Cost of Living: Private rented sector

Debate between Chris Stephens and Beth Winter

Tuesday 18th July 2023 Westminster Hall

[Chris Stephens (Glasgow South West) (SNP)]

I am delighted to see you in the Chair, Dr Huq. I congratulate the hon. Member for Stretford and Urmston (Andrew Western) on leading the debate. I always like and enjoy listening to his contributions. He follows a fantastic former Member of Parliament, Kate Green, who represented his constituency very well. He used his local authority experience, which is very important when discussing such issues.

The related issues of the cost of living and the private rented sector should be of great concern to members of all political parties as they affect the wellbeing of people in each of the nations of these islands. Much of what we are discussing today is centred on the experiences of people in England and Wales, so I will contribute a Scottish perspective. There have been some criticisms, from some sources, of the SNP-led Scottish Government and how they have handled the private rented sector. What Members will hear from me are the views of other interested organisations that contradict those misgivings and are supportive of the stance the Government have taken in Scotland.

We are familiar with the factors that have contributed to the current cost of living crisis, although some might question how much those factors have contributed, or even whether they have contributed at all—for example, Brexit—but no one will dispute that the war in Ukraine has driven up the price of oil, with a consequent massive increase in domestic energy costs. Russia’s de facto blockade of the Black sea has also resulted in Ukraine’s exports dropping to one sixth of the pre-war level, causing grain prices to rise dramatically. We have all seen the effects on the price levels on supermarket shelves. Covid has also played an obvious part in taking us to where we are.

We know that the biggest factors in determining the cost of living are wage rates and housing costs. The limits of devolution mean that the Scottish Government have no real say in private sector incomes, but for many in the public sector—nurses, midwives, teachers, junior doctors—pay awards have been sufficient to avoid protracted industrial and strike action. It is not as much as we would wish to pay, but better than elsewhere and certainly appreciated, which brings us to the major factor in the cost of living crisis: rent prices.

Different legislatures in the UK have taken different approaches to dealing with rent prices. In Scotland there were recent changes to the Cost of Living (Tenant Protection) (Scotland) Act 2022, which took effect from 1 April. With the exception of some defined limited circumstances, those changes have included a cap on most private landlords’ mid-tenancy rent increases at 3%. The enforcement of evictions continues to be paused across all sectors for up to six months and increased damages for unlawful evictions of up to 36 months of rent will continue to apply. Those measures will be in force until 30 September, provided they remain necessary, but there is also the option to extend for another six-month period if required. As previously announced, a social sector rent freeze has been replaced with agreements from landlords to keep any rent increase for 2023-24 well below inflation. That voluntary approach to rent setting agreed with the social sector will equate to an approximate average rental increase of £5 per week. That is still a strain for many, but more manageable than is the case elsewhere.

The legislative approach has had its detractors who suggest that SNP policies have harmed or unfairly targeted the private rented sector. There is, however, no credible evidence for that, leaving the detractors’ motives open to question. For example, concerns are expressed by some private landlord representatives about the different approach between social and private landlords. The Scottish Government contend that a collective approach like that in the social sector is simply not possible in the private rented sector. As a consequence of the policy, the 3% increase in the average rent of a two-bedroom private rented property, which is the most common size, is broadly comparable in monetary value with the average planned increase in the social sector.

The Scottish Government continue to monitor the data and to listen to landlords and tenants, in order to consider whether the measures that are in place remain proportionate and necessary. The recent legislation is time-limited and can only be extended with the approval of the Scottish Parliament, and in any event it cannot extend beyond March 2024 at the latest.

Some have suggested that investors will exit when certain rent-controlled regimes are introduced, and some political parties claim that this has already happened. But, again, there is no evidence to support those claims or suggestions. On the contrary, the chief executive of the Scottish Association of Landlords has stated publicly that

“We do need to have rent control in Scotland. I think that’s where we’re going to be going.”

Let me add a few other views about Scotland and its recent decisions. Crisis Scotland told Parliament:

“We all know that the cost of living crisis is an emergency at the moment, and for those in poverty that’s an emergency as acute as the pandemic. And it calls for emergency measures that at other times wouldn’t be considered. We absolutely support the need to do something to support tenants through that crisis.”

Living Rent said that a rent freeze would have a

“massive impact, as skyrocketing rents continue to pile on top of out of control energy bills.”

Shelter Scotland stated that short-term emergency measures in the Programme for Government

“are great news for tenants and will stop people from losing their homes.”

The Scottish Trades Union Congress said that

“the Scottish Government is to be commended for freezing rents…when used, the powers of our Parliament can bring positive change.”

It is on the use of the powers of the Scottish Parliament that I will now dwell, because Scotland has delivered 10.8 social rented homes per 10,000 population compared with just 1.2 per 10,000 population in England—nine times as many. Spend on affordable housing in Scotland remains the highest in the UK. Since the Scottish National party came into office in 2007, that has produced 14 homes per 10,000 population compared with 9.7 per 10,000 population in England. The Scottish Government’s per capita spending on affordable housing is more than three times higher than that of the UK Government. And in their published 2022-23 Programme for Government, the Scottish Government pledged to deliver 110,000 homes ahead of 2032, of which at least 70% will be available for social rent and 10% will be in our remote rural and island communities.

The Scottish Government have also committed a five-year investment of £3.5 billion to Scotland’s internationally recognised Affordable Housing Supply Programme, which this year’s £752 million affordable housing budget feeds into, despite a 3.4% real-terms cut in capital funding from the UK Government.

The first-time buyer relief, which raises the nil rate band to £175,000, means that the majority of Scotland’s first-time buyers pay no land and building transaction tax, which replaced stamp duty, and all other buyers benefit from a tax reduction of £600.

All that activity can be compared with the work of the Department for Levelling Up, Housing and Communities, which recently handed back £2 billion in funding, including £1.2 billion that was unused from the Help to Buy scheme.

I ask everyone here to ponder on the past achievements and future plans for Scottish housing, and consider whether some of them might also be applicable in some other parts of the UK. There have been several well-documented attempts in recent times to dilute the dissolution settlement and reduce the decision-making powers of the Scottish Government.

[Beth Winter]

The hon. Gentleman is making a very powerful contribution to the debate and the comments with regard to Wales and Scotland show the progressive, more radical policies there. Does he agree that if the devolved nations received fair, needs-based funding settlements from the UK Government, we could go much with those radical socialist policies?

[Chris Stephens]

I absolutely agree with the hon. Member.

In closing, on the cost of living in the private rented sector, the UK Government might do well to follow the policy lead of Scotland and Wales, and I urge the Minister to respond positively to the suggestions that have been made today.

Civil Service Pay

Debate between Chris Stephens and Beth Winter

Tuesday 7th March 2023 Westminster Hall

[Beth Winter]

I thank the hon. Member for her contribution, and I will come on to recruitment and retention later.

There have been pay freezes and pay caps over the last 13 years. The situation has worsened in the past 12 months because of high rates of inflation and the lower allowance in the civil service compared with other public sector settlements. Civil servants had a paltry 2% pay rise imposed on them in the past year, which is more than 10% below the retail price index at its peak and almost 10% below the consumer prices index.

Civil servants, teachers and nurses have all suffered under the Conservatives’ low-pay agenda, and have all received a completely unacceptable and avoidable real-terms pay cut. The extent of the Conservative Government’s low-pay agenda is laid bare by the high number of civil service staff in receipt of the minimum wage. It is an absolute travesty that over a quarter of DWP staff are paid so little that the national living wage floor increase this April will push their salaries up. It is worth noting that when many Departments contract work, they insist that people get paid at least the real living wage as determined by the Living Wage Foundation, yet the civil service itself point blank refuses to guarantee to pay civil servants at least the real living wage.

[Chris Stephens (Glasgow South West) (SNP)]

I thank the hon. Member for giving way and emphasising that point. Does she share my concern, and that of many others, that the statistics she has just quoted are the reason for an increasing number of civil servants using food banks in order to survive week by week?

[Beth Winter]

I thank the hon. Member for his contribution and I fully agree. I will come later to the stark figures on the use of food banks by civil service staff.

As I said, the past 13 years of pay freezes and pay caps have slashed the value of civil service pay. There is also the current civil service pay remit process, which is completely unacceptable. The FDA union describes the current system as “entirely flawed and incoherent” and as one that completely fails to allow for a strategic approach to pay, reward or meaningful negotiations.

Repeated pay cuts cannot simply be imposed without industrial disputes. Pay needs a negotiation between employers and employees. The current civil service pay remit process does not even offer the façade of employee involvement through the trade unions that even the increasingly discredited public sector pay review bodies are meant to offer. The end of national pay bargaining in the civil service by the Thatcher and Major Governments and the introduction of departmental and agency-delegated responsibility for setting pay continued the Tory ideological attack on the powers of the trade unions.

In the “Continuity and Change” White Paper, John Major’s Tory Government set out how, previously,

“centralised pay systems covered groups of staff whatever department they worked in, with settlements negotiated nationally between the Treasury and the unions.”

Even the claim that pay is delegated is a fallacy. Pay continues to be determined centrally. Ministers can, and do, still determine pay in these different bargaining units. That is evidenced by George Osborne’s imposition of a two-year pay freeze in the civil service, which he did without permission from the delegated bargaining areas. He was allowed to do that. That has been the approach for the past 30 years. It now applies to more than 200 bargaining units across the civil service, from the DWP to the National Museum of Wales. It is not logical, practical or cost-effective, and is certainly not fair. The fragmentation of the pay system has been described by the former Minister for the Cabinet Office, the Secretary of State for Levelling Up, Housing and Communities, the right hon. Member for Surrey Heath (Michael Gove), in his evidence to the Select Committee on Public Administration and Constitutional Affairs as the “balkanisation” of pay. I would like to hear whether the Minister agrees with that comment.

What is the cost to the Government, both in finance and efficiency, given the duplication of human resource process, of changes to payroll procedures across so many units? It is just not cost-effective. Although civil service Departments essentially follow the same grading structure, the salaries paid at different levels by different Departments mean increasing disparities, resulting in significant inequalities. There has been an entrenchment of inequalities that existed in the 1990s, and an opening up of new gaps that did not even exist then. The PCS union has argued that as a result there has been an entrenchment of historic gender and ethnicity pay caps, and the development of pay differentials across Departments for the same grades. That includes women being paid less than men, and the pay process has not allowed them to break out of that. Last year, Civil Service World reported how the civil service’s median gender pay gap had widened for the first time in six years, with a gender gap in average hourly earnings of 11.3%. In most cases, where large median pay gaps exist, it is because there is a higher proportion of men in senior and more highly paid roles, or of women in more junior roles. The PCS has argued that, as civil servants are increasingly being co-located into regional hubs organised by His Majesty’s Revenue and Customs and by the Government Property Agency, the difference in pay between staff at the same grades is becoming increasingly apparent—so much so that the PCS has said that it is preparing to begin large-scale equal pay challenges, bringing cases on behalf of women in one bargaining unit against men in another.

Ethnicity pay gaps are also a significant cause for concern. Black members of staff are disproportionately employed in lower paid areas of the civil service. Only this morning, we heard shocking evidence of racism in the Cabinet Office from trade unions giving evidence to the Public Administration and Constitutional Affairs Committee. Regional inequalities have also been identified. For example, a median civil servant at administration assistant or officer level at the Ministry of Defence earns just over £20,000, whereas their equivalent in the Welsh Government earns around £24,500, nearly as much as the median executive officer, a grade higher, at the Department for Digital, Culture, Media and Sport.

The evidence clearly shows that the pay structures across the civil service are unequal, dysfunctional, broken and in urgent need of reform. The situation hinders the delivery of an efficient service, so the transfer of staff between Departments is complicated in the absence of a uniform and fair pay system, while the unfair pay differentials create obstacles to achieving effective joint working within or between Departments. As others have mentioned, poor pay and terms and conditions within the civil service are also resulting in recruitment and retention problems, which, in turn, are also very costly for the Government.

Analysis by the Institute for Government reveals that turnover in the civil service is the highest it has been for a decade, and that the recruitment and retention of highly skilled staff is a particular cause for concern. It stated:

“The National Audit Office, the Public Accounts Committee, Ministers and civil servants have described how a lack of specialist skills in areas from digital to finance has contributed to delays, cost overruns or policy and operational failures.”

Research commissioned by Prospect and the FDA this year concluded that in order to ensure that the civil service can recruit and retain the high numbers of staff required, it is essential that the Government urgently address the poor levels of civil service pay. That is all having a significant detrimental impact on staff.

In PACAC this morning, we discussed the civil service people’s survey and we heard shocking evidence of harassment, bullying, discrimination and racism in the civil service. I will just quote some startling figures from a recent PCS survey of its members: 85% said that the cost of living crisis has impacted their mental and physical health; over half fear losing their home; 40% say that they have used credit to pay for essential shopping; and almost a fifth say that they have missed work because of their inability to afford transport or fuel. As the hon. Member for Glasgow South West (Chris Stephens) has said, 40,000 are using food banks, and 47,000 people are claiming universal credit because pay is so low. That is totally unacceptable and that is why civil service staff have been driven—forced—to take industrial action.

Nobody makes the decision to take industrial action lightly; it is very much a last resort. It is not a choice but a necessity that has been forced on civil service staff. Since December, PCS has been engaged in a series of targeted industrial action across many Departments, including the Department for Environment, Food and Rural Affairs, the Driver and Vehicle Licensing Agency, the DWP and Border Force. That is why we will see over 130,000 civil servants take strike action on Budget day next week in an attempt to make this Government listen and improve their offer. PCS is not alone. The poor pay outcomes have also led the Prospect union to ballot its members and they have also overwhelmingly voted for industrial action. Even the fast-streamers organised by the FDA have voted for industrial action.

I am very conscious that some Government Members have sought many a time to assert that rising wages cause inflation by creating a wage spiral. I am confident that the Minister is aware that that does not stand up to scrutiny. Research by James Meadway for the General Federation of Trade Unions, cited in a recent pamphlet, said:

“Whatever it is that is driving inflation in the UK, it is not high wages. Wages have been low for a long time and are now falling very fast.”

Independent analysis commissioned from Incomes Data Research by Prospect and the FDA argues that,

“public sector pay rises might only lead to an increase in inflation if they at least matched or were higher than current rates of inflation, and then only if private sector employers followed suit, and then only if these employers then decided to deliberately pass on this aspect of increasing costs directly to consumers in the form of price rises.”

If the Government truly believe that they do not have the resources to fund the pay rise, they need to make it clear they will end some of the tax inequalities that continue to let the wealthiest off the hook and will introduce a new measure of wealth taxation.

Previously, I have highlighted what such measures might include, including the equalisation of the rate of capital gains tax with income tax, which, in a single measure, would raise up to £14 billion. The money is there; it is a political choice not to use it. The Government can afford to pay civil servants, all public sector workers and everybody who has been forced to strike a decent wage.

I will move to a conclusion. There are a number of issues that need addressing and I would welcome the Minister’s response to them. We need an audit of pay differentials impacting gender and ethnicity across Departments, an audit of pay differentials at the same employment grades across Departments, a grouping of agencies around their main Government Departments to harmonise pay arrangements and an acceptance of the need for pay remits that move the civil service towards national pay rates, which will establish moving floors at different grades and the safeguarding of differentials between grades. That should be a step on the way to the re-establishment of a national pay bargaining process that ends the refusal to negotiate with trade unions.

Indeed, Labour’s deputy leader, my right hon. Friend the Member for Ashton-under-Lyne (Angela Rayner), and her predecessor on the employment rights brief, my hon. Friend the Member for Middlesbrough (Andy McDonald), have set out that fair pay agreements will be negotiated through sectoral collective bargaining, reversing the decades-long decline in collective bargaining coverage. I am not asserting that that is a manifesto commitment to national pay bargaining for the civil service, but it is clear evidence of the direction in which the party intends to move. I refer people to the Labour party’s excellent “ A New Deal for Working People” employment rights Green Paper for more information.

Such an approach is essential in order to tackle the problems of insecurity, inequality, discrimination, enforcement, low pay and the raft of other issues that I outlined in my speech. Urgent action is also required, with the Government’s commitment to hold constructive talks with PCS to resolve the current dispute. In next week’s Budget announcement, we need a revision of the 2022-23 civil service pay remit that reflects an understanding that a 10% rise and a living wage of at least £15 an hour are wholly affordable—wholly in this Government’s grasp—and do not require a reduction in service provision. We need a reformed pay bargaining process for the civil service and across the public sector, and an end to the Tory low-pay agenda of holding down public sector pay. Diolch yn fawr, Mr Pritchard.