PARLIAMENTARY DEBATE
Exempt Accommodation - 27 October 2022 (Commons/Commons Chamber)

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.

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.

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.

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.

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.

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.

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.

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.

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.