Universal Credit: Private Rented Sector

Jamie Stone Excerpts

Tuesday 9th January 2018 Westminster Hall

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

It is a pleasure to serve under your chairmanship, Mr Gray. Normally, I would talk about the differences in my constituency—I might go on about it being vast, remote and so on—but my constituency faces absolutely the same issue as the rest of the UK. For example, I had a conversation with a private landlord just the other day who owns quite a lot of property. I suggested to him that he might like to give accommodation to people caught in this trap, and he said, “Oh, no, Jamie. I’m running a business. I’m not a charity. I can’t take these risks. I wouldn’t get the rent paid. That’s for the council to deal with.” That puts in a nutshell the problem that we face of private landlords not wishing to engage. It is true, and it is out there.

As my hon. Friend the Member for Eastbourne (Stephen Lloyd) mentioned, there is a lot of housing out there that we could access. It is absolutely true. Members for any constituency can think of property currently lying empty above shops in town centres. If the right inducements were offered to private landlords, that property could be brought back into the housing market.

For example, one thing that used to work in Scotland was the specific targeting of improvement grants at below-standard or empty properties, which encouraged landlords to invest using the grants and then make the property available. That worked in the past, and could indeed work in future. As Members have said, it is about encouraging private landlords to engage and offering inducements to make it worth their while, so that they do not see it as the difference between running a charity and running a business.

The man to whom I spoke said, “It’s for the council to deal with,” but as we have heard from other Members, councils are completely stretched. If we consider the amount of housing debt that councils must service and the huge chunk that it takes out of the rents coming in, we can see the trap that they are caught in. It is a point for another place and another debate, but the existence of housing debt among local authorities across the UK is a big problem and a millstone around their necks. As we have heard, the six counties of Northern Ireland are addressing the situation, and it works over there. That seems to be a good example to us all. If we are smart, we will look at how they are doing it, carbon copy it and do the same thing ourselves.

Somebody who is no longer with us either in this place or in this world cast some doubt on what society was. It seems to me that we believe that society as a concept has a role. The idea of direct payments to private landlords for the most vulnerable people is absolutely in keeping with the idea of responsible society. My hon. Friend the Member for Bath (Wera Hobhouse), who has left us now, mentioned that part of the Northern Irish deal was looking after those with disabilities, mental health problems and so on. That seems to me to be exactly what society is about: looking after the most vulnerable, because it is part of our collective responsibility as good human beings.

--- Later in debate ---

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship once again, Mr Gray. I congratulate the hon. Member for Eastbourne (Stephen Lloyd) on securing this important debate. It is vital that universal credit failures and the opportunities to fix them are highlighted to the Government at every opportunity, in the hope that they might listen.

The hon. Gentleman spoke eloquently about the problems with payments to claimants, which we raised with the UK Government when the Highland Council was a pilot area in 2013. [Interruption.] I hear my former council colleague, the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone), agreeing from a sedentary position. This is a cross-party issue, which I will come back to later. The hon. Member for Eastbourne also spoke about the problem with ideologues. I agree that there has been a continued failure to listen. I hope that that will change and that we will get a more positive response from the Minister about actions that could be taken. I will give some examples later on.

[Jamie Stone]

I return to my vast and remote mode. One of the warnings that the hon. Gentleman and I and others put to the Government was that the sheer rurality, distance and sparsity of population would present a special challenge when trying to get private landlords to let property.

[Drew Hendry]

I agree.

The hon. Member for Batley and Spen (Tracy Brabin) spoke eloquently about the issues that she has witnessed. She talked about universal credit being rolled out, glitches and all. I would go further—we are seeing more than glitches in the roll-out of universal credit. I have witnessed it for nearly five years. These are systemic issues. She mentioned that no child should have to experience these effects, which is absolutely right. This is about the people and their families who are affected in their homes. That hits home the hardest when people come to us with the personal stories of suffering they are enduring. That is when we understand why the Government have to listen and do something about it.

The hon. Lady also talked about the pressures on housing stock and the need to support the private rented sector, saying that 66% of private renters have no savings. That is true and is reflected in my experience, albeit anecdotally. People do not have the ability to inject their own cash into the system because they do not have any cash—it does not exist.

The hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) mentioned that there are problems that need to be fixed. I welcome the fact that we are hearing that around the Chamber. There is a consensus that these serious issues are hurting people.

The hon. Member for Caithness, Sutherland and Easter Ross talked about rent arrears for councils. Again, I refer to what happened in the Highland Council as a result of this problem.

The hon. Member for Edinburgh West (Christine Jardine) has not yet seen the roll-out in her constituency but is aware that a cold wind is coming. Those of us who have experienced it in our constituencies have seen the devastation that it leaves in its wake.

The hon. Member for Strangford (Jim Shannon) made an important point about the price differential between council housing association and private lettings. He asked who pays the difference. If, as we heard earlier, most people do not have private income to fall back on, who does pay the difference? He also made a telling point about the decrease in the already low number of private landlords willing to rent to universal credit claimants, which is backed up in many other pieces of evidence from around the nations of the UK.

Since Inverness was chosen in 2013 as a pilot area for universal credit, we have lived with the problems of a highly dysfunctional system. Originally, the Highland Council engaged with great hope. There was and remains support for simplifying the social security regime. There were too many benefits in the past and it was too confusing. In local and national politics of all colours, people got behind the idea of a system with a lot less bureaucracy and hassle for claimants. If only that had been the outcome. Instead, universal credit in its current form has gradually shown itself to be a failure. Worse, its continued roll-out has had a devastating impact on claimants—not just the unemployed, but working people, single parents, the disabled and even the dying—particularly through the toxic legacy of debt and rent arrears.

The hon. Member for Eastbourne described universal credit as a car crash. It is, and its corrosive effect is not restricted to claimants. Landlords in both the public and the private sector feel a knock-on effect, which squeezes incomes, reduces the supply of rented properties for claimants and chokes investment in new building. We in the Scottish National party have called continuously for the roll-out to be halted and fixed. Like those in Northern Ireland, we will use the very limited powers we have to try to mitigate the impact, as we have done with other matters over the past few years, and inject a little fairness and dignity into the system. However, it remains almost entirely a UK-reserved issue and needs to be dealt with.

I have been a noisy witness in the nearly five years since the pilot, when I was leader of the Highland Council. We have tried every approach to get the Tory Government to listen. I was joined by the political voices on the council—regardless of political colour, if any—to highlight the misery that was gradually unfolding before our eyes. We set out the alternatives, asked for changes and relayed the experiences, the frustrations and the inevitable wider impact that the roll-out would have if it was continued without fixing the problems, yet our voices were not listened to, and now we are seeing the pattern repeating itself wherever universal credit is deployed.

The hon. Member for Eastbourne mentioned the public sector. As a result of universal credit, the Highland Council has seen rent arrears rocketing to around £2 million —a signal of the misery, but also a noose around the neck of investment in housing. Vital resources are being drained from the council as it picks up the cost of the universal credit failure.

According to a recent report by the Residential Landlords Association, universal credit is now the main reason for private sector landlords seeking to evict tenants. We have heard a lot of statistics this morning, but 29% of landlords have evicted a tenant for universal credit rent arrears and now only 13% of landlords say that they are willing to rent to universal credit claimants at all. According to the RLA, more than 73% of landlords are unlikely to rent homes to someone claiming universal credit, because they are worried that they will not be able to pay.

The Scottish Federation of Housing Associations says that those problems are putting more pressure on public housing; that the administration of universal credit falls short of what its own service standard should be; and that the schedules that associations receive are beset with errors. The federation’s survey found that the standard of communications between the DWP and landlords was erratic, and made worse by the absence of implicit consent in the universal credit full service roll-out. Arrears are much higher among people on universal credit. The federation says that the shortcomings need to be fixed and that a pause is therefore required.

The DWP has not allowed implicit consent, except through MPs. That hamstrings organisations such as citizens advice bureaux and housing associations, meaning that they cannot effectively help claimants to get their entitlements to retain tenancies. The reliance on explicit consent is impractical, especially in rural areas.

There is a growing worry that the design and the benefits of universal credit are not fit for purpose. It should be the objective of any good enterprise, especially a Government, to listen to the experiences of people affected, especially those delivering a service and those who have been asked to partner and make the required adjustments, but neither I nor anybody else in the highlands have witnessed such a willingness to adapt. The problem has spread to other areas. Landlord after landlord, housing association after housing association, council after council, support group after support group and charity after charity have echoed the calls we have made. Every day, new and more troubling examples of hardship and suffering are exposed. Debt and rent arrears mean long-term damage and lasting harm to communities.

Universal credit, in its current form, is designed to create debt by default—it is constructed that way. What kind of Government create the situation where people and families are turned into debtors, with no hope of escape other than eviction, bankruptcy or both? As the hon. Member for Eastbourne pointed out, some welcome changes were made by the Chancellor in his Budget. However, the Chancellor said in his November Budget speech that he wanted to avoid debt for the Government

“not for some ideological reason but because excessive debt undermines our economic security, leaving us vulnerable”—[Official Report, 22 November 2017; Vol. 631, c. 1048.]

He went on to talk about vulnerability to financial shocks. Well, people are facing financial shocks now because of the shambolic handling of universal credit. It should be halted; the messages should be taken on board; and it should be fixed.