Commission on Social Justice: Minimum wage warning for Labour as party urged to adopt student loans: Housing and Benefits

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Replace income support and family credit in long term.

Reform income support to cope with uneven earnings.

Sixteen and seventeen-year- olds should have the right to income support restored.

Mortgage interest tax relief should continue to be phased out.

Housing subsidies should go into bricks and mortar rather than in housing benefit.

Homelessness is the most potent symbol of social injustice, the report says.

It demands an urgent response, but the 'scandal' it represents cannot be tackled unless more homes are built and refurbished and made available at affordable rents.

In a package of recommendations the commission calls for a 're- balancing' - in effect a reversal - of the Government's policy of subsidising individuals rather than bricks and mortar. That policy, of pushing up rents to market levels and then paying housing benefit to those who cannot afford them, has seen the housing benefit bill 'balloon' from just over pounds 5bn in 1988 to approaching pounds 9.5bn in 1992.

The commission also calls for housing benefit to be re-drawn to cover mortgage costs so that unemployed home-owners do not become trapped on benefit. Although some already in low-paid work would gain from that, it could produce substantial savings by helping unemployed families to take jobs.

And it says the policy the Government is pursuing of gradually phasing out mortgage interest tax relief should be continued.

The commission calls for a return to subsidising buildings rather than people because, it argues, subsidising bricks and mortar is more efficient and effective. Housing benefit is costly to administer and fails to improve housing or work opportunities.

Gradually releasing the pounds 6.5bn in council house receipts would help tackle the 'scandal' of homelessness, 10 per cent of the receipts creating at least 50,000 new and refurbished homes for rent along with 45,000 jobs.

Private as well as public cash should be brought in by creating local housing companies able to raise private money while drawing on a new national Housing Bank.

The Housing Bank could offer grants for the renovation of private housing, their cost being recovered when the house is sold. And where houses are unoccupied for more than 12 months, penalty payments should be levied. It is 'intolerable that so many houses lie empty when so many people are homeless,' the commission says.

Controversially for Labour, the report says that 'private renting has an important role to play in making the housing system more flexible, more efficient and more just'. While the private rented sector will never again be large it can play 'a pivotal role' offering quick access, popularity with the young and more housing choice in areas of job growth.

While 16 and 17-years-olds should be in education, or a job with education, they none the less should have the right to income support, the commission says. 'The scandal of young homeless people is in large part a direct result of the withdrawl of benefits. Income support . . . should be once again available to this desperately vulnerable group.

'It is a disgrace that nearly half a million people are homeless, over a million more people live in homes which are officially unfit for habitation, and 800,000 homes are standing empty.'

The commission argued that it wanted to reduce dependence on means-tested social security benefits to an absolute minimum, replacing income support and family credit in the long term with a means-tested benefit focused more tightly on people with large housing costs or many children. But it also proposed reforms in the meantime.

People should be allowed to earn much more than the current pounds 5 a week limit before they began to lose income support. It argued that people should be able to 'roll up' this income disregard to perhaps pounds 260 over three months. Childcare costs should also be deducted when benefit is calculated.

The commission argued that the transition from income support to family credit - paid to people in low-paid work with children - should be eased.

The Chancellor is expected to take steps in this direction in the Budget.

On benefits for the disabled, the report says the aim of a comprehensive disability income is clear, but further debate is needed.