Welfare Reform Bill

My Lords, the noble Lord, Lord Best, has no need to apologise for tabling an amendment at this hour, particularly as he spoke on the matter with lots of knowledge and clear commitment. As has been acknowledged, the amendment is something of a compromise between the current rates and the complete abolition of the single room rent, or shared room rate. In Committee, we discussed the rationale for having the single room rent cut-off at age 25, as the lower average earnings for those under 25 limits the type of housing that someone in this age group can afford. The noble Lord is right to note that the adult rate for the national minimum wage is set for those aged 22 and older. The national minimum wage and the social security system share the same aim of increasing employment. However, it is important to note the difference between the two. The national minimum wage is intended to make work pay, but has a lower rate for those under 22 to ensure that young people are attractive to employers. The social security system, and therefore housing benefit, is intended to reflect an individual’s needs but not to create a disincentive to move into work, a point touched on by my noble friend Lady Hollis. This leads us to consider again the fundamental principles behind the single room rent. In Committee, the noble Earl, Lord Listowel, spoke about the difficulties that some of the most disadvantaged young people in society face. He spoke of the perilous cycle of exclusion that may begin when a young person is denied the safe and secure upbringing from which many people benefit. Last Monday, I had the opportunity to meet the noble Lord, Lord Best, to discuss some of these issues further. I reassure the House that the Government share his concerns for young people. This is the age at which many young people complete their transition to adulthood. It is vital that the Government play their part to help them start adulthood in the best possible way. One of the principles behind the single room rent is fairness for working people. When 75 per cent of those who are under 25, single, without dependants and not receiving benefit live in shared accommodation, there is the principle that those who rely on housing benefit should expect only the same. More importantly, however, we do not want to put young people into a position in which they become dependent on benefits. If we were to abolish the single room rent for all or part of the group to whom it applies, we would extend the benefit trap for many more people. Those who might previously have found suitable shared accommodation would now be able to live in larger, more expensive self-contained accommodation, which would mean that they would have to earn a greater amount before being able to move off housing benefit and its taper and fully benefit from every additional pound that they earned. So the culture of benefit dependency would be extended. Instead of housing benefit providing an initial levelling platform for young people, it would provide another route of exclusion and dependence on the state, damaging future job and wage expectations. The noble Lord rightly spoke about the experience of the shared room rate and the local housing allowance pathfinders. We have learnt from this experience, and for national roll-out we will be using a different, broader definition of what can be counted as shared accommodation—I think the noble Lord, Lord Best, acknowledged this—and changing to the use of the median to calculate rates, which will help to address some of the problems of affordability reported. The noble Lord, Lord Best, suggested that the drop in the number of houses in multiple occupation, with its share of the whole rental sector decreasing from 9 per cent to 6 per cent, was measured over only two quarters and that therefore the time span was too short to link to any policy change. The local housing allowance evaluation has found that the proportion of landlords providing some shared accommodation remained about the same, despite a high degree of churn in the ownership of this type of accommodation. The noble Lord, Lord Best, suggested that landlords are unwilling to let to single room rent customers. There are many factors influencing who landlords let to. Two of the groups which landlords least like letting to are young people and benefit customers, but this is symptomatic of wider stigma and stereotypes. Abolishing the single room rent is unlikely to fix this. However, making local housing allowance payments to tenants is a step in the right direction. There is some indication from the pathfinders that customers on local housing allowance have been able to mask from their landlord that they are receiving benefit. We should recognise that many more vulnerable customers are eligible for social-sector accommodation, and the groups exempt from the single room rent include certain care leavers under 22. The noble Lord acknowledged, in relation to those who are severely disabled and those in the social sector, that the single room rent has only ever applied to private rented sector cases. Again, the noble Lord, Lord Best, talked about the cost of changing the arrangements. Twenty per cent represents the cost of moving existing claimants under 25 into the over-25 rate of benefit. If the cut-off point were under 21 the cost would be half of that, but that assumes that there is no behavioural change. In particular, it assumes that one does not have to go further and align the change to the benefits system more generally, as my noble friend Lady Hollis pointed out—the 25 per cent threshold is relevant for income support and jobseeker’s allowance. It was suggested that those who lose their job must downsize, but the data show that 75 per cent of working people live in shared accommodation and therefore many would not downsize. This is the rationale behind the single room rent. My noble friend Lady Hollis raised the issue of discretionary housing payments, which, as the noble Lord, Lord Oakeshott, said we debated at Committee. I am advised that only in the very early years did any local authority spend anywhere near its discretionary housing payment limit. That is the centrally provided bit and the proportion that they can use from their own funding. I can assure my noble friend Lady Hollis that we are updating the guidance on the DHPs to ensure that it continues to assist local authorities to make full use of the discretionary scheme. Obviously we cannot dictate to local authorities precisely how they proceed but working with them is quite important. The noble Lord, Lord Best, talked about what was happening in the housing market. He said there had been an explosion in the number of small, self-contained flats and a dearth of shared accommodation. Would the impact on market rents not be an equalisation of those two parts of the housing sector? If there is a lot of self-contained accommodation, I presume that, all other things being equal, the price goes down and that, if there is a dearth of shared accommodation, all other things being equal, the price goes up. That must have an impact on the situation. I am sure that we will not readily reach a consensus on this issue tonight, but I have set out the Government’s position, which I believe to be the correct one, and urge the noble Lord to withdraw his amendment.