Without portfolio Sep 2000

Non-dependant deductions have been a feature of the benefit system for many years, but they grew substantially in importance shortly after the 1997 general election.

The new government needed to find some money in the housing benefit system in order to finance its decision to reverse the Conservative plan to extend the single room rent scheme.

Someone had the bright idea that the odd hundred million pounds could be found by jacking up the rates of non-dependent deductions (NDDs). Out of gratitude for the decision not to extend the single room rent system, commentators at the time turned a blind eye to the hike in NDDs, but there is now evidence that the high level of these deductions are themselves starting to have a damaging effect.

The way the system works is that the amount of rent that a non-householder is assumed to contribute varies according to their means. Just over half of those facing deductions are assumed to contribute £7 per week to the rent, but in around 15,000 cases the non-householder is assumed to contribute no less than £45 per week – regardless of whether the contribution is actually made.

There are major problems with deductions at this level. The first is where the non dependant is unable to make contributions at the level assumed. The householder has to find any shortfall to avoid falling into arrears and this may not always be possible. The only financially viable solution might be to split up the household.

There are several reasons why this outcome might be undesirable, quite apart from the distress caused to the family. First, the taxpayer ends up paying the full rent of the continuing household and, possibly, has to contribute towards the housing costs of the person who has moved out.

Second, in parts of the country where housing land is particularly scarce, breaking up households runs contrary to the other goals of public policy.

Finally, and particularly where the householder is elderly, forcing an adult child to move away from a parent almost certainly reduces the chances of the parent continuing to live independently if ill health should strike. For all of these reasons, driving NDDs beyond a realistic level could prove highly counterproductive.

For households who are determined to stay together, the effects of NDDs can be to force either the householder or the non-dependant below the poverty line. The DSS has estimated that £30 million a year is assumed to be coming from non- dependants who end up below the poverty line as a result of making the deemed contribution to the rent.

The obscurity of the system of non-dependant deductions, and the cost of abolition, suggests that any government is likely to retain some element of deemed rent contribution within any continuing housing benefit system.

But surely it is time that some proper research was done into the effects of deductions at their present level, before they split up more households and drive more families into poverty?

Steve Webb is Liberal Democrat MP for Northavon