Welfare Reform and Work Bill — House of Lords, 2016-01-12
Topic: Housing
Richard Best (Crossbench, Unknown): My Lords, I speak to Amendment 109, which covers the same issue as Amendment 107, moved by the noble Lord, Lord McKenzie of Luton. Of course I entirely support that amendment, which was so well presented by the noble Lord. In both cases the amendments look for an exclusion from the proposed 12% rent cuts for supported housing as defined in housing benefit and universal credit regulations. I am grateful to the noble Lords, Lord Kerslake and Lord Shipley, and the right reverend Prelate the Bishop of Rochester for supporting this amendment, and to the noble Lord, Lord Horam, who spoke earlier in favour of exceptions and exclusions for cases of this kind. I also offer sincere thanks to Members from all sides of the House who signed a letter to the Times, co-ordinated by the National Housing Federation just before Christmas, expressing the hope that the Government would give favourable consideration to the case we are making today The specialist housing organisations that fall within this definition—such as St Mungo’s Broadway, the YMCA and many small charities—would suffer a major blow from the 12% reduction in income from their rents. These are the organisations on the very front line, providing supported housing for those with mental health, drug and alcohol problems, homeless people, care leavers, those fleeing domestic violence, as well as veterans and older people needing care and support The vulnerable people these charities support inevitably require higher spending than for general-needs renting. The charities working for them operate on the margins of viability and can easily be pushed over the edge. As well as supported housing being provided by specialist bodies, many of the larger housing associations have been keen to include schemes of this kind within their wider stock, but these social businesses cannot absorb loss-making projects. It is very hard for them to sustain this specialist provision if supported housing becomes a financial liability Management costs are not the only ingredient that means supported housing must have higher rents than the norm. There are higher maintenance costs due to the higher turnover of tenants, greater wear and tear, more voids between lettings, more arrears, and even significantly higher insurance premiums. Yet without these housing schemes it is certain that a lot of people will suffer the most acute deprivation, including living out on the streets. Moreover, the wider impact on society from neglecting their needs will be immense. The Homes and Communities Agency found that supported housing work produced a net positive financial benefit of some £640 million—more than six times the savings that the Government would obtain from cutting rents by the fourth year of this rent-cutting policy The accommodation covered by the amendment has already been given special status in respect of the new benefit cap and exemption from the so-called bedroom tax. Therefore it seems entirely consistent to exclude these hostels and specified accommodation schemes from the requirement for rent cuts. The Government have stated that it might be possible for an organisation which could face extinction as a result of the rent reductions to apply for a waiver from this requirement. However, there are two flaws in this approach to solving the problem now facing housing. First, the specialist charities requesting a waiver face ongoing uncertainty and an unknown, potentially bureaucratic and time-consuming process to decide the somewhat extreme question of whether they will become insolvent rather than just be completely undermined by losing so much income. Secondly, the waiver route does not address the issue of supported housing provided within their wider role by larger housing associations that do not face financial ruin but which are likely to pull back from pursuing this kind of accommodation if rent cuts render supported housing loss-making If an association with wider objectives has to improve its financial viability by closing its supported housing schemes, the effect will be just as bad as forcing a small charity out of business. This is where we get into the issues raised by the Minister on the difference between exempting organisations by providing a waiver if they look like they are going bust because of the rent reductions, and excluding categories of housing—the category in this case being supported housing I know that the last thing the Government want is to undermine housing provision for those in the most acute need, with all the extra expenditure for the NHS, social care, the justice system and the rest which would follow. I believe that the Government already have a concession of this kind in mind, but confirmation of the position by the Minister is needed urgently because the process for a rent reduction on 1 April, with the sending out of thousands of notices to tenants and local authority housing departments, which will be very hard to rescind, must begin at the end of this month I must conclude with a footnote, albeit a rather important one. The Government are also planning to introduce another constraint: a cap on housing benefit for council and housing association tenants at the same level as for tenants of private landlords; that is, at the local housing allowance level. This ceiling is not a problem for the great majority of housing association properties since their rents are lower than in the private rented sector. The noble Baroness, Lady Hollis, suggested that they are something like 40% to 50% lower. But, of course, rents for supported housing—the kind of housing that private landlords do not provide—are obviously much higher For example, a homeless project for people with mental health and/or drug and alcohol issues is currently charging £119 per week, but the relevant local housing allowance maximum for an ordinary one-bedroom flat is £84 per week, so the new cap at LHA levels would mean a loss of £35 per week per flat for the project. A purpose-built autism scheme for enabling people to move out of institutional care would face a shortfall of £90 per week per flat, even though the scheme saves huge sums compared with the costs of leaving people in the institutional setting.