Universal Credit: Private Rented Sector

Debate between Melanie Onn and Stephen Lloyd

Tuesday 9th January 2018 Westminster Hall

[Stephen Lloyd]

My hon. Friend makes an important point. I think that is something that needs to be considered, particularly as regards the further caps that have come in over the past couple of years. I think those are unsustainable.

[Melanie Onn (Great Grimsby) (Lab)]

Has the hon. Gentleman given any consideration to the issue of 18 to 21-year-olds who are on universal credit and have no recourse to any funding for the housing element? Very often they will be on a lower wage, as obviously the minimum wage for younger people is lower than that for people over 25. There are big issues for the sector and I think it will ultimately end in a rise in homelessness among that group. Does he agree?

[Stephen Lloyd]

I agree. As regards that particular age group—unless they have some sort of bank of mum and dad—in our surgeries we are already seeing that young people are tremendously adversely affected, both by the lack of housing benefit at that age, and, frankly, some of the issues around universal credit.

Another issue that has not been properly addressed, and I would welcome hearing about this from the Minister, is that there is a portal for public sector housing and councils and housing associations to access as regards people in their area, or their tenants, going on to universal credit, but there is not one for the private sector. I urge the Minister not to tell me that there is, if she has been told that by her civil servants, because I have been told by all the residential trade associations that there is not, or it is not working.

At the risk of misquoting Tony Blair, who kept saying, “Education, education, education,” I want to talk about evidence, evidence, evidence. All those years ago, when I and others first challenged the then Secretary of State, the right hon. Member for Chingford and Woodford Green, in the Work and Pensions Committee, saying, “You must understand, if you retain the original plan, which is that all the money goes to the tenant and the tenant pays the landlord, it will be an absolute disaster,” I did not have evidence. I just had a hunch, based on years of experience dealing with thousands of people. I just knew that, as did many others. Where are we now? We are five or six years down the line, and I want to provide some evidence.

In the past 12 months, the RLA reports, one in three landlords has attempted to evict a tenant; 60% were due to rent arrears, and the majority of those were on universal credit. This means not only unnecessary suffering for tens of thousands of housing benefit recipients, but it poses a threat to the future of benefits claimants ever succeeding to rent in the private sector, because once a tenant has a bad record, it is extremely difficult to unwind.

Secondly, a recent study carried out by the RLA shows that almost 87% of landlords would not be willing to let their properties to claimants of universal credit, while 38% have already experienced universal credit tenants going into arrears. Where are we going with this madness? I remind everyone of the percentage of rent arrears among those on universal credit in Northern Ireland. A recent study commissioned by Crisis—a homelessness charity—and the Joseph Rowntree Foundation found that 90% of local authorities were concerned that universal credit would increase homelessness, which it has, because of section 21s. The list of evidence goes on and on.

The RLA has found that 73%—Minister, these are the facts, the stats and the evidence—of its thousands of members,

“lack confidence in renting to tenants on the Credit due to uncertainty that they will be able to recover rent arrears.”

Another major landlords’ trade association, the National Landlords Association, found that only one in five of its members would let their properties to tenants on universal credit. I have already talked about Crisis. The trade association for letting agencies, the Association of Residential Letting Agents, which many hon. Members deal with, found that

“34% of ARLA Propertymark letting agents who we surveyed told us that they had seen a reduction in landlords renting to Universal Credit claimants.”

The list goes on and on, so it is time to fix it.

This is what I propose to the Government. I am delighted that the Chancellor of the Exchequer listened to me, the MP for Eastbourne, and made those amends in the Budget. I suspect that a few others probably had a little more influence than me; but, heck, like all politicians, I have been banging on about it for years so I will take the credit. So there have been some adjustments, but where do we go next? I ask the Minister to report back to the new Secretary of State, with whom I worked in coalition and whom I congratulate on her position, and persuade her to go to the Chancellor and do what it takes to make defaults to landlords, by mutual tenant-landlord agreement, automatic; and to go over to Northern Ireland, see their minority Government colleagues in the DUP, find out exactly what their computer programme does that allows colleagues in Northern Ireland to do automatic default payments, follow their two-week advice—I would do the same on that—and implement it across the country.

I believe that what would happen is that the housing stock capacity in the private sector would go up exponentially—even potentially double—because of what I mentioned earlier. Despite the challenges with tenants sometimes being on benefit, the prejudices that landlords sometimes have against them are often founded on the reality that landlords do not feel secure that they will receive the money. I am absolutely certain that if landlords know that they will get a default payment, over a couple of years there will be a substantial increase in the amount of private rented stock available to people on universal credit, and that could make a significant difference in reducing homelessness.

There is an opportunity for the Government. Despite the ideological and fundamental errors that underpin some elements of universal credit, finally, after years and years of banging on the door, they are beginning to change. Thank heaven! Now that door is open, the Minister and her Government have an opportunity to be game changers and to convert universal credit into what I believe it always should have been: a decent benefit. One of the key things they need to do is around the default payment, which I have debated this morning. Along with that—this is my other favourite—I would go to the current Secretary of the State at the DWP and ask her to have a word with the previous MP for her constituency, the former Chancellor George Osborne, and ask for the £3 billion back. He took that out after 2015, when the Liberals were defenestrated at the election; he slashed £3 billion a year out of universal credit, which was supposed to be about the work allowance.

If we get that money back and properly convert what should be a default payment to landlords, we can produce what universal credit should have been, and was originally designed to be: a progressive, positive benefit that gives people transformative opportunities. After five years of it being a complete car crash in so many ways, I believe that the Government finally understand that. I urge the Government to make my day and, possibly, that of the former Secretary of State, the right hon. Member for Chingford and Woodford Green, and to make automatic payments as a default to landlords. I ask that they to do it instantly, they do it in both the private and public sectors and they do it now.