prospects by moving up the career ladder or increasing their working hours.

The Merits Committee also expressed concern about the knock-on effect of this measure and the overall costs to the Government in, for example, the cost of providing emergency rehousing. That point has also been made by several noble Lords today. However, there is no evidence to suggest that the change will result in an increase in homelessness, and most people in this age group are unlikely to come under the local authority statutory homeless duty.

As I have already said, many in the new age group— 41 per cent of non-housing benefit private renters and 36 per cent of those who are on housing benefit—already share accommodation. The reasons for homelessness are varied and complex, and the benefits system plays only a small part in that.

Local authorities have an excellent track record in preventing homelessness. They helped 165,000 households avoid homelessness last year. We are confident that they will continue to deliver that service effectively.

We have commissioned an independent review and monitoring of the April 2011 changes to local housing allowances. I assure my noble friend Lord Kirkwood that the review will include the early impacts of the extension of the shared accommodation rate. It will look at the availability and access to shared accommodation across different regions and rural areas, including houses in multiple occupation. We aim to publish interim findings next spring and the final report a year later. As with all new policy areas, we shall also be listening to the feedback that both I and my officials receive on how the changes work in practice.

I hope that this debate has helped to inform your Lordships of our thinking behind this measure, and I thank all noble Lords for their contributions and views. I commend the regulations to the House.

My Lords, I am extremely grateful to the Minister for his usual, comprehensive diligence in responding to the debate. We have had a very good debate, which I do not want to prolong. I take it from what the Minister said that he has registered that there is continuing concern, not just among the bodies that we have cited but in this House and in this Committee, about the potential effects of implementing this policy. I also take it, from his invitation to feed back any information on untoward results, that any evidence that might controvert the evidence on which the department has founded the regulations will be happily received. Speaking for myself, I will be watching this area, as will other colleagues, extremely carefully over the next 12 months.

As well as being very grateful to everyone who has taken part in the debate, I want to say two other things before I sit down. First, the Minister has invested discretionary housing payments with a role that I did not think that they had. He said—I wrote it down—that there is “no limit” on discretionary housing payments, but he has to be very careful about this. I do not want to read too much into what he said but, for example, a very powerful case was mentioned this afternoon. I take it from what he said that, as there is no limit on discretionary housing payments, it would be possible for a local authority, if it thought it appropriate, to apply discretionary housing payments not just for transitional provision or for temporary problem solving but—if it has the budget, which is an important point that was made—to apply its discretion systematically over time. That is not what I thought that discretionary housing payments were for. We will all go away and reflect carefully on that.

My final point is that we need to monitor all of this, including the use of discretionary housing payments. We also need to ensure that we keep in kilter with the devolved Administrations, as I am not sure that these local authority duties are exactly the same in other jurisdictions in the United Kingdom.

Having said all that, this has been a valuable debate, for which I am really grateful. I know the Minister of State well enough to know that he has obviously engaged with the issues seriously, and we are grateful for that. If we get any other evidence or feedback from other sources, including the pressure groups and other bodies that are competent to operate in these areas, we will take advantage of his kind offer by ensuring that the department is made fully aware of the circumstances as those unfold after January next year. I am grateful to the Minister for making that clear.

On that basis, I am happy that the Committee has indeed considered the statutory instrument in what has been a very valuable debate, and I am grateful to the Minister for his reply.

Motion agreed.