Sir George warns about Government plans not to pay housing benefit direct to landlords
7 Dec 2005
This is the text of a speech Sir George made in the House:

Sir George Young (North-West Hampshire) (Con): We are grateful to the hon. and learned Member for Redcar (Vera Baird) for raising this subject this morning. She said that she is not a housing expert, but, if I may say so, she did jolly well. I am not a housing expert, but as I was a Minister with responsibility for housing for 10 years, I was one—or I certainly hope that I was. It is residual memories of that experience that prompted my interest in this morning's debate.

The hon. and learned Member for Redcar is right to raise this subject, because many in this Chamber know that in the early 1990s an apparently innocuous change to housing benefit was passed and was implemented on 1 April of a given year. Shortly afterwards, our postbags were full of complaints and the whole system had to be revisited. In a moment, I will say a word or two about a reform that has some comparison with the one we are discussing: the community charge. I put down a warning to Ministers about that.

This debate is being responded to by a Minister from the Department for Work and Pensions, whose presence I welcome. There is inevitably some tension between the DWP's view and that of Housing Ministers when it comes to housing policy, particularly when the payment for housing policy comes not from the Housing Minister's budget but from someone else's. I hope that the Minister will be able to say that he speaks as one with his colleagues in the Office of the Deputy Prime Minister, who have responsibilities for housing policy. There have been tensions in the past.

I want to pick up a point that the hon. and learned Lady raised at the end of her remarks about the Government's intention to roll this scheme out to registered social landlords. The arguments for doing so are weaker than they are in relation to the private rented sector, because extortionate rents are not being underpinned and there is no need to require people to shop around.

I hope that the Minister will consult those who provide the funding for housing associations—the Council of Mortgage Lenders and other institutions. They are interested in the cash flow of housing associations, to whom they advance funds. If, for the sake of argument, there was evidence that the scheme might slow down the cash flow and have some impact on bad debts, that would not stop them lending to housing associations, but it would affect the rate at which that lending was made. That would in turn have an impact on the output of social housing.

The Joseph Rowntree Foundation pointed out last week that fewer new social houses are currently being built than at any time since the 1920s. I do not think anybody would want to introduce a policy that further reduced the supply of social rented housing. I hope that the Minister will give an assurance that if the Government are to roll out the scheme to the RSLs, they will consult mortgage lenders and others to ensure that it does not damage the supply of such private rented housing.

I have had informal consultations with the housing association in my constituency, Testway, which is a large-scale voluntary transfer organisation. I discussed the matter with tenants and the housing association. They are concerned about t the impact if the policy were to be rolled out to social landlords. I agree with what the hon. and learned Lady just said about the potential disadvantages if that were to be carried out.

I mentioned a moment ago that the policy had something in common with the community charge. Before the community charge was rolled out in England, which, I hasten to say, I voted against, those on low incomes had 100 per cent. of their rates paid direct to the local authority. They were not troubled by the rates. When the community charge was introduced, they were asked to pay roughly 10 per cent. They got that through their benefit and what they received was based on the average.

The theory was that that would act as an incentive to vote for prudent local authorities, so that the average that they received left them in pocket if they had a prudent local authority. The policy was not a thundering success. It failed mainly because it was regressive. People should not forget the administrative chaos that accompanied the introduction of the community charge. The money was paid through their benefit to people on low incomes—they got their 10 per cent.—but it did not find its way to the local authority, because it had other priorities and there were lots of bad debts. There is a risk of that particular feature of the community charge being replicated in this particular social policy unless precautions are taken.

Another point I want to make is that if one listens to the policy of the Government, one would think they were keen on choice. In their education and health policies, parents' choice and patients' choice are key
elements. However, this policy removes choice, as the hon. and learned Lady said. People will have no choice. Instead of people opting to have their rent paid directly to their landlord, the money will be given to them, unless they can prove that they are vulnerable. To that extent, this sits uneasily with the vocabulary of the Government, which is pro-choice, because this is a social reform that removes choice.

The hon. and learned Lady also mentioned the potential impact on the supply of private rented housing. One of the housing policy successes of the past 15 years has been the revival in private renting. There has been all-party agreement on the tenure form—the assured tenancy. The percentage of housing stock that is privately rented has shot up; speaking from memory, I would say that it has risen from about 5 per cent. to well into double figures. It would be sad if that revival were arrested because a change in the way housing benefit was paid led to private landlords withdrawing from the market, particularly in respect of the supply of houses to those on low incomes who for whatever reason are not a priority with local authorities, but who can currently get good quality accommodation from the private rented sector.

The community charge ended with the downfall of the then Prime Minister. I do not know whether the Secretary of State for Work and Pensions is hatching a sinister plot to bring forward the departure of the present Prime Minister by steaming ahead with a social policy that will have the same outcome, but he and his colleagues would be well advised to think it through before they steam ahead.

My final point comes from helpful analysis by the citizens advice bureaux. They made a clear recommendation about the rate for the under-25s, who have a lower rate in respect of entitlement. Is the Minister minded to accept that recommendation? Does he smile sympathetically on it?

To pick up a point of the hon. and learned Lady, a lot of resources went into the pathfinders. I expect that that helped to minimise the damaging fallout from the policy. Unless the same amount of resources is invested in the roll-out of this scheme, and unless the allowances are pitched at a fairly generous rate, the outcome now will be worse than in the pathfinders. If the Treasury has anything to do with this—I am sure it will—it will be anxious that the average rate is not pitched at too high a level. There will also be some drift, as the hon. and learned Lady said, and in respect of local rents what is the average will become the floor. What is the Minister's reaction to the CABs' sensible recommendations? Will he give an assurance that if and when this scheme is rolled out, the CAB recommendations will be an integral part of the roll-out policy?

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Copyright Sir George Young Bt. 2015