Universal Credit: Private Rented Sector

Debate between David Drew and Stephen Lloyd

Tuesday 9th January 2018 Westminster Hall

[Stephen Lloyd]

I thank the hon. Gentleman for the intervention. He raises an important point about the public sector, because housing associations and councils have also been badly affected. It is just that broadly speaking—again, everyone in this Chamber knows this, because we are experienced politicians—the public sector will be more patient and understanding as it waits for payments from universal credit. Usually, private landlords simply cannot wait, not because they are mean or what have you, but because their business model does not allow them not to be paid for month after month. As a result, there is a spike in section 21 evictions.

We now get to the Budget. Finally—although I would like to think that this was partly due to my lobbying I know that it will be thanks to many other people in this Chamber and outside—the Chancellor of the Exchequer took on board some of the fundamental criticisms that I have been making of universal credit, for years frankly, about default payments to landlords, and some changes were made. At last! It was five or six years since I had been arguing for that and advocating it, but better late than never. It will make a difference, and that I approve of. However, it is only the first part of the journey in relation to automatic default rental payments to landlords. It is the beginning, but it does not include people who are not already on automatic payments. As I understand it—the Minister may provide clarification—it also does not include all those people to whom universal credit has already been rolled out over the past few years. And it does not start until the spring. It is a step in the right direction and an acknowledgement from the Government that they made a mistake and they finally want to try to put it right, so I approve of it, but there is still much further to go.

[Dr David Drew (Stroud) (Lab/Co-op)]

Does the hon. Gentleman accept that this is one of the fundamental flaws? Local authorities have decades of experience of dealing with housing benefit, both in the public sector and, more particularly, in the private sector. We have thrown all that expertise away, which is so counterproductive. Does the hon. Gentleman agree?

[Stephen Lloyd]

I appreciate the intervention. Not only do I wholly agree, but the decisions are completely irrational. One thing that I am finding out from the Residential Landlords Association and others is that there is not adequate communication between the DWP, local authorities and landlords, so even though, in theory, it seems from the changes in the Budget that there is the beginning of an understanding from the Government that default payments will be necessary to prevent a complete car crash, there is still a long way to go towards understanding that they have made the system so complicated that things will still be very hard for residential landlords. What does that mean? It means that they will pull out in droves.

Currently, 1.2 million people are on housing benefit or LHA in the private rented sector. There is a housing crisis in this country. This is not the debate to discuss that, but we have a housing crisis; we all know that from our constituency surgeries. The Government could convert that 1.2 million to 2.4 million; it could double the number of tenants moving into the private rented sector, because the capacity is there. However, that will happen only if the Government make it easy—very straightforward—for private landlords to take on someone who is on universal credit and give them a roof over their head, and if there is that automatic default payment that is, as it says on the tin, automatic.

If I am a landlord and I take someone, or am willing to take someone, on universal credit, and give them a flat or a house, a roof over their head, the automatic situation—by mutual agreement with the tenant, I accept that that is important—would be for his or her payment on universal credit automatically to go straight into my account, the landlord’s. I was in business for years before I went into politics, and I can absolutely guarantee that despite the challenges with some tenants on universal credit, in the eyes of landlords, ultimately, a business is a business, and if a landlord is getting their payment directly into their business bank account every month—or every two weeks, as I would like, but that is another issue—then, as a business, they will look favourably on that particular group. That is something that I really urge the Minister to consider.