Housing Costs (Reformed Welfare System)

Debate between John Hemming and Teresa Pearce

Tuesday 3rd March 2015 Commons Chamber

[Teresa Pearce (Erith and Thamesmead) (Lab)]

I am pleased to have the opportunity to participate in this debate. It was very well opened by my hon. Friend the Member for Aberdeen South (Dame Anne Begg), who is a dedicated and inspirational Chair of the Work and Pensions Committee. I want to put on the record my thanks to her for the way in which she has chaired the Committee and for all the things I have learned from her. She is the epitome of the iron fist in a velvet glove, and she manages to be both reasonable and radical at the same time.

I am speaking in this debate because I am a member of the Select Committee, and the Chair has already gone through some of the recommendations in our report. Given the importance of the report, it is disappointing that, a year on, we are still waiting for the Government response. I hope that the Minister will address that matter.

It is indisputable that we are the middle of a housing crisis. House building is down, homelessness and rough sleeping are rising, and houses are unaffordable for many people. The lack of social housing means that those with legitimate claims and in desperate need are deemed ineligible or not in priority need as local authorities try to implement housing strategies to manage demand with a only very few houses to allocate.

The private rented sector has filled the vacuum caused by the lack of affordable and social housing. As a result, the private rented sector in London has grown by 75% in the past 10 years. In my constituency, it is now common for families to live in private rented accommodation, although they previously either owned their own home or lived in social housing. Yet the ever-growing private rented sector is still failing to meet the demands of renters. It is easy to reduce discussions about housing costs to an evaluation of numbers and statistics, but the truth is that covering housing costs is crucial to securing a stable home life and a stable society. Affordable housing costs give families certainty and freedom from the fear of eviction, and help to foster communities.

Costs are spiralling out of control. The cost of renting has soared while wages have dropped. The lack of regulation in the private rented sector and the limited supply of housing in comparison with demand mean that private landlords are currently free to set their own prices. The cost of renting privately has increased consistently since 2009, and rents reportedly increased in London in 2012-13 by nearly 8%.

It is not surprising that so many people, both in and out of work, require help with paying their housing costs and have to resort to housing benefit. The number of in-work housing benefit claimants rose from 439,000 at the end of 2008 to more than 1 million in May 2014. The latest statistics also show that there were just under 4.9 million housing benefit claimants at the end of November 2014—increased from 4.2 million in November 2008—of whom 67% were in the social rented sector, but the rest were in the private rented sector.

The Committee’s report illustrated that the cost of housing benefit is rising, while the most vulnerable are failed when they rent privately. Over the past year, as a constituency MP, I have seen a spike in the number of people contacting my office who have been told that they are ineligible for social housing, but cannot secure private rented accommodation. That is due to a combination of factors, but one that has made things very difficult for people is the change in local housing allowance. Constituents tell me that when they go to the local authority, they are just given a list of private letting agents. The problem is that nearly all those on the list say that they do not take any tenants on benefits. Constituents are spending time and resources searching for suitable properties only to be told that they cannot be helped. That means that a large section of the private rented sector is unavailable to claimants, and that they are often forced to take poor, substandard property that fails to meet their needs.

[John Hemming]

We have found in the west midlands that private landlords are often willing to take people on housing benefit if they have a 6 Towns type of account that reserves the funds. There is a solution in the system as it stands. Perhaps that needs to be investigated. Obviously, 6 Towns does not operate across the country, but perhaps there are solutions that can be found within the current policy.

[Teresa Pearce]

It is true that solutions can be found. Sadly, no one seems to have found them yet in my part of south-east London.

The Work and Pensions Committee looked at the problems that are faced by people on housing benefit. They are discriminated against when looking for private rented accommodation. For families, that makes trying to find a roof over their heads an uphill struggle. Given that tenancies typically last for six to 12 months, private renters often have to move just as they have settled in. Children who live in such places have their life chances restricted and their education disrupted, and are often not registered with a doctor. That cannot be acceptable.

Private landlords may be reluctant to rent accommodation or provide temporary accommodation to claimants for a number of reasons. It might not just be general discrimination, but might be due to constraints that are imposed by mortgage lenders, who say that they are not allowed to provide longer tenancies, or due to fears that local authorities will fail to allocate housing benefit in a timely manner. Giving private renters the option of allowing the housing benefit component of their universal credit payment to go directly to their landlord might allay those fears and enable private renters to control their finances more easily. The Government must work with private sector landlords to address their concerns about universal credit and offer greater support to those who rent property to housing benefit claimants. That work must start now.