Housing Benefit (Local Housing Allowance and Information Sharing) Amendment Regulations 2007

My Lords, this has been another interesting debate and I will try to respond to the points raised. However, I first remind the House about the wider context for these regulations and why they are such an important step not only for housing benefit reform but more widely for transforming the way we pay social security benefits in this country. It is clear to me that housing benefit plays a vital role in the Government’s programme of welfare. Indeed, the objectives we set out when we first floated our plans for housing benefit reform back in 2002 show that local housing allowance aims were at the very forefront of the welfare reform principles that have now become so prominent. First, as regards promoting choice and responsibility, allowing people to have rent payments made directly to them was a rather bold prospect when we first raised it more than five years ago. We heard the fears and worries of those people who suggested that tenants would run off with their rent money rather than paying their landlords. Now, not only have we proved the pessimists wrong, but the choice and responsibility objectives that we promoted are at the very heart of what this Government want to achieve. With the local housing allowance, tenants are able to see clearly in advance how much housing benefit they are likely to be entitled to. They will then be able to take responsible decisions about where they live, how much they want to pay in rent and then use that money to pay the landlord themselves. Secondly, we said that we wanted to use housing benefit to help support incentives to work—and again, this is very clearly at the centre of what we do. Improving the speed of housing benefit processing times in itself should help give people the reassurance and security they need that benefit claims will be reassessed quickly when they take a job. I am convinced that treating people with respect and encouraging them to manage their financial affairs will go a long way to preparing people for the world of work. Thirdly, we have seen the financial inclusion agenda grow quickly over the last couple of years. I am delighted that the local housing allowance plays an important role in encouraging people to use bank accounts and to become financially independent. It is important to point out that the specifics of the regulations have been comprehensively tested. The local housing allowance evaluation is probably the largest single evaluation of a housing benefit scheme we have ever undertaken and is a true example of evidence-based policy. The findings of the evaluation have certainly been very positive, and were referred to by noble Lords. At the outset concerns were raised that the introduction of the local housing allowance would force landlords to leave the market. In fact, private lettings have increased overall by about 7 per cent during the course of the pathfinders. Of course, this is not all down to the local housing allowance but it shows that the fears that landlords would leave the market in droves have simply not materialised. There is a similar outcome as regards the fears raised that tenants would not pay their rent and would abscond with their benefit payments. On the contrary, the evaluation has shown that tenants in receipt of the local housing allowance were less likely to be in arrears than the control areas that were used during the evaluation. Finally, it is important to point out that 84 per cent of tenants in the pathfinders received direct payments, proving conclusively that most people are quite capable of managing their own money. That is a really positive move towards financial inclusion. We have also learnt lessons from the evaluation and made changes to the scheme as a result. Many of these changes are set out in the regulations before us. For example, customers can keep any excess benefit they receive as a result of shopping around for accommodation, but only up to a maximum of £15 each week. People should be able to take advantage of the choices available to them, but we do not want to erode their incentive to move into work. We needed to strike a balance between implementing simplicity and providing choice with the need to ensure that we are delivering one of our key housing benefit objectives to support people into work. We changed the way that the rent officers calculate local housing allowance rates by moving from a mid-point calculation to a median. In that way, we can be sure that exactly half the rental market in any area will be affordable to people receiving benefit. We have decided to roll the scheme out nationally on a slower scale, which perhaps addresses the point made by the noble Lord, Lord Oakeshott. That means that only new housing benefit claims or those people who have moved address will be assessed according to local housing allowance rules. Some other points were raised in the debate. The noble Lords, Lord Oakeshott and Lord Skelmersdale, asked about funding being provided to local authorities. We have already provided funding of £59 million to local authorities for the rollout of local housing allowance, including money advice. It is for the authorities to decide the nature and extent of the service that they wish to support by way of money advice. That funding was provided at the end of August.