Work and Pensions Committee

Oral evidence: Support for housing costs in the reformed welfare system, HC 720
Wednesday 6 November 2013

Ordered by the House of Commons to be published on 6 November 2013.

Written evidence from witnesses:

Professor Suzanne Fitzpatrick, School of the Built Environment, Heriot­Watt University, Robert Joyce, Senior Research Economist, Institute for Fiscal Studies
Steve Wilcox, formerly professor of housing policy, University of York

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Members present: Dame Anne Begg (Chair), Debbie Abrahams, Graham Evans, Sheila Gilmore, Glenda Jackson, Kwasi Kwarteng, Stephen Lloyd, Nigel Mills, Teresa Pearce, Dame Angela Watkinson

Questions 1-74

Witnesses: Professor Suzanne Fitzpatrick, School of the Built Environment, Heriot­Watt University, Robert Joyce, Senior Research Economist, Institute for Fiscal Studies, and Steve Wilcox, formerly professor of housing policy, University of York, gave evidence

Q1   Chair: Can I welcome you this morning to our very first evidence session of our inquiry into housing costs in the reformed welfare system?  Thank you very much for coming along this morning.  I wonder if you could start by introducing yourselves for the record.

Professor Wilcox: I am actually former Professor Steve Wilcox, University of York.  I formally retired at the end of March, but I have had an interest in housing and welfare reform policies for far too many years.  Indeed, it has been my privilege to act as adviser to this Committee on previous occasions.

Professor Fitzpatrick: I am Suzanne Fitzpatrick, Professor of Housing and Social Policy at Heriot­Watt University.

Robert Joyce: Robert Joyce, senior research economist at the Institute for Fiscal Studies.  I work in the direct tax and welfare sector there, and do a lot of work around welfare reform.

Q2   Chair: During our last inquiry into housing costs, when we were looking at the local housing allowance and its implementation, Government Ministers said that the effect of the cap on LHA would effectively mean that landlords would reduce their rents.  Now, I understand from your own research, Mr Joyce, that that has not happened; the rents have not actually fallen.  Is it just too soon for that to have happened—for that kind of effect to have taken place—or do you think that it is unlikely that the caps on LHA are going to reduce rents?

Robert Joyce: The fact that we have not initially seen much impact on rents does not really tell us much about the long-run impact necessarily.  It would not be surprising if this reform ultimately does have an impact on rents, but I cannot predict whether it will or not.  There are reasons why we might expect any impact to be lagged, and we see evidence of some of those, such as limited awareness of reforms from claimants; our consortium partners, in the evaluation done for the Department for Work and Pensions, did a survey, and their survey suggested that the majority of claimants initially were not aware that the scheme had changed, even just after it had actually started to affect them.  That might be one reason why it is taking longer to see rents being renegotiated and for impacts to feed through. 

There is also some evidence of arrears building up. You might think that is the first step before rents start getting lowered formally.  There is some evidence that already landlords are informally just accepting lower rents without changing the contractual rents.  In a sense, there may be some real effects there, but they are not captured if you just look at the contractual rents that are recorded in the administrative data.  Presumably, eventually, that will feed through into formal rent.  I cannot predict what is going to happen to rents in the future, but it would not be surprising if they fell, even though they have not initially.

Q3   Chair: It is early days, in terms of the supply of houses.  Presumably, landlords will drop their rents if they cannot get tenants—or is it the case that the supply is still less than the demand?

Robert Joyce: The main determinant of what will happen to rents is the relative supply and demand, and the level of responsiveness of supply and demand to rent levels.  Some of the academic literature that has looked at what happens to rent levels when you change rent subsidies has tended to find that a lot of the effect of rent subsidies is to change rents, and that is because they find that supply tends to be relatively unresponsive.  That might be one reason why you would ultimately expect to see impacts on rent.

Q4   Chair: Are there geographic differences?

Robert Joyce: We found some evidence of that.  It is a little harder to be precise about geographic differences, because often rents within particular regions are quite volatile anyway, and so it is harder to unpick the effect of the reform from just normal volatility.  However, we found some evidence that people in the West Midlands, Scotland, and urban areas outside of London were better able to get rent reductions than people elsewhere.  As I say, those regional differences are actually made less precisely than the overall effect.

Q5   Chair: If there is such a time lag on the rents, are there any other ways that landlords are responding to the caps in local housing allowance?

Robert Joyce: Again, looking at the qualitative research that our consortium partners did in the interim report as part of the evaluation of this, one thing that came up was that housing advisers suggested that landlords who take LHA tenants tended to place more stringent requirements on them in terms of things like more rent in advance, larger deposits, perhaps seeing them as riskier prospects and responding to that.  There is also some evidence that in some areas, particularly in London, landlords were looking to replace LHA tenants with non­LHA tenants.

Q6   Chair: So there was some evidence that landlords were being resistant to taking people who were essentially on benefit.

Robert Joyce: There has always been some segmentation in the market between some landlords who prefer not to take LHA tenants or housing benefit tenants, and some who do not mind.  I cannot say with any confidence whether that has particularly changed in response to the reforms.

Q7   Nigel Mills: Obviously, we are in a world now where benefits will be rated by CPI, not by actual local rent increases.  I guess it is too early to say on that, but do you see that having an impact on this market as well, driving on the behaviour that we are just starting to see?

Robert Joyce: Certainly, eventually, it is going to have a big impact.  Obviously, there is a change to indexation, and the impact of that will tend to grow every year into the future, assuming that real rents continue to grow, so that CPI inflation is lower than what LHA rates would otherwise have gone up by.  In time, I think this will be a major, major reform, and it should be taken very seriously.  In terms of the impacts, it would be useful to break that down into two components.  One is just the fact that it is generally going to mean that housing benefit rises less quickly than it would otherwise have done, and it will generally mean that it will cover a lower share of people’s housing costs over time, assuming that rents continue to grow in real terms. 

You can think of it just like most cuts to housing benefit; the general impact of cuts to housing benefit will apply.  It will tend to mean that people may spend less on housing, as they now face more of the additional cost of choosing to live in more expensive housing.  It may mean they work more, either because there is an income effect—they have a shortfall now that they need to plug—or because reducing housing benefit tends to strengthen work incentives, in the sense that you have less to lose when you enter work, as there is less housing benefit you are getting.  They might also buy less of other things.  The general impact of a big cut to housing benefit will apply, but there is also the fact that it means that there will be a difference between areas where rents grow quickly and where rents grow slowly in the future, because that will no longer be reflected in what happens to housing benefit entitlements in different areas, and other components. 

Over time, after 2012-13, you would expect people to live in areas where rents grow quickly less than they would otherwise have done, and more in areas where rents grow slowly.  Initially, the impacts are going to be small, but given the change to indexation, they will grow and grow over time.  It is going to be a major reform.

Q8   Nigel Mills: How much evidence was there that it was the level of housing benefit that was driving up rents, rather than the other way around, with the market dragging housing benefit up?

Robert Joyce: There is certainly some evidence that, if you look at the distribution of rents in a particular area, there is a spike in the number of rents that are basically around the LHA rate, so it is evidence that landlords do use that as a benchmark.  There is some evidence that there is some causal effect going from LHA rates to rent levels.  Clearly, it is not the only thing that affects rent levels.  We probably would expect rent levels to continue to grow in real terms, regardless of what the uprating of housing benefit is.  We can still fairly confidently expect that the reform will result in LHA covering a smaller proportion of rents than it would otherwise have done.

Q9   Nigel Mills: Can I turn to Professor Fitzpatrick?  You expressed a concern that extending the shared accommodation rule up to people aged 34, I think, would result in some vulnerable people moving into inappropriate shared settings.  Could you just explain a little more about this?

Professor Fitzpatrick: The shared accommodation rate has been extended to single, childless people under 35.  There are very limited exceptions to that.  There was an exception introduced for people who have spent at least three months in a hostel, and also for offenders who pose a significant risk to the public, but those are very restricted, very narrow exceptions.  That means that in shared accommodation, which there is a very limited supply of in many parts of the country, you have an increasing range of people sharing what are essentially stranger settings.  You are sharing with people you have not chosen to share with and you do not necessarily know, and you have got a wide range of ages sharing, from 16, 17 and 18 up to 34, which raises a lot of concerns for the youth-homelessness charities we work with, in terms of younger people being in situations where they may be exploited by older people sharing the accommodation. 

There are some very specific concerns around people with mental health problems or drug and alcohol problems sharing, and that creating an environment that does not feel particularly safe, especially for women and other vulnerable people who have experienced violence, abuse and so on in their home settings, which has led them to leave either relationships or the family home.  There is a whole range of groups who might find themselves in shared settings who are either difficult to live with, because of their own issues, or find it an even more uncomfortable environment than most of us would because of their own vulnerabilities.  There are a lot of issues.  The shared accommodation rate raises a lot of concerns, but that specific concern about vulnerable people is one that has particularly exercised, I would say, the youth homelessness charities and groups representing, say, women fleeing domestic violence.

Q10   Nigel Mills: Instinctively, you would not think somebody who was 33 was more vulnerable in shared accommodation than somebody who was 23.  It was more who they might end up sharing with, or why they end up sharing.  Have you ever looked at how other countries do this?  Is 35 atypical of how other European countries handle single people who need housing support?  Were we very generous when we had the limit at 25?

Professor Fitzpatrick: Just to pick up your first point about a 33-year-old versus a younger person, the point is that younger people under 25 who were sharing now increasingly find themselves sharing with 32, 33, and 34 year olds, some of whom may be the sort of people that you would not want a vulnerable 19-year-old young woman, say, to be sharing with.  It is more about that broader age mix affecting younger people, and also more vulnerable people in the mix. 

In terms of other countries, I may have to pass that on to my colleague, Steve Wilcox, but the key point is that the housing benefit scheme as a whole is very unusual.  Certainly, most other north-western European countries make some allowance for housing costs within the general income maintenance benefits, rather than pay for it entirely separately, as we do under our housing benefit system.  These sort of specific issues around the SAR are part of that general approach that we have to housing benefit.  I will maybe pass that point on.

Professor Wilcox: It is too long ago since we did the research report on that for me to remember the details.  Certainly, there are other countries in Europe where there are age limits on levels of the wider welfare benefits, but as Suzanne was saying, it is about the wider welfare system in those countries, rather than specifically about the housing allowance.  That is a much smaller part of the total package, so it does not have quite such a direct housing effect. 

One other thing is that it is actually quite difficult to get real hard data on the impact of the lower shared accommodation rate, because although it is now possible, under the new way in which the DWP is releasing its benefits statistics, to get quite a disaggregated picture, for example, of the number of younger single people living in different tenures, and you can break that down to a regional and a local level, at the time these reforms were introduced, all that was ever published was a single figure saying how many people there were in the age up to 25 and in the age between 25 and 34 across all tenures.  We have not got the benchline data that will tell us what has been happening, in terms of those groups being able to access the private rented sector.  The overall number for those age groups has been going down, while for all age groups, the numbers have been going up in the private rented sector, but we have not got the hard data to really evaluate quite what the impact has been.  It is there within the Department, but it is just that the routine data they publish does not show it.  That might be something the Committee might want to get hold of to help it get a fuller understanding of these regulations.

Professor Fitzpatrick: Can I add something to that?  The analysis that we have done for the homelessness monitor of the labour force survey raises a suggestion, at least, that many of the under-35s who are now affected by the SAR may be—instead of moving into shared accommodation that seems to be very difficult to access in many parts of the country, particularly within reach of the 30th percentile of the SAR—disappearing, so to speak, into concealed households.  The labour force survey suggests that the number of concealed households is rising, and the number of sharing households is falling.

Q11   Chair: What is a concealed household?

Professor Fitzpatrick: “Concealed households” covers a range of different categories, but it is basically a household that is living within another household, rather than as a separate household themselves.  These are adult single people, or low-paid families.

Q12   Chair: So it is an adult non-dependent?

Professor Fitzpatrick: Yes, it is an adult non-dependent.  You can split it between family and non-family and so on.

Q13   Chair: So that could be a family living in a room of an aunt, for instance.

Professor Fitzpatrick: It could be, but not necessarily with anyone whom you are related to.  It basically means you do not have separate accommodation of your own, but you are not in a shared situation, either, where a number of different households are sharing accommodation.  There are issues around the data, and it is not entirely clear what is going on.  There was a suggestion that there is a shift from shared to concealed households, which may be linked with the SAR.

              Nigel Mills: A concealed household is basically a rented room, is it?

              Sheila Gilmore: Or a sofa.

Q14   Glenda Jackson: This is entirely anecdotal: I have met two under­35s, recently released from prison, and the only place we could find for them was, in effect, a dormitory where there were seven other people.  They are claiming housing benefit, but it is certainly not a home that they are in.  Essentially, I wanted to go back to the first point about whether rents have come down.  Certainly, in my part of the world, they have consistently gone up—this is in the private rented sector, of course, although we are seeing it bleed into certain registered social landlords—and there is an absolute refusal to take people, as far as the landlords are concerned, on housing benefit.  How is this actually measured?  I get the feeling that all of the figures are put together on a national level.  We all know that London and the South-East are on a promontory of their own, but then we are told by the Department that rents are going down, when they patently are not.  Is this because the whole of this is put together and divvied up, if you see what I mean?

Robert Joyce: Our evidence does not suggest that in some areas there are clear reductions in rent.  There are slight differences, as I mentioned, between regions, but it is not like our average estimate that there has been basically no impact on rents conceals the fact that in some areas there has been a big reduction, and in other areas there has been nothing, or a rise.  It really is that, across most of the country, our best estimate is that the effects, initially, of these reforms on rents was pretty close to zero; that is what our evidence suggests.  There is some variation, but it is not like the overall figures are masking really big reductions in rents.

Q15   Glenda Jackson: Are they masking really big rises?

Robert Joyce: Against an underlying trend where rents are going up, if the effect of the reform is to reduce rents, that would not necessarily mean that we observe rents going down in nominal terms overnight.  It will just mean they go up more slowly than they would otherwise have done.  We would not necessarily expect to see nominal falls in rents.  That would not necessarily have to happen in order for the reforms to have had a downward impact on rents, which is what we are trying to get at.  We are trying to get at whether the rents are lower than they would otherwise have been.  That does not mean that rents have to be lower than they were in 2011, because they might have gone up anyway.

Q16   Glenda Jackson: You are not looking at whether they are higher than they would have been?

Robert Joyce: We know that they are higher.  That is what we are looking at, yes.  Our best estimate is that rents are basically exactly as high as they would have been without the reforms, initially.  That was our estimate of the initial impact of the reforms.

Q17   Stephen Lloyd: One of the things that the previous Government started introducing is a default for the housing benefit to go direct to the tenants, rather than the landlords.  The coalition Government has carried on with that, and even extended it.  How do you feel that is working over the last year or so?  Do you think it is making it easier for landlords, or harder?

Robert Joyce: I am not sure whether I am the best person to answer that.  Anecdotally, I hear landlords concerned about arrears and not getting the money when it is not paid directly to them.  I do not really have anything more detailed.

Q18   Stephen Lloyd: Professors, have you got any evidence on what is happening yet, or is it too early?

Professor Wilcox: I have not got hard evidence in terms of surveys on this point.  The clear point there is that since the local housing allowance system came in with the presumption of payments going to the claimant, although the landlords were very opposed to that proposal, in practice the numbers of claimants able to access the private rented sector continued to rise quite rapidly after the new LHA regime came in.  I cannot recollect the source of this, but there was some work looking at the number of landlords who took up the Government’s offer to make this commitment to reduce their rents to the lower LHA rate in return for getting payment direct.  However, my recollection was that the indication was there was very little of that going on, which is not surprising, because it is now quite clear that within the wider context of universal credit reforms, that was only ever going to be a very short-term measure. 

Quite clearly, there are issues about it, and social landlords are now expressing the same sorts of concerns that the private landlords were before the new regime came in.  The critical area here will be the findings of the areas where they are piloting direct payments to social tenants.  It is about getting the rules to be very effective where you have got vulnerable households and households with histories of arrears, so you can get a very quick transfer of payments direct to landlords.  You can try to balance off the objective of trying to have claimants with fuller responsibility and control of their budgets against both protecting them in terms of their housing and protecting landlords in terms of their business.

Q19   Stephen Lloyd: That is terribly interesting.  Do you know when those pilots are actually wrapping up and we will have the results?  Any ideas?

Professor Wilcox: You can get initial results from those informally, because the local authorities and landlords in it are quite happily going around the country at conferences, talking about it.  The formal evaluation is going on for another year.  They have extended the length of it.  It is a question of what comes out of it about the rules for making the transfers.  That is the most critical element of that.

              Chair: We will have some landlords in front of us at a later stage.

Q20   Dame Angela Watkinson: Could I just go back to the matter of shared accommodation for a minute?  Sharing accommodation is common practice among young people who are not on housing benefit now, maybe to share the costs, but of course they are able to choose the person whom they share with, which is quite a big issue.  Is there an assumption in your findings that the people on housing benefit who are in shared accommodation are unable to live with their own families at home, or is it that their home and family circumstances are worse than whatever the shared accommodation happens to be like?

Professor Fitzpatrick: There is a very broad group of under-35s caught with the shared accommodation rate, so it is not entirely an issue that is to do with the very most vulnerable end of the spectrum.  Clearly, there are a lot of people in a range of circumstances who are caught with the shared accommodation rate.  My evidence in the homelessness monitor tends to be about people at that more vulnerable end of the spectrum: people who have been through a homelessness situation, or have been threatened with homelessness.  For that group, there is very strong qualitative evidence that it is not possible for them to live at home.  It may not be safe for them to live at home.  That is not at all to say that the whole group of people caught by this shared accommodation rate are in that situation, but there is certainly a substantial group of people whom the youth homelessness charities work with.  Youth homelessness is rising quite fast at the moment. 

People in that situation cannot live at home for a whole range of reasons—increasingly, financial reasons as well, now, because if they come from low-income families where the adults in those households are also finding their benefits cut, that tends to lead to very high levels of friction between children and adults in those households.  The child very often has no choice but to leave home, because their parents are entitled, in law, to remove the licence for them to live at home once they are of a certain age.  It is 16 in Scotland; there is a bit more of a debate in England as to the position of 16 and 17-year-olds, but certainly 18 upwards, the young person has no right to continue to live in the family home.  If the parents withdraw the licence, they have to go. 

That actually is unlike other countries, where the duty on parents is to accommodate and fund their children at least until age 21.  In most countries—countries like the Netherlands, Sweden, and so on—where parents have those duties, people would tell you that it is almost impossible to enforce them.  However, it does mean that there is a different culture about what happens with an 18 or 19-year-old.  There is a great deal of friction.  Certainly for the vulnerable end of the spectrum, the evidence would very strongly suggest that those people do not have a choice.

Q21   Sheila Gilmore: At the time of the changes to LHA, there was a debate around what proportion of the private rented sector was also covered by housing benefit—in other words, what proportion of the private rented sector was people receiving housing benefit.  The argument appeared to be that it was a sufficiently large proportion to drive changes in rents.  I wondered if there was any clearer information now about what the proportion is.

Robert Joyce: I do not have anything precise.  I would have thought it was not too difficult to get a reasonable handle on that. 

Professor Wilcox: The reason why there were issues about it is that, in a sense, the data on benefit numbers becomes available very quickly, and the data on the numbers of dwellings in which there is tenure becomes available much more slowly, as a result of surveys and so forth.  Obviously, with the census, we have now got very robust data for 2011.  On one set of projections, I think, the Government had thought that something close to 40% of the market was covered by people on housing benefit.  From memory—I had not seen those figures before today—the outturn figures were closer to about 35% than 40%. 

Perhaps the key point is that you have very strong variation in that from locality to locality.  It is not just regional; it is very much about local housing markets.  We were part of the team that did the initial evaluation of the LHA for the Department, and one of the things that came out is that you had variations between areas like Teignbridge in south Devon—where the private rented sector claimants represented only about 8% of the local market, and so were relatively insignificant—and elsewhere.  In Teignbridge, there was a high level of demand from other claimant groups for the properties in that area.  There are other areas—Blackpool and north-east Lincolnshire come to mind—where the proportion of housing benefit claimants represented closer to four fifths of the total housing benefit market.  Quite clearly, in those different market situations, you would anticipate a different likely impact of trying to change the LHA rules.  In what you might call the benefit-dominated markets, you would expect to see more of a change, but in the markets where housing benefit is relatively insignificant, it would not be surprising that you see something like the near-to-zero impact that has been suggested.

Robert Joyce: Just to add to that, in the initial evaluation of the LHA changes, we did look at what happens if you split areas according to an estimate of the share of LHA recipients in the private rental market in each local authority; we had to do an approximation, for most of the reasons that Steve outlined.  There, we found that you do not really see any effect on rents, either in the bottom or top quintile of local authorities listed according to density of LHA claimants.  The zero was zero across the board.  Clearly, if and when effects on rents do start to materialise, we may expect that to happen more in areas where LHA claimants make up a larger proportion of the market than in areas where they do not, although that will also depend on how segmented these markets are.  There are some landlords who will not let to LHA claimants.

Q22   Sheila Gilmore: I could not help noticing that in the Lothians, which is bigger than just Edinburgh, when the change was made from the median to the 30th percentile, the LHA for a one-bedroom flat, and I think for two-bedroom flats as well, was nearly the same at the end of the year as it had been at the beginning.  In other words, the 30th percentile had crept up to be in the same cash terms as the previous median, which suggests that rents were rising.  Presumably, that tracking will cease with the link to the CPI.

Robert Joyce: Yes, exactly.

              Sheila Gilmore: Or 1%, as it now is.

Q23   Chair: Professor Fitzpatrick, you said that youth homelessness was on the increase.  There was always the accusation made that young people knew that if they declared or made themselves homeless, then they would get a house, which would be paid for by housing benefit.  With the increase of the shared accommodation rate to age 35, that correlation surely does not exist.  Maybe that was never true, but it was certainly an urban myth.  What is the reason now?  It cannot be that young people know they are going to get a house, because they will not now under the changes to the shared accommodation rate.

Professor Fitzpatrick: The suggestion that youth homelessness is rising is not particularly based on the statutory homelessness figures—people coming forward to local authorities—although, as Committee members may know, we had quite a long-term decline in the overall numbers of statutory homeless for seven or eight years under the prevention policies that were introduced by the last Administration.  Since 2010, the overall numbers of statutory homelessness applications and acceptances have been rising.  There has been some increase among young people, as in other groups, but only since 2010.  My main source for that is data derived from the analysis we do, for the homelessness monitor, of administrative data sets and survey data sets, and in particular, the Poverty and Social Exclusion survey, which covers the whole of the UK and asks people their experience of homelessness.  It suggests a) that the experience of homelessness is very heavily concentrated among 16 to 25 year olds, and b) that the incidence of it has been rising over time.  That is nothing to do with people applying as homeless to local authorities; it is asking people in surveys whether they have experienced a range of homeless situations.  That evidence is quite independent of any of these incentive issues that you outlined. 

On the incentive issues, clearly there has always been a big debate around the homelessness provisions, and it is difficult to deny that if people are given some sort of priority in social housing allocations, particularly in the areas of highest demand, then there is some incentive in the system for people to place themselves in that position.  However, an incentive being there in principle or in theory is not the same as it being acted on in practice, and the evidence of young people or other age groups acting on the incentive to put themselves through the homelessness system is actually extremely slight.  I did a very large survey when I was at the University of York some years ago, paid for by the Department for Communities and Local Government.  It was a major survey of homeless 16 and 17-year-olds and homeless families.  We looked at this issue in detail, and we found very little evidence indeed of people putting themselves forward as statutory homeless in order to get speedier access to council housing.  I do think that the evidence, such as it is, is very anecdotal on that point.  The point that youth homelessness is rising is, in any case, a separate one about what the survey evidence is telling us on that.

Q24   Glenda Jackson: What impact is the benefit cap having on families with children?

Professor Wilcox: The only report I have seen that goes into any detail on that so far is one that was published by Haringey Council and the Chartered Institute of Housing.  The key thing that was showing is that, of the families who were affected by the overall benefit cap in Haringey, 90% were in the private rented sector.  Only half of those were in, if you like, the straight private rented sector, and the rest of them were homeless families in temporary accommodation, as part of the homeless route.  One of the almost ironies in that was that had the majority of those households managed to secure a transfer to Haringey council housing, or housing association housing at social rents, they would have ceased to be impacted by the cap.  The cap is particularly impacting on families in the private rented sector, and a very small number of much larger families who would be impacted by the cap regardless of any level of rent.

What I found surprising about that—and I had not thought it through—was the way it was cutting across the way that local councils were trying to deal with homeless applicants, and it was actually creating a difficulty for the local authority in terms of how they managed the whole process of providing temporary accommodation for homeless families ahead of a longer-term solution.  Obviously, homeless families in temporary accommodation are not in the best position to resolve employment issues when their housing situation is right up in the air as well.  There are also quite strong, good reports of a lot of positive work being done by landlords trying to support all of those families into work, and to the extent that happens, I am sure everyone would welcome that.  Equally, for a lot of these families, there are very significant difficulties about whether they are ready, or can make that change in short order.

That, frankly, raises questions for local agencies in terms of whether the revised rules that are now being set are consistent with their aims, objectives, and missions, and if they do not feel that the national benefit scheme is supporting them to provide their mission, a number of them are looking much more at their own kind of welfare policies, to step in where they feel that the state scheme is no longer meeting their aims and objectives.

Q25   Glenda Jackson: Again, this is anecdotal, so I am asking you if you have any hard stats on a broader range.  Many of those families who have lost their homes in the private sector because of the benefit cap are in work.  The problem, as far as my local authorities are concerned—I am talking about families with children—is that they still have a statutory obligation to put a roof over those children’s heads.  They are finding it increasingly difficult so to do, and so those families are being moved, for example, to Birmingham and Luton; they are the two favourites at the moment.  What are the implications of that for the future?  I cannot see any way at the moment that local authorities are going to be able to find a solution, other than saying to people, “You actually have to move out of the area that you have known, and your children have certainly known all their lives”.

Professor Wilcox: Are we talking about two slightly different, but related, issues here?  There is the benefit cap within the local housing allowance regime, impacting London across the whole private rented sector, which will impact on both working households and non­working households, and then there is the overall benefit cap of £500 a week, which applies just to working-age households not in employment, which is the one I was talking about.

              Glenda Jackson: Sorry, I was talking about the other one.

Professor Wilcox: There is a general issue about tension between benefit policies on the one hand and housing policies on the other.  I worked for a local authority association in London some 40 years ago, and there were tensions then, but I have to say that some of the policies that are now there in both forms of the benefit cap have a particular impact in London.  In one sense, they are designed to have a particular impact in London, but they are very much at odds with the duties on local authorities, particularly in terms of homelessness, and so it is difficult to see how local authorities continue to be able to meet those duties, even with moves to move temporary accommodation households some considerable distance from London.  There comes a point where you have to say, “If these policies of two different Government Departments are so much at odds, something has to give.” One has to be realigned with the other, and it is very much a policy decision which way you go, but we are in that uncomfortable position at the moment where the two are fighting against each other.

Q26   Glenda Jackson: Is there anything that Government, local authorities, or charities—the whole range—could do by working together to ameliorate the problem, or come up with an alternative?  The point I am making is that we are talking about families with children specifically—that was my question—so this is broader than just housing people.  We are looking at children having to find a new school, and families where one or both parents are working.  They have to find jobs in another area, so this is across a much broader range than just housing.

Professor Fitzpatrick: We have still to see the main impacts of it, as well.  Until now, the London boroughs have mainly been using discretionary housing payments to make up the difference.

              Glenda Jackson: Yes, but only for a year.

Professor Fitzpatrick: Exactly.  As Steve says, we are in a position where, certainly within the London context, there is a direct contradiction between local authorities’ statutory duties under the homelessness legislation and what they are able to source for people that is anywhere near their home locality.  That circle is being squared at the moment using DHPs, but that is a short-term fix.  At the moment, we are not seeing very large numbers of families being relocated.  You are certainly seeing some, but you are not seeing very large numbers being relocated outside London.  Most of their placements at the moment are still within London, but there have been recent reports from Inside Housing that that is beginning to shift.  The numbers being moved outside London for temporary accommodation are going up; it is starting from quite a low base, but the overall number of out-of-area placements has doubled since 2010.  Out of 56,000 households, most of them families with children, in temporary accommodation in June of this year, 11,000 were in out-of-borough places, mostly elsewhere in London but increasingly outside London. 

As I say, at the moment, the really big impact of it is being held back by DHPs, but in the longer term there is exactly this issue.  As Steve says, a choice has to be made, particularly in the London context.  There are also issues, for example, with the guidance that local authorities have under the homelessness legislation.  In fact, a statutory instrument that has just been issued about the suitability of both the temporary and permanent housing that they have to secure for people talks about suitability, including affordability and location.  However, local authorities are unable to do what they are required to do under that statutory instrument, given the restrictions—the benefit cap, the LHA cap and other restrictions on housing benefit.  There is a big question there for London that has to be resolved; it has not been resolved as yet, and it has been put off, to some extent, by DHPs.

Q27   Glenda Jackson: You say it is for London, but it has implications for the rest of the country, does it not?

Professor Fitzpatrick: It does.

Q28   Glenda Jackson: If this is going to explode, and what is there on the ground at the moment makes it look as though it is, there are implications for the rest of the country, not least as regards the provision of school places, to go back to my earlier point.

Professor Fitzpatrick: Most of the families being relocated at the moment are overwhelmingly in London; there are some elsewhere, but they are mostly from London.  There are big implications for the receiving authorities as well, as you say, not just in terms of schools or housing, but also child care services; a lot of these families will be vulnerable families.  You are losing track of children who perhaps do need protection from children’s services and so on.  The implications are not just at the household level, important as those are; they are also for the local authorities that are receiving these households, and, of course, that is causing a lot of anxiety.

Q29   Glenda Jackson: There is the other aspect: most of these changes were introduced in the hope that people who were not in work would get work.  We have already made the point that it is very difficult to look for work when you have not got anywhere to live.  Presumably, there is that as well.

Professor Fitzpatrick: There is evidence, again, from the big survey we did of statutory homeless families some time ago that about a third of families who were accepted as statutory homeless had at least one adult in work, but mostly there was a big increase in the levels of worklessness after they had gone through the homelessness system because of the disruption that involved.  It is not just out-of-area placements; in general, the disruption of being homeless and being moved between temporary accommodation addresses and so on can make it very difficult.  I think it was about half of all children that had had to move school as well, so there are major issues of that kind at the household level as well.  Of course, those will be exacerbated enormously if you are moving people to the other end of the country.

Q30   Glenda Jackson: Is there something that you would suggest, or think should be suggested, that could ameliorate this situation, without fundamentally saying, “Scrap the housing benefit cap”?

              Chair: Bring down the housing costs in London.

              Glenda Jackson: Exactly, yes.

Professor Fitzpatrick: There is a contradiction there that has to be resolved.  If we want to continue to have statutory homelessness protection for families with children—and I would argue that we would want to do that, as a civilised country—then you have to look at the benefit implications, at least for that group.  That said, there are issues—Steve and I have discussed this in the past—around local connections to London boroughs, and whether there is an argument for restricting the statutory homelessness protection in London to a greater extent than you do elsewhere in the country.  It is a bit of a difficult road to go down, but it might be something that has to be looked at as well.

Q31   Glenda Jackson: On that issue of local authorities’ statutory obligations, is there any evidence that the non-exempt properties, for example, are making that task more difficult for them?

Professor Fitzpatrick: Sorry, I do not follow.

Professor Wilcox: The non-exempt properties?

              Glenda Jackson: For example, non-exempt temporary accommodation.

Professor Wilcox: If you look at the Haringey report, if the temporary accommodation for homeless families that is caught by that overall benefit cap could be exempted, that would certainly ease the process of local authorities dealing with families through what is actually a transitional period.  That would not remove or require removing the overall benefit cap policy, as once those households have then moved on into other accommodation, the likelihood is that they would be far less likely to be impacted by the cap.  It is just a transitional period when they are in, typically, a leased property in the private rented sector pending re-housing.

Professor Fitzpatrick: Bear in mind that people do not choose the temporary accommodation that they move into.  It is very expensive, but not because they are living in the lap of luxury.  It is accommodation that is leased from the private rented sector, by and large, in London, which is very expensive but, in many cases, not very good quality.  To penalise people through the benefit cap when they are in that particular situation seems even more difficult to justify than other aspects of that policy.

Q32   Glenda Jackson: Are local authorities getting closer and closer to actually breaking the law, in a sense, because they do have a statutory duty and they are not going to be able to meet it?

Professor Fitzpatrick: I think they are all considering their positions very carefully.  One of the key debates within local authorities is around this definition of suitability of accommodation, both temporary accommodation and accommodation that they may use to discharge their permanent duty, and around what view the courts will take on relocating families long distances and what view the courts will take on affordability.  Local authorities are considering whether to start moving much larger numbers of people outside London, and also how they can protect themselves from legal challenge if they do. It is a very live debate.

              Glenda Jackson: It is already happening.

Q33   Dame Angela Watkinson: I am also a London MP—an outer-London MP. There, property and rental prices are very high and local salaries are very modest, but there is a very wide range of reasons for people being homeless.  On the one hand, you could have a family who have always been independent and have lost their mortgaged home through redundancy, and are actively trying to get back into work again. At the other end of the spectrum, you could have somebody who has been in public sector accommodation, has been a very bad neighbour, engaging in antisocial behaviour, and lost their tenancy for that reason—long-term unemployed, with no intention of looking for work.  They are two very, very different circumstances, with all sorts of other circumstances in between. I think it is perfectly reasonable that the family who have no intention of ever contributing should be moved out of London, which is a very high-cost accommodation area, to somewhere where there are not only lower prices but greater availability.  I do not see anything wrong with that.  What do you think?

Professor Wilcox: There are a number of different issues there.

              Dame Angela Watkinson: I do not think the other area would be terribly happy to receive them.

Professor Wilcox: Well, quite.  The other issue, of course, is how long families in those more positive or negative scenarios have been resident in a particular area.  It would certainly be very difficult to make a case to exempt long-term unemployed families who could be in work but who do not move into work from any impact of the benefit cap, however it might be structured. 

However, the issues about pressures on London, in particular, are also about how you manage flows of households through London.  London is a very dynamic housing market.  There is more mobility in and out of London than there is in markets in other parts of the country, and there is the issue that Suzanne has alluded to.  When we look at the way market pressures operate in the private rented sector, housing, essentially, is rationed by price and household income.  In the social rented sector, we have a waiting-list system that is based on a variety of criteria, but where the main form of rationing is actually in terms of waiting time.  That varies.  In the areas with a very high demand, you will wait much longer on the waiting list than the areas of low demand. 

The homeless legislation actually has a completely uniform structure, and it has a uniform set of rules about local connection and whether people should be re-housed in a particular area, whether it is in central London or whether it is in—for the sake of argument—Middlesbrough.  There is a question about whether those rules are appropriate, and whether the particularly high-pressure areas should have the same duties towards households where there is a very limited local connection, and whether, although those households should be housed and supported under homelessness legislation, the way they are assisted could be structured in a different way and not necessarily fall to be dealt with by the particularly high­stress areas.  Certainly, for example, there would be a case for looking at a London-wide approach to the households without a very detailed local connection with particular London boroughs.

Professor Fitzpatrick: I agree with Steve on the point about local connection.  There are difficulties with it, but it is something that has to be looked at in the London context.  Just to come back to your scenarios, the statistics that we have from the local authorities, returned under the homelessness legislation, but also from survey data, suggest that both of the scenarios that you outlined are very, very small proportions of the homeless population.  The proportion of people who are accepted as homeless because of mortgage repossessions is less than 2% at the moment, even in the current climate.  It is a very, very small proportion.

Q34   Graham Evans: What is the typical homelessness scenario?

Professor Fitzpatrick: At the moment, in London, it is loss of an assured shorthold tenancy because a landlord has ended the tenancy.  Anecdotally, we understand this is mostly because they want to let it at a higher rent to a non-benefit recipient.  That is up to 27% of all acceptances in London; it is up to 22% nationally, which has more than doubled since 2010.  There is a massive increase in the proportion of homeless households that have become homeless because they end an assured shorthold tenancy and they cannot source another one because of the benefit restrictions. 

The other key group is people who become homeless after a relationship breakdown, and in half of all of those cases, domestic violence is involved.  The antisocial behaviour group and the mortgage repossession group might be seen as being at opposite ends of some sort of ethical spectrum, but in fact, a very small proportion of homeless households come into those categories.  Relationship breakdown and loss of assured shorthold tenancies are by far the most important causes of homelessness in London and elsewhere.

Q35   Dame Angela Watkinson: But what the good neighbours would describe as “neighbours from hell” are a continuing problem, and they have to go somewhere.  Nobody wants to live next door to them, and getting them to modify their behaviour is almost impossible.

Professor Fitzpatrick: I think everyone would agree with that, but there is a very small number of those people.  They have a very disproportionate effect on their immediate neighbours.  I think we would all agree with that.

Q36   Debbie Abrahams: I wanted to go back to the questions that Glenda was asking in relation to the effect of the benefit cap on incentivising adults and families to find work.  There has been a lot of speculation on what the actual effect is.  I wondered if you had any evidence of what that effect is.

Robert Joyce: I am not aware of any particularly good evidence on what the effect has actually been yet.  It is quite a difficult one to analyse, in a sense.  Thinking about who this group is, they are a very specific group of people, and a very small group of people as well.  We have a lot of evidence from the academic literature on how responsive people are in terms of their work decisions and how they respond to financial incentives, but this is a very specific group of people, and it is not clear that that other evidence is a great guide here.

For example, about half of the households affected by the benefits cap are lone‑parent households.  That is a group who are generally found to be relatively responsive to changes in financial incentives, so we might therefore think, “That could have a reasonably large effect on moving them into work”, but this is a very specific group of lone parents.  It is not clear that more general estimates are really going to apply to them.  One particular thing you might want to think about is that a lot of these families, we know, have lots of children, by the nature of the cap.  An issue for a lot of those is going to be child care costs.  It may be that a lot of them are quite far away from the labour market, in the sense that they would have to earn quite a bit just to cover the child care costs for, say, four children.  Three quarters of the households affected by this have at least three children, so this could be quite a significant issue.  It may be that a lot of these families are, in that sense, quite far away from the labour market.  They are a long way from it being perceived to be worth while for them to work, so even quite a large cut to their out-of-work income, which this definitely is, may not be enough.  Really, there is a lot of uncertainty about this.  I really would not want to speculate on what the effects are.  It is something that it should be possible to get some handle on once the data becomes available and we can analyse that.

Q37   Debbie Abrahams: So we should take the numbers that have been put out in the press with a pinch of salt, should we?

Robert Joyce: I have seen numbers relating to the number of people who were sent a letter in advance, warning them that they would be affected, and the number of those who have moved into work some period after that.  Of course, the question is how many more of those moved into work than would otherwise have done.  Over any period, some group of unemployed people move into work; the key thing there is the counterfactual: what would have happened without the reform? We do not know that, so that is why you need to try to evaluate this properly when we have the data available about people’s labour‑market outcomes and how they evolved after the reform came in, which I do not think we currently have.  It will be a difficult one to get a handle on, because it is a small group of people, but it should be possible to have more of an idea than we do now, at least, in time.

Q38   Kwasi Kwarteng: You are an academic for the IFS, or have some academic training.  I am interested in the methodology. How do you measure the effect on people going into work?  There are so many other factors: the state of the general economy, in terms of economic growth; obviously, the area where they live, and the economic growth affecting that; the time frame that you are looking at—short-term, longer-term, 18 months.  As a layman, I am interested to know how you measure the specific effect of the reforms on people going into work.

Robert Joyce: The key requirement, particularly when you have got a lot else going on, as you say, in the economy, is finding another group of people who are quite similar to those affected by the reform, but who were not affected by the reform, and you can use them as a kind of control group.  You look at what happened to them, and the difference between what happened to them and what happened to the affected group is the estimate of the effect of the reform.

Q39   Kwasi Kwarteng: But they would have to be in the same areas, as well.

Robert Joyce: Yes, you generally want them to have as close characteristics as you can get to the group who were affected by the reform, in terms of areas or whatever else may be relevant in that particular setting.  It can be very difficult, and there are some policies that are therefore easier to evaluate than others, precisely because there is a more natural control group that you can use.  In the case of the benefits cap, it is quite difficult.  This is a very specific group of people; who do you compare them to?  Who are the control group?

Q40   Kwasi Kwarteng: Forgive me: the whole point about the cap is that it has huge regional variation, because, obviously, the rental market, in terms of property prices and housing benefit, in the South-East will be different from that in other parts of the country.  It seems a very difficult control group to get—people with a similar demographic who are not affected.

Robert Joyce: It would be difficult.  You have to work quite hard to get one.  What affects your benefit entitlement?  What affects the line where you are affected by the cap?  One thing that affects it is the age and sex composition of your children, actually, if you are in the private sector, because that affects how much LHA you can get. You can have families who are almost identical, but the gender of one child differs, and that can affect how much benefit they get. That can be one specific case where you have two very similar families in the same area; one is affected by the benefits cap, and one is not. You can compare their outcomes.  You have to work quite hard in this particular case to get many of those people.

Q41   Kwasi Kwarteng: Also, the incentives to work will differ from the number of children, as well.

Robert Joyce: The number of children, certainly.  You probably would not want to use as a control group a family with a very different number of children.

Q42   Kwasi Kwarteng: My general point is that it seems that getting the control group you are looking for—I am not even sure what the time frame is—seems like a very difficult proposition.

Robert Joyce: I absolutely agree.  This is a particularly difficult policy to evaluate.  It was pretty much rolled out at the same time everywhere—not quite, but pretty much—so it is not like you can say, “At this point in time, this area was affected and this area was not; let’s compare those two areas.”  That is another way you can sometimes do it, if you believe the areas are similar enough.  It is a very difficult policy to evaluate.  It is possible to get some handle on the effects, or it will be.

Q43   Kwasi Kwarteng: I am not used to these sorts of surveys.  What time frame are you looking at?  Are you going to be looking at the effects over six months, 18 months, or three years?

Robert Joyce: Ideally, you would want to look at the effects over all of those.

              Kwasi Kwarteng: I see.  So you are tracking it.

Robert Joyce: Yes, and even before the reform came in, there might be anticipation effects of the reform.  The aim was to warn people in advance that they may be affected.

Q44   Kwasi Kwarteng: Can I ask one more specific question?  Clearly, you have studied this thing closely.  There must come a point at which the effects of the reform are played out, if you see what I mean.  I am assuming that in six years’ time, or at some point in the future, the effects of the reform will have been exhausted.  At what point do you think that would be?  At what point do you stop doing this control experiment?

Robert Joyce: In practice, you would stop being interested once you see the effect not changing any more over time.  You might find that after six months, the effect is something; after a year, it is bigger; and then after two years, it is the same.

Q45   Kwasi Kwarteng: In the context of all the uncertainty and all the variables, you are saying that, at some point, you can see that there is no effect?

Robert Joyce: Typically, if you have a good estimate of what the effect is and it is relatively precise, you could look at whether the effects appear to be changing over time, and when they appear to be flattening out, that would be a reasonable point at which to say, “That is probably the full effect of the policy”.

Q46   Kwasi Kwarteng: My conclusion is that this is very difficult and very unclear in terms of what the actual outcome will be, and in terms of the data you are looking at.

Robert Joyce: Yes, it will be a hard policy to evaluate.  It may even be that, after that has been done, there is a lot of uncertainty that remains.

Q47   Sheila Gilmore: At the very least, is there any longitudinal monitoring of the people who are affected to see how it goes?  A lot of the early talk related to some survey work asking people what they would do if they were affected by the benefit cap, or telling them, “You will be affected by the benefit cap; what will you do?”  People said, “I would try to get a job”.  That was then reported in some quarters as those people having been pushed into getting a job, which is not quite the same thing as looking for a job.  Presumably, that is being monitored to see if that is following through to achieving that end.

Robert Joyce: My understanding is that the DWP have commissioned a consortium that includes Ipsos MORI, and they are going to be looking both at the benefits cap and the new rules relating to under-occupation in the social sector.  That will include surveys of affected people.  That is my recollection; I do not know whether the others know of any other research on that.

Professor Wilcox: At the moment, I am only aware of the published report from Haringey on how the overall benefit cap has been impacting there.  It did start off in, I think, four areas in London first before it got rolled out more widely.  In that initial period—the first six months—it was found that there was a very small number of households able to move into work, but there were some positive effects in those terms.  In the longer term, just to come back to that broader methodological point, as social scientists, we do our best.  However, for all the reasons you have identified in terms of so many changes in the world at the same time and not always having a perfect control group, it is often a case of trying to come up with the most coherent arguments about the evidence that is there, rather than being able to put our hands on our hearts and say, “This is absolutely the answer”.  It is about what is plausible in the light of everything we can see.

              Kwasi Kwarteng: I understand where you are coming from as a social scientist, but my point was a specific point about this particular policy.  I think there are particular unusual difficulties with regard to this, compared to other studies that I have seen, relating to social science or economic method.  That was the point I was trying to make.

              Chair: That is true, but Governments can take decisions based on what they think is right morally, rather than any evidence that backs up that it is necessarily effective. 

Q48   Graham Evans: Dame Angela was talking about London families who are out of work, and their homelessness.  If that was me, living in London, and my family was going to be made homeless, I would look at every other opportunity to make sure that did not happen. In my constituency, there are family homes—three and four-bedroom properties—that are freely available. I would look at other parts of the country. My constituency was built on chemicals, and if you look at the communities that were built up in the 1930s, 1940s and 1950s, lots of Scottish people came from Scotland and moved to my patch. The social housing there is perfectly adequate; there are opportunities, including job opportunities. Rather than the taxpayer subsidising or paying for these families to stay in London—who can afford to live in London these days?  Hardly anyone—is it not a case of looking at the opportunities in the regions of the country where the housing is good and available, and where there are job opportunities for these people?

Professor Wilcox: Sorry; I took that as a statement, rather than a question.

Q49   Graham Evans: You said that you are a social scientist; in my experience, scientists are supposed to come up with solutions to problems.  I do not hear you coming up with any solutions to these problems, and I am suggesting to you that that is one solution that could get the homeless families in London into the regions where there are job opportunities and where accommodation is freely available in the social sector.  Professor Fitzpatrick was talking about one of the main reasons for homelessness being that the private sector rents are going up, and that is what you have just said, is it not?  Do you not encourage people to look at areas outside of London where there are social rented sector properties more freely available?

              Chair: I think that is a political decision.  I think their job is to observe.

              Graham Evans: But they say they are social scientists, and scientists are supposed to come up with solutions.  That is my point.

Professor Wilcox: No, not making policy judgments. We provide you with the evidence with which you can reach a judgment on, for example, what the effectiveness of a policy would be and what the issues are, in terms of trying to encourage people to move long distances for employment. There are a number of issues, one of which is that we are typically talking about households that, even if they were able to access the labour market, would be accessing jobs at the lower end of the labour market. Long-distance moves for employment are far more typical amongst people on much higher incomes.  Job searches for more casual, insecure employment, which is what a lot of the low end of the labour market is, is actually much more a localised affair.  Managing that transition is difficult. 

It does not mean you cannot do it. My first job was as a housing adviser in Camden.  I was advising people on moving to new and expanding towns—it was that long ago. I am not averse to the notion that you should be looking at ways to assist households to move out of London, but equally, you just have to acknowledge that you actually need to put a lot of support in to try and make it happen.

Professor Fitzpatrick: The other point that is worth making—although I do think, overall, that is a political judgment—is that, as Steve says, what social scientists can help with is what the implications of those different political choices might be.  There is the issue about housing and labour market mismatches, particularly at the bottom end of the labour market.  As Steve said, the point is that most people who move long distances in the labour market are doing it from a position of economic strength.  To ask people to do it from a position of being much lower down the labour market is a different proposition entirely, in terms of short-term and insecure temporary work and so on.

The other thing is that I think it is a bit behind the times to think of social housing as being freely available, certainly in many other parts of England.  I have done a lot of work recently in Newcastle, for example, which would have been traditionally an area of quite low demand in social housing, but they are also talking about very high demand for most parts of the social rented stock, long waiting lists, and so on.  London certainly has a far bigger problem with housing supply than northern and midland parts of the country, but it is not the case that social housing is freely available elsewhere.

Q50                 Graham Evans: It is in my experience, and in my area.

Professor Fitzpatrick: Perhaps that is true, but the evidence would suggest that, because of demolition programmes and the long-term impact of Right to Buy and many other factors, the demand for social housing is in fact very high in most parts of England, and now in most parts of Scotland as well.  I do not think it is as simple as asking people just to leave London and take up social housing elsewhere.

Q51   Teresa Pearce: This is to Professor Wilcox, because, without being rude, you look more my age than the other two. To get a job, you need networks, and if you move away from where you live, you have not got the networks. Am I correct in remembering that in the 1970s, there was a scheme where if there were job opportunities in Norfolk or somewhere and you took them, you actually got social housing to go with it?  Have I dreamt that?

Professor Wilcox: No.

              Chair: I think it was called key worker housing, if I remember rightly.

Q52                 Teresa Pearce: It was on factory work, and all sorts of things.  Was that an actual thing?

Professor Wilcox: There were a variety of schemes.  There were, essentially, national mobility schemes, and I actually managed the housing mobility scheme for London for some years as well.  One of the criteria in terms of securing accommodation was employment.  If you got employment in a different area, you were a priority, through the mobility scheme, to be re-housed in those other areas.

Q53                 Teresa Pearce: So it was a joined‑up type of thing.

Professor Wilcox: Yes, and there were a number of other schemes as well.

              Chair: A potential recommendation for us. 

Q54   Graham Evans: How much control do social tenants have regarding the size and location of their home, and how easy is it for social tenants to downsize or move to different areas?

Professor Wilcox: If I can start on that, I should declare an interest, in that I am now heading up a Rowntree-funded research project that is looking at the impact of the bedroom limit across the country, and all the issues associated with that.

              Stephen Lloyd: Let us have the report when you have finished it.

Professor Wilcox: I am trying to be very good about reading everything that has been published that identifies what some of the obvious issues to look for are, but also trying to be very controlled in terms of not leaping to conclusions until we have done our own work and been able to get a proper sense of where they are. 

In terms of the issue about allocation to social tenants, social housing is essentially allocated, rather than selected in the market in the way it is in the private rented sector.  However, it is often a negotiated process; different applicants might have a higher degree of priority and therefore a greater choice or influence over the accommodation they are allocated than other households.  They are not in full control of what they are allocated, but the degree of influence varies from area to area.  Equally, the demand for transfers and the pressures on stock will vary from one part of the country to another.

Obviously the critical issue around the bedroom limits is about what capacity there is, in appropriate cases, for households to be able to secure smaller accommodation.  There are some landlords—and these more typically tend to be those around London and the South‑East—who have a mix of sizes of dwellings within their supply of stock, and they have a strong demand from new applicants, very often homeless families, for larger accommodation.  If they can facilitate a downsizing transfer, then that is a win-win situation.

A lot of landlords are struggling with quite how they prioritise downsizing-transfer cases in the light of the new bedroom-limit rules, so it does not always work as smoothly as you might think.  That is, if you like, the smoother end of the spectrum.  The other end of the spectrum is the landlords who have very little smaller accommodation, and where levels of what is deemed to be under-occupation are quite widespread.  That is partly because of a structural mismatch between the distribution of the stock and the demand they have from households.  Also, particularly once you move out of the more pressured areas of London, one of the wider issues is that the bedroom standard, as we know it, does not actually fit with wider social notions of how much accommodation people need.  There were surveys decades ago trying to look at what was deemed to be under-occupation.  The vast majority of households who were deemed to be under-occupied did not recognise themselves as being under-occupied. 

The bedroom standard was based on pre-world war two environmental health standards.  Since then, social standards have risen enormously. Three quarters of all households in Britain live in accommodation with more than the bedroom standard, and the social norm now is the bedroom standard plus one. Back in the days when the bedroom standard was first evolved as an idea, the bedroom standard was more the norm. Social standards have changed, so it is a very tight rule that people do not recognise. Particularly once you move outside of pressured housing markets, there is a more relaxed approach to allocation, which fits with this mismatch of stock.  Landlords have not been obliged to try to come up with a much tighter fit on stock by the benefit rules for the last 50 years, so this is a very major change.

One can see the principles, and in fact one can almost think it is rather an anomaly that there was never some kind of bedroom limit within the social sector housing benefit system over all the years it has existed.  On the other hand, trying to introduce it at one moment in time in areas where you have this mismatch, and in areas where there is not necessarily the high level of demand from other applicants for that larger accommodation, makes it a classic example of one of those policies that might work very well in one part of the country but not necessarily in others.    

Q55   Graham Evans: In terms of those tenants who are impacted by the sector size, what about use of exchange and home-swapping, or taking in lodgers or family members? In your experience, how available are those options to those people?

Professor Wilcox: I do not have direct experience of it.  I just read the research reports that have been published.  For example, there is one report that focuses on landlords in the midlands and the north of England, suggesting it would take them somewhere between seven and 13 years if they were to deal with transfer applications into smaller accommodation to accommodate people who wanted to move because of the bedroom limit.  That is a very long transition, and far longer than is envisaged by the provisions for discretionary housing payments.  

Q56   Graham Evans: What could housing associations and local authorities be doing to speed that up, to alleviate that situation?

Professor Wilcox: They cannot reduce the rent, because then the deduction gets taken off the lower rent, which puts them in a very odd position.  They cannot make their own welfare payments to top it up, because that would then be treated as income under the benefit rules.  They have to either live with arrears, or they have to look at re-designating some of their properties as having one less bedroom than they currently do.  Again, that gets to be a rather clumsy and artificial process. 

There certainly are cases for them looking more closely at designation.  There is also a case for looking at the way in which the bedroom limit is structured.  It is modelled on a totally different process in the private rented sector, but essentially it talks about the number of bedrooms households need, not the number of bed spaces they need.  There is a vast amount of social sector housing stock that was specifically built to include single‑bed‑space bedrooms.  These rules assumed a two-bedroomed property could be shared by two adults and two children, even if it was specifically built as a two-bedroomed three‑bed‑space dwelling.  Then you have, for example, three‑bedroomed four‑bed‑space dwellings, which have got two single bedrooms along with a double bedroom, and five‑bed‑space and six‑bed‑space dwellings.  There is therefore such a mix of stock that in a sense the housing and rent policy rules do not really fit with the benefit limit rules.  It is frankly a bit cack-handed for it to have been introduced in that kind of way.    

Chair: I had not thought of that.  That is why you get arguments where they say that a bedroom is really just a box room, and really it is a one-bed-room.  That is a really interesting way of looking at it. 

Q57   Sheila Gilmore: I visited just such a new-build house on Saturday with somebody who wanted to move to a bigger house, because it was such a very, very small second bedroom.  That was not a bedroom-tax issue, but an issue about the space.  It was a very new build, which was interesting; it was not in an old build.

Graham Evans: How many bedrooms?

Sheila Gilmore: It had two bedrooms.

Graham Evans: It was a new property.

Sheila Gilmore: It was a brand-new property with two bedrooms; there were two children, and it was a very, very small second bedroom.  I had to tell her that under our housing allocation policy, her chance of getting a move was zero.  She took me in to see it and said, “Look at it. It is very small, isn’t it?”  I said, “Oh, my goodness; yes, it is.”  It had a window—it was not a box room—but it was very small.

Graham Evans: Could you get bunk-beds in?

Sheila Gilmore: She is not going to get a move.  One of the issues that has come up more recently is the question of the savings to be derived from the changes.  Robert, your written evidence suggested that the Government might not achieve these savings.  Could you tell us a bit more about that?

Robert Joyce: The basic point we were making there was just that in the official costing of the policy, the Government assumed no overall change, so it assumed that the amount of housing benefit it would save as a result of this policy is just what would happen if everyone stayed where they were.  There was no response in terms of people trying to downsize, or swapping people who were overcrowded.  Clearly, that is an assumption that they made in the modelling, rather than a prediction, because one of the objectives that has been stated for the policy is to change behaviour, but that is the assumption they made for the costing. The point is that if there actually is substantial behavioural change as well, in terms of people moving around, that would act to reduce the amount you save in housing benefit, because if fewer people are under-occupying the stock, fewer people have their housing benefit cut, essentially.  That tends to act to reduce the savings from what they are in the official estimate. That is not a criticism of the policy; it is just saying there are two different objectives the Government might have here.  One is to save money on the housing benefit budget; the other is to change people’s behaviour.  It is just saying that there is a trade‑off between those two objectives, to the extent that if it does more of one it will do less of the other.  That is not a criticism. The Government might be perfectly happy if the policy saves no money at all but changes behaviour.  It is just pointing out that there is a trade-off between those two things happening, to some extent.

Q58   Sheila Gilmore: Are you looking at any other costs? They might not be direct central Government costs, but local government costs of implementation of this policy. For example, are you looking at the cost of administering DHPs or dealing with people’s requests to move?

Robert Joyce: It is not something we have looked at, at all.  Offhand, I cannot remember what assumptions were made about extra administrative costs in the Government’s own costing of the policy.  I think it had assumed something about extra administrative costs, but I cannot remember exactly what it was offhand.

Q59   Sheila Gilmore: Is anybody tracking—in statistics, not just anecdote—whether people are moving to the private rented sector?

Robert Joyce: It is not something that I know of any statistics on.

Professor Wilcox: It is one of the things we want to try and cover in the Rowntree project.  That would be talking to a sample of landlords across the country.  It does depend on their ability to know, when households have moved out of their stock, where they have moved to.  I suspect they may know in some cases if people have moved into the private rented sector, but we are not likely to get totally robust data on that.  If anything, we are likely to get figures that are lower because there will not be full recognition of cases where they have not been told where people have moved to.  There will be lots of “moved, unknown” cases.  

Robert Joyce: It is also worth pointing out that in terms of the possible effect of people moving into the private sector on the total amount that is saved in housing benefit, it is all going to be very complicated.  It will depend on not just how many social tenants move into the private sector, but the rent levels in those private sector properties, who they are displacing and where they are going, and who takes their place in the social home they leave behind.  A lot will be going on there, so it will be rather complicated to unpick the actual effects on the total housing benefit spending of those people moving around between the sectors.  

Q60   Sheila Gilmore: The other issue that a lot of councils and housing associations have been raising is the increase in rent arrears, which they put down to the difficulty tenants are having in meeting the additional charge. Is there anything that the Government could do to assist with this, even on a transitional basis?

Robert Joyce: There are temporary discretionary payments that can be made.  Change the policy.  I am not sure I have any other great suggestions.

Chair: The question on DHP is coming next, so anything other than DHP.

Professor Wilcox: One of the other things that perhaps partly relates to the DHPs is actually looking at the precise scope of the policy: for example, whether you reconsider the definitions just to look at that bed space issue, and whether you look at the relationship between DHPs on the one hand, and the exemptions from the regulations on the other.  Are there the kinds of cases coming up again and again and again for DHPs, whether it is about people with disabilities or whatever, that might be better dealt with on a more enduring basis, because they are not transitional household circumstances, by a particular exemption or provision for an additional bedroom to be provided in such‑and‑such a circumstance, rather than discretionary housing payments?

The other thing is that there is a lot of uncertainty in authorities over the presumptions about discretionary housing payments, both whether they are temporary and also whether the issues of adjustment to this new regulation by landlords and tenants can be dealt with in a relatively short period of time, therefore meaning that the discretionary housing payment budget should reduce quite quickly over time.  That does not seem to be borne out in all parts of the country from the evidence we are seeing so far, in terms of what the transition time would be, even in those cases where it is appropriate to look at the possibility of some downsizing.    

Q61   Kwasi Kwarteng: I want to ask a general question about your approach to these issues. We have mentioned rental costs and the nature of housing stock. To what extent do you look at the bigger picture, in terms of the stock of houses? Do you have a view on house building, and the fact that we have not really, people might argue, given the supply that people might expect?

Professor Wilcox: Obviously, there is currently a very significant shortfall of supply against household projections.  Having gone through a century where the balance of houses to households improved, it has been rather flat for the last decade or so. At the moment it is problematic, but those things do not change very rapidly.  Landlords essentially built up their stocks of social housing over 50 or 100 years.  The social demand for that housing stock has changed much more rapidly than they can change the stock they have in their portfolios, so there is quite a challenge for the landlords to be looking at, as regards the impact of this new rule.  Bear in mind that it is not one they have ever confronted before, or ever had to factor into their business plans, so they have got to start thinking about it. They cannot do that portfolio management overnight.

Q62   Kwasi Kwarteng: From what I remember from reading history books a long time ago, you can change the housing stock quite quickly. In the 1930s, we had a very big building scheme; we had to go round to London to see these 1930s houses.   Similarly, in the 1950s, there was a very famous drive; Macmillan’s Housing Minister announced the building of some 300,000 homes in four years.  It is not altogether true to say that the supply is something that takes decades to come through.

Professor Wilcox: New supply tends to be about 1% of the stock a year.  With the best will in the world, if you accelerate it, you might get it up to 1.5% or 2%.  If you go back to a stock that has been built up over half a century or more, it has a particular profile in terms of size and type and so forth.  Re-jigging that portfolio, which is not just around new build—it is about selective sales and maybe acquisitions of other existing stock—is an area that social landlords will have to move into more actively, and they would be prompted by the new benefit rules to do that. 

There are examples of that.  Glasgow Housing Association purchased a tranche of a couple of hundred smaller flats from the private rented sector, because it knew it did not have the stock within its own portfolio, in order to try to assist with transfers.  Other landlords may look to do similar things, but that is going to cost them money and divert their resources away from other objectives.  One of the issues around the policy is that while there may well be savings for the DWP, even if they are less than was anticipated, what are the knock‑on effects on the landlords? That is not just in terms of arrears; if they have to change their policies in other ways, is that absorbing resources that would otherwise have been available for other priorities?  The knock-on effects can be quite complex.     

Q63   Dame Angela Watkinson: We have heard quite a lot about downsizing, but the other side of that coin is upsizing.  Is it too soon, or is there any evidence coming through that previously overcrowded families are being moved into more suitable, larger accommodation as a result of this change in policy?

Professor Wilcox: It has not been said yet, but as part of the Rowntree project, we will be looking into that, because we are trying to see what the positives are from the policy, rather than just concentrating on what the more problematic areas are.  My suspicion is that we are going to find a very mixed story in different parts of the country.

Q64   Graham Evans: Is it possible for you to identify where local authorities or housing associations have done a good job, thinking positively, and have taken on the challenges that have been discussed today?  Have you looked at best practice and analysed why some local authorities or housing associations have done a better job than others?

Professor Wilcox: We are certainly looking to identify this.  It is fair to say that some landlords have been quicker off the mark than others, in terms of realising what was coming their way. Love or hate the policy—and maybe you know that they hate it—but it is about thinking creatively, “What can we do?  This is here now; what can we do?” 

There are the examples, such as Glasgow, with its acquisition of stock.  There are examples that have revisited their rent policy.  From what I have seen so far, the small number that have looked at re-designating some of their stock to have small bedrooms, and designating some rooms as box rooms and so forth, do appear to have been doing it quite selectively, although that is not across the board.  There was one authority that had high‑rise flats, which for a long time they had not considered appropriate to allocate to families.  They had very limited demand for that stock from other larger households, so the only way to continue to let those properties would be to single people.  Some of them have been converted into student housing and so forth, but in some places that is not always possible.

They are looking at where the particular pinch-points are in terms of mismatch between stock, benefit rules and the demand from other households, and how it can best be managed.  There are good examples of that, but at the same time it is a bit uncomfortable; you are ending up with some slightly artificial re-designations of properties to accommodate the benefit rules.

Q65   Stephen Lloyd: Just before we go on to DHP, on social housing and the 14% that you are expected to pay for an additional bedroom, have you got any numbers on what percentage of people are likely to just absorb that 14%, and what percentage are not absorbing it and are having to move?  Have you got any data on that yet, or is that still in the pipeline?

Professor Wilcox: That is still in the pipeline. The initial work that I have seen is based on the first three months.  It was still very much about households’ expectations and what they thought they would do rather than what they are actually doing.  Again, what you decide to do for three months, six months or a year, in terms of how long you can absorb that 14% reduction from your baseline budget, is a very different question.

Q66   Stephen Lloyd: That is obviously a crucial piece of data, so we will watch that very carefully. On DHP, how successful do you feel that discretionary housing payments have been thus far in helping to mitigate the impact of the reforms on the affected claimants?  Robert, have you done any research on this?

Robert Joyce: Again, consortium partners in the evaluation of the LHA reforms specifically looked at this and spoke to housing advisers. The short answer is that housing advisers tend to think that these can be very useful in easing the transition on to the new system, but there is quite a lot of variation in how effectively they are used.  One thing that came up was that in some areas DHPs are often used much more on a “first come, first served” basis, rather than proactively raising awareness that they exist, so that everyone knows about them, and proceeding from there.  It was more that if people know about them and apply for them, they will allocate them on a “first come, first served” basis.

In London there was a sense that that had been done rather more proactively.  There had been more of an effort to raise awareness that DHPs exist. It makes more sense for local authorities in London to spend time doing that, because London was relatively hard‑hit by the reforms.  The bottom line is that there is a general feeling that they can be very useful in easing the transition, but there is quite a bit of variation in how effectively they are used in practice.  

Q67   Stephen Lloyd: Professors, anything to add to that?

Professor Wilcox: Nothing in terms of evidence so far available, but that is something we are intending to look at as part of our project.  The LGA are also commissioning a survey of all their members on the discretionary housing payment, so hopefully we will see some results from that before too long.

Q68   Stephen Lloyd: A few months ago, I managed to get a spreadsheet from the DWP of the amount of unspent DHP that local authorities had returned at the end of the financial year.  I will declare an interest there; Eastbourne returned about £50, but other boroughs nearby, who have similar if not more challenging issues, returned thousands of pounds.  I just wonder whether some councils are perhaps not maximising the use of DHP for whatever reason.  Have you any evidence for that, or is that something that is a complete surprise to you?

Professor Wilcox: As someone who used to work for a local authority association, it is not a surprise to me at all.  Discretion is always difficult to manage.  That is the first thing.  Local authorities will go about it in very different ways, and some are far more cautious than others, and it is therefore not surprising that you will get quite an uneven response across the country in terms of the way different authorities have taken that. 

I do start from a presumption that, as far as possible, it would be better to codify those cases for which discretionary payments are being made, and deal with those through regulation.  You would have more certainty for all concerned about how the process is managed, but there is also this issue about time frame and the circumstance we are talking about.  If it is a household with particular disabilities or health issues and it is deemed appropriate for it to have an additional room, it is likely to be an enduring circumstance, not a short-term circumstance.  In that context, with the whole focus of discretionary housing payments being around easing transitions, it does not seem to me the most appropriate tool for doing that particular job. 

Professor Fitzpatrick: There is a general issue, across the cuts that there have been to housing benefit and local housing allowance, that the response is that the current discretionary housing payments are helping deal with that.  That is okay when they truly are transitional issues that are being dealt with.  However, there are a lot of very deep-seated, fundamental issues with not just the bedroom limits, but also the issues we were talking about earlier, like benefit caps and homeless households in London, where a short-term transitional response like DHPs is not going to manage to resolve the problem.  We have to be careful about how much emphasis is put on DHPs as being the solution for some of these deep-rooted structural things.  Unless the Government wants to continue to fund it at a higher and higher level, we need to face up to the contradictions in policy. 

As Steve says, the problem is that as soon as benefits are discretionary, they become much more difficult to administer. They become patchier and more inconsistent, and you tend to have underspend.  It is not unusual to have underspend when you have highly discretionary systems, so I think it is problematic.

Q69   Sheila Gilmore: What I am seeing is the application of a second means test in my area.  Effectively, the discretion is starting to look at people’s expenditure as well as their income to make decisions.  Is there a way of codifying that that would make it fairer? I find it quite difficult to understand why some people get it and some do not.  That is how they ration it.  They ration it through a second means test.  People are being asked a series of questions about their income and expenditure to decide whether they get a discretionary payment or not.  Things such as DLA are included as income, whereas they are not for other purposes.  As well as that, they are asked questions about whether their food and heating bills are reasonable.  It is a second means test of a kind that we have not seen in this country for some years.  Could that be codified in some way?  

Professor Fitzpatrick: The balance between the use of discretion and the use of rules in the distribution of social welfare is a perennial debate across every part of the welfare system.  Different people take different positions on that, but certainly an increasing reliance on local discretionary forms of judgment calls to support people in crisis situations and on very low incomes is inherently challenging and problematic.  That is true not just for issues to do with housing allowances but also for local welfare assistance and so on.  Most people on our side of the table would argue that we should move to a situation where there is more codification and clearer rules.  There always has to be some discretion in the system, but it should be kept to a minimum, because you have all these problems with inconsistency as well as underspend.  

Q70   Stephen Lloyd: I hear what you are saying, but do you not think that there is a counter-argument, which is that people locally, such as the council or the housing trust, actually have a better understanding of their local needs?  An argument could be promulgated that discretion allows them to use their local knowledge more effectively than some diktat from Whitehall. You are saying on this issue that that is not a strong argument and it should really all be codified. Do you not then get back to the idea that the man or woman in Whitehall knows all?

Professor Wilcox: I think it is a balance between the two.

Professor Fitzpatrick: A balance.

Professor Wilcox: An awful lot of pressure is being put on to discretionary housing payments.  Particularly when it is around circumstances that are long-term rather than short‑term and transitional, it is not the best vehicle.  I would not argue against there being some form of continuing discretion at a local level, though, for all the reasons you have advanced.

Q71   Stephen Lloyd: Would it be a reasonable view to say that, because of the enormous changes, DHP should be extended beyond what the coalition Government is currently proposing?  What would be your comments on that?

Professor Wilcox: I would prefer to wait until we have finished our research project to see what the balance is of the circumstances where the payments are being made, how many of them do relate to long-term rather than transitional situations, and what that suggests.  From what I have seen of reports and examples so far, there is certainly a question to ask about whether the time period should be more extensive.  Equally within that, though, we need to ask how much should remain to be dealt with through the discretionary formula, and how much can be dealt with by modifications to the regulations. 

Q72   Stephen Lloyd: Let me move on to one other question around the DHP.  Have people affected by the reforms, in your view, been able to use local welfare systems and schemes to assist them through a period of hardship?  Does the level of uptake of this assistance vary in different areas?  For example, crisis loans and those sorts of things—have they come across your radar as well?

Professor Fitzpatrick: I have forgotten; was it the Children’s Society?  There was a report out very recently.

Stephen Lloyd: It was the Children’s Society.

Professor Fitzpatrick: The Children’s Society has done a national report on this.  From the homelessness monitor, where we interview, on an annual basis, key informants from across all four UK nations about the impacts of welfare reform, the recession, and housing policy reforms on homelessness, the feedback we are getting, which is more qualitative with a select group of key informants, would match what the Children’s Society is saying, which is that in England most local authorities have introduced something.  They do not have to, and not all have done, but mostly they are focusing on in‑kind assistance, rather than cash assistance.  That in-kind assistance includes second‑hand-furniture projects and so on.  There is an increasing reliance on food banks, to a very great extent, and there is less and less provision of things like rent in advance and rent deposit schemes, which crisis loans were used for.  There are quite serious implications in terms of homelessness, particularly in those areas where we are trying to encourage people to use the private rented sector, rather than just go through the social housing route when there is high pressure on social housing.

It is very patchy and very inconsistent.  Again, it is back to the point that if you go down the road of entirely local discretion, which as far as I am aware has not even been monitored at a national level in terms of what is being put in place and how is it being used, then I am afraid it does tend to be very problematic, in terms of how it is administered and how costly it is to administer, but also in terms of the reliability of the service.  People in similar situations can find themselves treated in very different ways in different parts of the country.  This was something that the people that we have spoken to from services working with women fleeing domestic violence were particular exercised about.  The kind of help that those women in those crisis situations used to be able to get from the social fund is extremely difficult now, because mostly they cannot get access to any kind of cash assistance, and the in-kind assistance is highly rationed.  They might only be able to use food banks three times a year, for example.  These are the sorts of things that we have been hearing.

As you will be aware, Scotland and Wales have decided to take quite a different route on this, so my comments relate to England.  From the point of view of domestic violence and homelessness services, though, we would say that this new policy is very problematic in probably most parts of the country, although not all.  

Q73   Nigel Mills: The end-of-the-session, difficult question for you is: what could we do differently?  How can housing support be done in a way that is perhaps not as clunky and expensive?  Have you any suggestions for a real radical reform? 

Professor Wilcox: It would be very easy if we were not starting from where we are.

Chair: We always get that answer.

Professor Wilcox: We have gone down this particular road of having the baseline welfare benefits at a low level, predicated on falling housing costs more or less being covered in addition to the baseline benefit, whereas in lots of other western European countries the level of both the welfare benefits and, in particular, much higher reliance on insurance benefits at higher levels has meant that you have not had the same issues about how you manage dealing with housing costs, because it has been appropriate in those countries to say that the housing cost contribution would only be a partial contribution, because of the element in the baseline welfare system.

That kind of route, which would actually make the whole process of managing help with housing costs a heck of a lot easier—you do not have so many perverse incentives you are trying to deal with all the time—does mean going down the route of increasing levels of underlying welfare and insurance benefits.  That is never easy, and can never be done quickly.

There is one thing that I would say could be improved, and I think it is a missed opportunity. With the introduction of universal credit—assuming it goes ahead at some point appropriately—it would have been possible to bring assistance with mortgage costs into that scheme, rather than keeping it outside of the scheme, as now proposed.  There has been resistance in the past to the idea of providing help with mortgage costs, particularly where it relates to people in low-paid work, because that would be an additional bill that the Exchequer is not currently facing.  However, it would be a logical fit to have the same rules for benefits and help with housing costs, whether you are in low-paid work or out of work, applying to home-owners and tenants.

You have seen the Government’s evidence to you.  They are saying that in the longer term their view is that they will look at treating the payments for mortgage costs as a recoverable loan, rather than a one-off payment.  Once you have taken that decision and are going down that road, you are not actually incurring costs going forward.  It is a loan arrangement, not a grant arrangement, so the reasons for keeping the scheme separate and causing difficulties around people in transition, moving into small parts of work before they move into longer-term employment and so on, could have been removed.  That is something that might be very well worth asking the Government to reconsider, because they have not taken their final decisions on how they deal with that, but there is an opportunity there to bring treatment of mortgage costs in alignment with treatment of other rental costs.  

Professor Fitzpatrick: There is a point to make at a very high level, and then maybe a couple of much more specific points.  The main reason why the housing-benefit bill became so large is because of the under-supply of housing for people on low incomes.  One obvious solution therefore, going back to a conversation we were having earlier, is to considerably up the supply of social housing.  That would ease the pressure on the private rented sector and rents in that sector as well.  Of course, we are relying increasingly on the private rented sector.  It is now bigger in England than the social rented sector.  It is increasingly accommodating low-income groups who are relying on benefit at a point when market rents are rising strongly, so clearly you have a rising housing benefit bill.  The underlying issue here is housing supply, which is a very big one but there is no getting away from it; it is driving up the cost.  You asked about making it cheaper.  I think we do have to reiterate that.

On a much more detailed level, I want to make a point on the bedroom limits.  Steve was saying that, whether or not we accept the basis of the policy—many people, of course, do not—there is a range of ways in which you can ameliorate the impacts of something like bedroom limits.  In the homelessness monitor this year, people in the north, the midlands, Scotland, Wales and so on, are saying, “This is the overwhelming welfare issue for us.  It is much more important than any other benefit cuts that are going on.”  That is particularly local authorities and social‑sector landlords, but it is not only them.  The voluntary-sector agencies are also saying, “Bedroom limits are a really big issue for us”.

Even if the policy stays—it looks like it is going to—there are ways to ameliorate its impact.  Steve said one of the things we can do is codify the people.  What are the patterns in the people who are receiving DHPs, and the people receiving DHPs in relation to something that is a long-term enduring issue?  We could see whether we can develop some sensible, rational exemptions to the policy based around that.  Clearly there are parts of the country where it is very difficult for people to move, but there are also specific groups—disabled people; women fleeing violence, with sanctuary rooms put into their properties; other groups who, for health or other reasons, need extra bedrooms—where perhaps we can look at expanding the exemptions to make the policy not quite as overwhelming in its impact as at the moment, even if the underlying principle remains. 

Robert Joyce: Following on a little bit from what Steve was saying about putting more things in universal credit, I know we are not talking about council tax support specifically, but there is a very strong case for having council tax support within universal credit. 

Chair: We have made that case ourselves.

Robert Joyce: Having them separate creates very difficult issues around how they interact with each other.  It risks undermining some of the main points of universal credit, like ensuring that work incentives cannot get too weak when multiple benefits are withdrawn over the same range of income. That is very problematic, and I think there is a very strong case for putting it in universal credit.

Another specific thing that we mentioned at the start, which really is a very, very big reform in the long run, is the change to indexation of local housing allowance rates to CPI.  This is a major thing.  In the long run you are breaking the link between rents and support for rents, so in a sense you are really losing anything that has meaning for your housing benefit.  In quite a real sense, you are going to be having a benefit that is just for private sector renters, but it bears no relation to what housing costs are.  That is quite a big decision to make, and I do not think that is a debate that has been had, perhaps because it is not so clear that that is what is going to happen.  However, that will be the long-run implication of just uprating housing benefit in line with prices and not in line with anything to do with housing costs.  That is a very a major decision to have taken, and I think it is slightly odd.  It is also going to create very, very arbitrary geographical variation in local housing allowance rates. 

In 2050, one area could have a higher housing benefit entitlement than another simply because it had higher rates back in 2012, even if rents now are actually lower in that area than in another area.  That is just utterly arbitrary.  There is no reason why any Government should want a system like that.  I think that is a policy that will have a very big effect in the long run, and is probably important to reconsider sooner rather than later, because the longer you leave it, the harder it is to return to a more rational system, as the disruption it will cause will be bigger.  Those are the two specific things I would suggest.   

Q74   Chair: Thanks very much for coming along this morning.  Steve, what is the time scale for your Joseph Rowntree inquiry?

Professor Wilcox: We are hoping to report towards the end of February, and that will be based on survey data on the first six months of operation of the bedroom limit.

Chair: That fits in with our timetable, so we might possibly be able to see something of that, if that is possible.  That would certainly give us some background and some data.  As I say, thanks for coming along this morning; your evidence will certainly be very useful when we come to write our report.

              Oral evidence: [Inquiry name], HC [XXX]                            32