Levelling Up, Housing and Communities Committee statement: Exempt Accommodation - Oct 27

Exempt Accommodation

Levelling Up, Housing and Communities Committee

Select Committee statement

Madam Deputy Speaker (Dame Rosie Winterton)

We now come to the Select Committee statement. Clive Betts will speak for up to 10 minutes, during which time no interventions may be taken. At the conclusion of his statement, I will call Members to put questions on the subject of the statement and call Mr Betts to respond to them in turn. I emphasise that questions should be directed to the Select Committee Chair, not the relevant Government Minister. Interventions, including from Front Benchers, should be questions and should be brief. I call the Chair of the Levelling Up, Housing and Communities Committee, Clive Betts.

12.56pm
Mr Clive Betts (Sheffield South East) (Lab)

The Levelling Up, Housing and Communities Committee today published its report on exempt accommodation. I thank the Backbench Business Committee for providing time for this statement, and our excellent Committee staff and specialist advisers for helping to compile the report.

Members of the Committee are experienced public representatives, but individually and collectively we were appalled by what we heard in this inquiry, which revealed a complete and utter mess of shocking accommodation and inadequate support all funded at enormous expense by the taxpayer. Here is how the system is supposed to work: exempt accommodation, which is supported housing, should offer suitable accommodation and care to its residents. The people who live in exempt accommodation are often the most vulnerable in society, such as survivors of domestic abuse, care leavers and people who struggle with their mental health or with addiction. Because this type of accommodation can be more costly to run than general needs tenancies, it is exempt from locally set caps on housing benefit, hence the name “exempt accommodation”. To qualify for those uncapped rates, the provider must be not for profit, and provide care, support or supervision to residents.

Where the system works well, responsible providers offer a safe and supportive setting for people who may have fallen on hard times, and equip residents to move on and lead independent, fulfilling lives, but our inquiry found that where it works badly, vulnerable people are being exploited when they should be given support. Those with an eye for quick and large returns, sometimes with malicious and criminal intent, see the system as an opportunity to make large and potentially illegal profits, all at the expense of the taxpayer. I thank everybody who provided evidence to the Committee’s inquiry. In particular, I thank Birmingham City Council for helping to arrange the Committee’s visit in June this year, and all those who took part in it and gave evidence. Their stories brought to light just how appalling the situation can be, both for residents and for neighbours who have to live with the impacts on their communities.

We heard from people living in squalid conditions—tiny rooms with walls smeared with faeces—with no gas, electricity or internet. For some people, the support on offer was just a support worker shouting from the bottom of the stairs, “Are you all right, then?” or a loaf of bread and jam left on the table. Others are given no support whatsoever, or worse still are exploited by staff. We heard stories of individual residents being forced to undertake work on the property, or asked for sex in return for better accommodation. We heard of vermin, organised crime, prostitution and harassment. Unbelievably, residents are often asked to pay additional charges for the support that they may or may not receive. There is no requirement to assess people’s support needs before offering them accommodation. Survivors of domestic abuse are being housed alongside people with a history of sexual abuse. Recovering addicts are being housed with drug dealers. Residents we spoke to found their accommodation on sites such as Gumtree and Facebook, and for many there is no way out. Without their housing benefit, they cannot pay their rent, so they are afraid to enter employment and risk losing the roof over their head. Women’s Aid told us about survivors of domestic abuse actually going back to their perpetrators because they felt safer returning to an abusive relationship than remaining in these settings. This simply must change.

To add insult to injury, this mess is all being paid for by the taxpayer through housing benefit, which local authorities have inadequate powers to control. Not only that, but we heard numerous stories of providers exploiting loopholes to pocket that housing benefit as profit. West Devon Borough Council told us about a portfolio of properties that were bought for £6 million and sold on the same day for £18 million to an offshore investment company, in anticipation of the returns to be made from converting those properties into exempt accommodation. Local councils also end up footing much of the bill for accommodation that is not registered.

While taxpayers are footing the bill of this goldrush, the Government have no idea how much they are spending on exempt accommodation, how many people are living in exempt accommodation or how many providers there are. The Government tried to convince us that the bad experiences we heard about were the minority, but no matter how many times we asked for data to back that up, they could not provide any. The Government cannot know whether the system is providing value for money, but given how much money is being siphoned off as profit at the expense of vulnerable residents, we think it is quite possible that the Government may not need to spend more to improve exempt accommodation. They simply need to put in place systems so that the money spent is spent on good accommodation and appropriate levels of support.

We are therefore calling for national standards for exempt accommodation, covering the referral process, the care and support provided, the quality of the housing and the information given to the residents. It is, quite frankly, shocking that national standards do not exist. These standards should be in place within 12 months, and local authorities should be given the powers and the resources to enforce those standards, to improve the overall quality of exempt accommodation and establish greater consistency. Councils can then collect data, which the Government can collate, to give an accurate national picture of the exact scale and cost of exempt accommodation.

The oversight of exempt accommodation is a complete mess. There are lots of different regulators overseeing different bits of the system. There is the regulator of social housing, the Care Quality Commission and the Charity Commission, but no single regulator has overall responsibility for overseeing all the different components, and no single regulator has complete coverage of the sector. That is why we are calling for a national oversight committee to pull together all the different strands and fill the holes in the current patchwork of regulation.

We are also calling for compulsory registration with the regulator of social housing. If providers and properties are registered, local authorities will have the basic information to enable them to enforce standards. We look forward to the Second Reading of the Supported Housing (Regulatory Oversight) Bill, sponsored by the hon. Member for Harrow East (Bob Blackman), who is a long-term and valued member of the Select Committee. The Select Committee will be doing pre-legislative scrutiny of that private Member’s Bill.

Finally, there need to be greater controls on the development of exempt accommodation. Provision should be driven by local need, not by the greed of unscrupulous, profit-driven crooks. Instead, the planning system currently offers a free-for-all. It gives councils very little power to halt developments that strip out much needed family housing and create concentrated pockets of exempt accommodation that, when run badly, attract crime, antisocial behaviour and vermin to local communities. The Government should immediately end all exemptions to the licensing of houses in multiple occupation and article 4 directives, as well as ending other planning loopholes.

The Government need to sort out the many issues with exempt accommodation that our inquiry identified, but in reality, they cannot sort out exempt accommodation without solving the wider housing crisis. The Government’s five pilot schemes to look at these issues found that, often, residents of exempt accommodation do not even require care or support; they simply have nowhere else to go because there is a lack of affordable housing in this country, so we have reiterated our call on the Government, made in a previous report, to build 90,000 social rented homes a year.

The British public are living through many difficult challenges. They do not want to see money from their taxes being handed over during a cost of living crisis to corrupt people who make the lives of vulnerable people worse and create a living hell for neighbours and communities. The Government should implement our recommendations immediately and in full. I commend this report to the House.

Eddie Hughes (Walsall North) (Con)

It was a pleasure to contribute to the evidence session for this report, as the relevant Minister at the time. While I do not agree with all the recommendations in the report, which is perhaps no surprise, I commend the Committee for its excellent work and for shining a light on this important topic. Does the Select Committee Chairman agree that it is important that any changes in legislation do not negatively impact the many excellent providers of exempt supported accommodation out there, including YMCA Birmingham, of which I was previously the deputy chief executive?

Mr Betts

I thank the hon. Member genuinely for the way he engaged with the Committee as a Minister. Some Ministers engage better than others with Select Committees, and although he did not always agree with us, he engaged with us entirely properly, so I thank him for that.

In terms of the hon. Member’s question, he is absolutely right, and we reflected that, but what we are asking of even the best providers is simply that they register, so that we can be aware of who they are and what they are doing. They have nothing to fear from a basic registration fee—that is all. I completely agree with him: it is not just about closing down the bad; it is about how we can expand the good, particularly on domestic abuse. There is a shortage of such accommodation for people fleeing domestic abuse in this country, so there need to be more funds. Perhaps some of the funds that are being siphoned off inappropriately could be channelled into providing good accommodation, provided by organisations such as Women’s Aid, which came to give evidence to us.

Matthew Pennycook (Greenwich and Woolwich) (Lab)

I commend the Select Committee on the publication of an excellent report, which makes a series of extremely sensible recommendations. What is particularly concerning, albeit sadly predictable, is the Committee’s finding that, despite some limited improvements in quality and standards, vulnerable people were still living in “utterly appalling circumstances”, even in areas subject to supported housing oversight pilots. It is obvious that much more needs to be done in terms of national standards and local authority powers and funding. May I press my hon. Friend to expand on why he thinks Ministers remain unwilling to introduce the substantive emergency measures that are clearly required if we are to finally bring this scandal to an end?

Mr Betts

I thank my hon. Friend for that question, though perhaps it would be better addressed to Ministers, rather than the Committee. I do not know why the Government do not want to act more quickly. I take the point about not putting off good providers, but we have talked about a light-touch registration scheme for the good providers. We are not calling for more money; we said that. There is enough money in this system. We hear of organisations buying properties for a few thousand pounds—probably £100,000—then converting them into exempt accommodation and charging £1,000 per room in housing benefit per month. These are eye-watering sums of money. If that money was diverted into better accommodation and if local authorities had the powers to enforce it, using existing funds, it could all work well. We heard from the pilots that there were problems in lots of places, not just Birmingham, and every council that fed back said it could do more once it had some additional funds through the pilot schemes. That additional funding needs to be rolled out to all local authorities.

Bob Blackman (Harrow East) (Con)

I congratulate the Chairman of the Select Committee on presenting our report, which I agree with every single word of, and thank him for promoting my private Member’s Bill, which will have its Second Reading in this place on Friday 18 November. I trust that, with Government support, that Bill will include all the report’s recommendations or as many of them as we can shoehorn into it. We will have a Members’ briefing on Wednesday 2 November at 2.15 pm in Room W1, and I trust that we can get all-party support for the Bill and correct the wrongs.

Does the hon. Gentleman agree that one of the key issues is ensuring that local authorities can determine which homes are set up in their local area, which they know best, rather than having to deal with the consequences of one of these homes being set up and then try to close it down?

Mr Betts

I absolutely agree with the hon. Gentleman, my friend on the Select Committee, with whom I have worked on many issues; this is a unanimous report. That is why we have called for local authorities to be given those powers. The Government have laid down some guidelines on standards, but they are not enforceable. In such a situation, it is no use saying to providers who are making millions of pounds, “Oh please don’t do it.” The standards must be enforced. Local authorities need those powers and they need to control access to the accommodation so that people with particular needs are put into accommodation that can deal with those needs and has the right sort of support. That is why we are calling for local authorities to have powers over the support as well. It is a comprehensive approach, and local authorities are best placed to enact it.

Kerry McCarthy (Bristol East) (Lab)

The Chair of the Select Committee will be aware of my interest in the issue, which arose from a particular property in my constituency where several residents died. It was clear that that was being run not for the benefit of the residents but for financial reasons. I welcome the report and I think it is spot on in its condemnation of the situation. The problem that we came up against in Bristol was that, although the council would no longer refer people to that property, we found it difficult to stop other councils outside referring people in. Did the Committee look at making sure that each local authority has a responsibility to provide this sort of accommodation in its area, rather than trying to pass the problem off to other places that do provide it?

Mr Betts

We did not specifically look at that issue, but we looked at giving councils the powers to ensure that standards are met. My hon. Friend is absolutely right that one of the problems is that there is no control over the referral process—anyone can refer themselves, which is why people use Facebook and Gumtree to self-refer. If we can give powers to the councils to control referrals, it would be appropriate for them to consider commissioning services themselves in some circumstances. Some services are already commissioned; many are not. We did not call for all services to be commissioned, because some very good voluntary local providers are doing work in this area and we do not want them to close down. It is about controlling the referral process and ensuring that housing benefit is paid out only for properties that meet these standards. Once the money loophole has been closed, the rest of the abuse will stop —in our view.

Steve McCabe (Birmingham, Selly Oak) (Lab)

I acknowledge the way that the hon. Member for Walsall North (Eddie Hughes) engaged with the issue when he was a Minister. I congratulate the Chair of the Select Committee on the report. I was privileged to sit in on a couple of the evidence sessions in Birmingham, which were certainly illuminating. In view of the serious issues raised in the report, I have two questions.

First, there is a reference to the West Midlands police saying that such properties are sometimes used as a front for money laundering and drug gangs. Does the Chair agree that any standards must include a fit and proper test of any person who owns or purports to manage such a property, so that we know they are not a front for that kind of activity? Secondly, as well as trying to restrict the concentration of such properties through a planning measure, does he agree that any standards must include a proper inspection regime of the quality of the property and of the so-called support that is being offered? Otherwise, this activity will continue to be lucrative for anyone who wants to pursue it.

Mr Betts

I thank my hon. Friend for drawing the Committee’s attention to the issue, because he had had experience in his constituency, as he pointed out to us. He was the first Member who said, “You need to have a look at this. It is absolutely awful.” Unfortunately, he was absolutely correct about that. The idea of a fit and proper person test is interesting. We did not specifically address that as a Committee, but if we are going to have proper standards of accommodation and proper support on an ongoing basis, we need to ensure that the people doing that are legitimate people with legitimate objectives. He is absolutely right that if we are going to have standards, we need to enforce them. That is why local authorities need the powers and the resources, and why we need to bring all such properties within the HMO regulations, so that local authorities can send their health inspectors in to make sure that standards are kept and maintained.

Chris Bryant (Rhondda) (Lab)

The Select Committee Chair is being his normal, moderate self, but what he is exposing is phenomenally scandalous and despicable activity by some people who are not just making a profit but profiteering from the misfortunes of other people and the taxpayer. Many of the most vulnerable people who are housed in exempt accommodation are people with acquired brain injuries, whether because they have been in a car crash and had a blow to the head, because of concussion in sport, or because of hypoxia. Can he ensure that the Select Committee feeds into the programme board that is looking at a national strategy for acquired brain injury? If we leave this part of the equation out, many vulnerable people will not get the support that they need to lead genuinely independent lives.

Mr Betts

My hon. Friend is absolutely right to identify a particular group of people who need support and proper accommodation, and who can easily be exploited. There are many groups in that situation, which is why we should not simply shut down accommodation; we need to make sure that sufficient supported accommodation of an appropriate standard to meet particular needs is provided for a whole range of different groups, including people with acquired brain injury. We will certainly feed that back, as he has suggested.

Ian Mearns (Gateshead) (Lab)

I thank the Select Committee Chair for using this device to throw an important spotlight on the issue. Unfortunately, it is not new—we have been aware of it for some time—but it is important to have a spotlight shone on it. My hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe) referred to properties being bought, established and put to this use to launder often significant amounts of money. People then get a quasi-legitimate revenue stream to pay them back, but that is paid for directly out of the public purse through housing benefit from the Department for Work and Pensions. Surely it is not beyond the wit of Ministers in that Department to make sure that when significant amounts of money are paid out for housing benefit in particular properties, those properties are fit for purpose and managed appropriately. It should not be difficult for the Government to organise something as simple as that.

Mr Betts

It should not be. Currently, all that providers have to do to get the higher level of housing benefit, which is almost uncontrolled, is to provide support “beyond the minimal level”—nobody knows what that means; it does not mean very much. Some authorities have tried to challenge the housing benefit requests that have been made, but the problem is that all providers have to do is to show that the rent is reasonable—they are issuing freedom of information requests to find out the amounts of rent being charged for other properties in the area—and that there is no alternative accommodation, which there often is not, for reasons that I have explained. People are allowed to write a virtually blank cheque. That needs to be closed down, because the money can be put to better use than being siphoned off for profiteering, as it is currently.

Jim Shannon (Strangford) (DUP)

I thank the Chair of the Select Committee for the report that he has put forward. Does he acknowledge that the high concentration of antisocial behaviour in areas of exempt accommodation is indicative of the system and of the fact that some of the accommodation is unacceptable? I think he agrees that an urgent review of the system must be a priority for the Government to prevent the continued placement of individuals and families into homes that are simply not fit for purpose.

Mr Betts

The hon. Gentleman is spot on with that. When we went to Birmingham, we heard not from individuals living in exempt accommodation, but from those living in communities where dozens of properties in the same small area were being converted. They explained to us the amount of criminality and drug dealing going on, that the police were turning up every night and that there were people lying in the road and people begging. They often tried to help where people were vulnerable and in need, but they said that there was no control over how many properties could be turned into exempt accommodation in the same area. They were people with family homes and kids, who had often lived in that stable community all their lives, but who were seeing that community being destroyed around them. That is not acceptable or appropriate. We owe it to both the individuals needing supported accommodation and the individuals in communities where lots of accommodation is being created to change the system and help everyone.

Madam Deputy Speaker (Dame Rosie Winterton)

I thank the Select Committee Chair for his statement and for answering that thorough questioning.