Lilley to cut rent payments for poor

Document reveals fresh assault on spending
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Political Editor

A draconian cut in state help with the rents paid by some of the hardest- pressed housing tenants in the country is revealed in a circular drawn up by Peter Lilley's Department of Social Security.

The circular sets stringent criteria for new special "hardship payments" to be paid to tenants whose housing benefit does not cover the rents they are charged by their landlords. The impact of the new policy, due to take effect from January, could affect payments to vulnerable groups like the disabled and pensioners, as well as families with children.

In a remarkable passage, the document warns councils against showing too much flexibility in the award of hardship payments by quoting the Shorter Oxford Dictionary to define "exceptional hardship". Hardship, says the circular, means "severe suffering, extreme privation" while exceptional means "forming an exception, unusual".

The document outlines the operation of a strictly limited new hardship scheme, set up to deal with the worst-hit victims of Mr Lilley's measures - announced last year - to set a ceiling on housing benefit to cover the private rented sector. Under the new system benefit will be paid only to meet the average rental costs of the local area, rather than whatever the landlord is charging.

The circular, already sent to local authority chief executives, shows that the total allocation for top-up payments to housing benefit recipients will now have an absolute ceiling of pounds 2.5m, which Labour calculated last night would mean a maximum of pounds 6,000 per council - or the equivalent of help for just six people in each authority.

And it makes clear that the cash limit on payments that each council can make under the new guidelines is a rigid limit with statutory force. It says: "The Permitted Total is an absolute limit. Any discretionary payment that is made, either by Housing Benefit staff or a Review Board which takes expenditure above the Permitted Total would be unlawful."

The latest cut in Mr Lilley's pounds 85bn budget came as senior Cabinet ministers on the ministerial committee ED (X) met once again in their protracted struggle to agree cuts which can restrict next year's planned spending total to less than pounds 263bn and pave the way for tax cuts in next month's Budget.

The DSS circular HB/CTBA 23/95, goes to great lengths to underline the rarity with which hardship will henceforth be made. It says, for example, that discretionary payments can be made merely because the hardship is caused by reasons other than the actual shortfall in benefit. For example, the tenant may be unable to meet the rent even though he is living in sub-standard accommodation. But the hardship caused by the sub-standard conditions is not sufficient reason for making the payment.

It goes on in paragraph 13: "A shortfall in rent would not, in itself, ever constitute exceptional hardship. It is the consequences of that shortfall which might constitute exceptional hardship." The circular suggests that the official dealing with the claim should consider whether there is any "genuine risk of imminent eviction if the shortfall is not met"; other outgoings the tenant has which make it harder for him to meet the shortfall; assets the tenant might be able to sell, and whether he has any disregarded income which could be used.

Nick Raynsford, Labour's housing spokesman, said last night that the circular had in effect "removed the safety net" from some of the most vulnerable tenants and spelled a return to "conditions as degrading as the worst aspects of the Poor Law".

nThe Treasury has been urgently seeking ways of "ring-fencing" the promised increase in education spending to ensure that it is not siphoned off to other services by local authorities.

Gillian Shephard, the Secretary of State for Education, is coming under heavy pressure in the current spending round to make it clear how she will ensure that all the extra expenditure she has been promised will be allocated to schools.

The examination of possible ring-fencing of education came to light last night, as the Cabinet Committee ED (X) held a further meeting in the hope of resolving continued arguments over the public expenditure round. Mrs Shephard's department is one of the principal ones not to have settled.

The tensions over public spending are dominating behind-the-scenes discussions in Whitehall as the political pressure for tax cuts in next month's Budget increases amid clear signs that the party conference season has failed to lift the Government's opinion poll rating.

A MORI poll for today's Times shows Labour's rating jumping to 56 per cent compared with 51 percent in late September. The Tories have dropped one point to 27 per cent while the Liberal Democrats are at 13 per cent compared with 16 per cent last month.