Tenant Fees Bill (Third sitting)

Richard Graham Excerpts

Committee Debate: 3rd sitting: House of Commons
Thursday 7th June 2018 Public Bill Committees

What do tenants want? Again, the Government’s own impact assessment shows, on page 15, the results of the Government’s own consultation. We can see that a clear majority of tenants—two thirds—want a cap of four weeks’ rent. We can also see that a clear majority of landlords and agents want six weeks’ or even two months’ rent as a deposit. Very clearly, the Government have come down on the side of landlords and agents, and not on the side of tenants. They have claimed to be on the side of tenants but they are not.

[Richard Graham (Gloucester) (Con)]

On the length of time for the deposit, it is of course eight weeks in Scotland, so does the hon. Lady agree that this Bill is a significant step forward?

[Sarah Jones]

I am looking specifically at the impact of this Bill, which will be on people in England, and currently most people in England pay a deposit of four weeks’ rent—some pay less, some more—so we know that in England this Bill will not have an impact on the vast majority of people who are currently renting. That is the point that I am trying to make; I am not comparing the situation in England with that in Scotland.

[Richard Graham]

Surely the hon. Lady will agree that this is part of a package of measures, and that, taken in the round, these are significant steps forward in bringing down costs for tenants, as all our witnesses this morning realised.

[Sarah Jones]

I will shortly make the case that in some cases people will end up paying more money as a result of the Bill as it currently stands.

So a cap of six weeks’ rent will not make a difference to the vast majority of private renters, and it does not send a message to tenants that this Government want to improve things for them. I would like the Minister to explain his thinking on that.

In areas with higher housing costs, such as London, a six-week deposit based on median rents will see private renters needing to fork out £2,000. Therefore, amendment 7, in keeping with the advice from various experts, seeks to make this part of the Bill more impactful by setting a three-week cap. That would save tenants £575 compared with the Government’s proposals, rising to £928 in London.

I come to my second main point. We have established that, as it stands, this schedule will be fairly ineffective, but in fact it is in danger of making things worse. To emphasise the lack of impact that it will have in its current form, we can again look at the Government’s own impact assessment. It claims that a cap of six weeks’ rent will result in

“money being available to tenants to spend, leading to wider economic benefits.”

The impact assessment estimates that 1.4 million households moving home in the private rented sector in year one will pay £12 million less in deposits than they do currently. If that benefit is spread across all those households, the average saving is £8.50 per household, which would not be a massive boost to the economy.

The original briefing for the Queen’s Speech indicated an intention to cap deposits at four weeks—that is really important. The Financial Times was among publications that reported that

“deposits that tenants leave with landlords or their letting agents will be capped at no more than one month’s rent.”

When the draft Bill came out in May 2018, groups such as the National Landlords Association and the Association of Residential Letting Agents claimed victory in pushing the cap back to six weeks. A National Landlords Association newsletter stated:

“The Government had initially proposed in the consultation to cap security deposits at no more than 4 weeks’ rent. From the beginning of the process, the NLA has been actively campaigning around raising the cap to 6 weeks. This was outlined when…CEO of the NLA…met with the Minister of State for Housing and Planning…in September and pressed him to rethink the level of this cap.”

Perhaps the Minister can explain what arguments the Government took into account when deciding to amend their plans for a four-week cap, and why they did not listen to the evidence given by Shelter, Citizens Advice and others that a lower cap was the only way to effectively tackle the hardship faced by many private renters. Indeed, why did the Minister not listen to the views of tenants themselves?

On Second Reading, the Secretary of State gave various arguments in defence of a six-week cap, but I am afraid that none of them stands up to scrutiny. He argued that a cap of six weeks’ rent will give landlords greater flexibility to accept higher-risk tenants, such as those with pets, but analysis conducted by MHCLG as part of its impact assessment did not find a link between the level of deposit and the riskiness of the tenant. As landlords told us earlier this week, a better system for higher-risk tenants might be to allow an exception to the cap in specific cases, such as pets.

The Government have also argued that a six-week cap will address concerns about tenants leaving without paying their final month’s rent. Experts have argued that that is a rare occurrence, and just this morning, we heard that only 2% of tenants used their deposit as their final month’s rent. The important role played by the deposit protection scheme means that there are already means by which we can resolve disputes.

The Housing Secretary rightly pointed out the need to ensure a balance between financial security for landlords and affordability for tenants, but the data we have on deposits suggests that the proposals are skewed in favour of landlords. Deposit protection scheme data suggests that on average, since 2007, tenants have received more than 75% of their deposit value back. In more than half of cases, tenants receive their deposit back in full, with no deductions. Of course, landlords need the security of knowing that they can recoup costs if needed, and there should be a deterrent for tenants who might otherwise leave properties in a bad state, but the numbers suggest that a much lower-value deposit would still allow landlords to recoup any legitimate costs at the end of a tenancy.

The amount of the deposit could be halved and landlords would still have an ample amount to cover the average deduction. If the average deposit is £1,000, with people paying back a quarter on average, that means landlords receive back £250 on average. If the deposit was halved to £500, they would still have enough for that average to be returned. The majority of the deposit would still be returned to the tenant in most cases, but it would also leave room for a bigger than average deduction if necessary.

Importantly, the Housing Secretary argued that the six-week cap was not a recommendation, despite repeated warnings on Second Reading that it may be interpreted as such and become the norm. The inherent seal of approval of a Government cap could result in landlords thinking it was okay and normal to raise deposits to that six-week level. That is relevant in the context of other fees being restricted by the Bill.

The potential backfiring of the Bill could mean that an average deposit of 4.8 weeks across the country suddenly jumped to six weeks, which would cost tenants hundreds of pounds in extra deposit fees and completely negate the benefit of the main part of the Bill, which bans letting fees. The Government estimate the average cost of letting fees to be between £200 and £300. If the most common deposit of four weeks became six, based on average rents, Londoners would pay £500 more on their deposits, which means that the net impact of the Bill on renters would be negative.

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[Rishi Sunak]

The specific issue we are talking about is a cap on deposits. We do not need to look at potentially similar industries; we can look at an exactly analogous industry, because in Scotland where there is an eight-week cap that has been in force for a while. There, deposits have not gravitated to that level and have remained at about a month’s rent. There can be no more compelling evidence than that.

[Richard Graham]

The analogy offered by the hon. Member for Croydon Central is interesting, but it is not true, particularly for apprenticeship wages, where there is a minimum apprenticeship wage and very large numbers of apprentices get considerably more.

[Rishi Sunak]

My hon. Friend is right that the evidence on apprenticeships certainly does not suggest the conclusion that has been referred to.

The guidance that will be published will encourage landlords to consider on a case-by-case basis when to take a deposit and the appropriate level of deposit.

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[Melanie Onn]

The aim of the amendment is to remove unfair fees from tenants’ disproportionate burden, and to make the system fairer and power more balanced than it has been in the past. On Second Reading, the Secretary of State described holding deposits as simply a “refundable” deposit to “reserve a property”. I fear that they have the potential to be used in other ways.

As I said on Second Reading, the inclusion of such deposits in the legislation was

“allegedly designed to minimise instances of tenants securing multiples of properties at the same time before finally settling on their preferred property. There has been very little, if any, evidence that this is a regular practice.”—[Official Report, 21 May 2018; Vol. 641, c. 647.]

Indeed, in this morning’s evidence session we heard completely the opposite from Generation Rent, and that, in fact, holding deposits can often be used by letting agents or landlords to hold multiple deposits from one individual, taking their funds, preventing them from seeking other properties or from participating in a bidding process to rent other properties, and setting them back weeks in being able to access the home that they want.

[Richard Graham]

I thought we heard clearly from all our witnesses this morning that the proposal to passport deposits was widely welcomed and would help to solve that problem. Does the hon. Lady agree?

[Melanie Onn]

The hon. Gentleman is slightly mistaken in his recollection. That was not to do with the holding deposit; it was to do with the deposit given as security once the prospective tenant has gone through the holding deposit process. The holding deposit is simply to secure a property and to register interest. Referencing is then undertaken before a person is accepted and considered to be the tenant. Although I agree with the principle of passporting deposits, that was not the specific issue with holding deposits.

[Richard Graham]

Surely the deposit and the ability to move from one tenancy to another are much more important.

[Melanie Onn]

I disagree. The principle aim of the proposed legislation is to limit the unfair, up-front costs that make it much more difficult. We know that young people make up the bulk of the sector at the moment, and that is only set to grow. Moreover, in general—I accept that this is not always the case—those young people will be on lower wages, so such deposits are an unnecessary barrier to people in that age bracket being able to obtain the property that they desire to become their home.

My concern relates to the abuse of those holding deposits. When this matter was discussed in the Select Committee, there was a suggestion that tenants seeking a property were putting down multiple holding deposits so that they could play a game of which property they were going to choose, as if individuals have so much money that they are able to put down multiple holding deposits. I have not seen the evidence for that.

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[Rishi Sunak]

I would like to think that we are focused on getting the policy right. We have listened and responded to all participants in the industry. It is not a question of one or the other. We want to get the policies right for the long term to ensure not only that tenants are treated fairly, but that the market functions and that a healthy buy-to-rent sector is available, with investment going into it. It is important for that reason to make sure that some of the concerns that landlords have are addressed and listened to in order to ensure the functioning of this market in the years ahead. In the past, we have seen the catastrophic consequences for the supply of private rented accommodation of dramatic impositions on landlords, and I am sure that none of us would want to return to those bad old days.

[Richard Graham]

All the figures that have been shown to us in evidence so far suggest that the demand to rent from the private sector will continue to rise considerably over the next few years. It is vital that this market functions well, and it is not just a case of doing everything that every tenant would want or everything that every landlord would want, but of finding the balance so that good landlords and good agents are motivated to provide the private sector housing that good tenants need. That seems to me to be the purpose of the Bill. Does my hon. Friend agree?

[Rishi Sunak]

I could not agree more with my hon. Friend, who puts it very well. This is not about demonising people; it is about making sure that the private rental sector, which, as he so rightly identifies, is likely to experience some growth, is healthy and well invested in so that people who are looking for somewhere to rent have somewhere to call home. That is why we get the balance right in the Bill.

To conclude, we heard evidence on Tuesday from agent and landlord groups who were quite certain that if landlords and agents were unable to take a holding deposit, they would cherry-pick tenants. None of us wants to see that. I remind the Committee that the amendment would remove in its entirety the idea that landlords can charge any holding deposit. We do not support that and think that it would damage the functioning of the market, so I urge the hon. Member for Great Grimsby to withdraw the amendment and ask hon. Members to agree to clause 5 and schedule 2.

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Division 4

Ayes: 8

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Labour: 8

Noes: 9

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Conservative: 8

[Richard Graham]

On a point of order, Mr Sharma. May I raise a point for the Minister to comment on? We are seeing a bit of trend in this sitting of Opposition Members tabling various extremely well-meaning amendments that, in my view, would make for extremely bad law. For example, the amendment tabled by the hon. Member for Stockton South about having an exception for people with mental health difficulties could land huge numbers of tenants and landlords in all sorts of arguments going into the courts about what constitutes a reasonable amount of mental health difficulty or stress. My concern, which I would like the Minister to respond to, is that some of the amendments are extremely well meaning but not helpful in the bigger picture.

[The Chair]

I take your point, but it is up to Opposition Members what amendments they propose, and it is up to the Minister to respond to them. Opposition Members have that democratic right. You cannot just say that you think it is bad—I am sorry.

Tenant Fees Bill (Second sitting)

Richard Graham Excerpts

Committee Debate: 2nd sitting: House of Commons
Thursday 7th June 2018 Public Bill Committees

[James Frith]

Q But they should be refunded pronto.

Katie Martin: Absolutely, yes.

[Richard Graham (Gloucester) (Con)]

Q Katie Martin, I will ask you a question I wanted to ask our previous witnesses about who the best people are to try to work with tenants when there are issues effectively of breaking the law. We heard from previous witnesses that they had real doubts about vulnerable tenants turning to people such as trading standards and so on for help.

In my experience, quite a lot of tenants will turn to housing departments with questions, particularly on environmental health issues. For example, I have noticed a huge increase in the number of young mothers who go to the city council complaining about mould or damp properties. It is true that those tend to be more for housing associations than for private tenancies, where maybe the tenants feel more secure. However, do you think that if second-tier councils’ housing departments had responsibility for enforcing the measures in this Bill, tenants would be more likely to raise issues with them?

Katie Martin: I think you have hit the nail on the head about people in social housing feeling much more secure. Tenants in the private rented sector hesitate to come forward with complaints because there is a huge fear of retaliation, which is one of the reasons why we think that all of these problems should be pre-empted in the legislation rather than having to be picked up later. People do not feel like they are empowered. They are very worried about what action the landlord might take, such as not renewing their tenancy and all kinds of different things. That is definitely problematic for renters.

[Richard Graham]

Q Do you happen to know whether it is mandatory at the moment for an agent, or a landlord if it is a direct tenancy, to provide tenants with a bit of paper that spells out what tenants’ rights are on things such as environmental health and up-front fees? If that is the case and it was clearly marked, “If you see evidence of any of these issues, contact your second-tier council housing team on this telephone number”, would that help make people more aware of their rights?

Katie Martin: I will turn to Rhea on what is currently provided.

Rhea Newman: Landlords and agents do now have to provide a document that the Government produced, the “How to rent” guide, which includes lots of information about the roles and responsibilities of landlords and tenants. The Department has worked closely on that and engaged with a lot of stakeholders to try to make things clearer, but there is a challenge. Providing it is one thing; ensuring that tenants can actually engage with it and understand their rights is another. Sometimes people do not look at things until a problem occurs.

[Richard Graham]

Q Do you think a part of that is about effective media communication from local councils when landlords are fined? For example, on illegal tobacco, I have noticed from the number of cases that since trading standards gave publicity to the fines of people who had been selling illegal tobacco, that has raised awareness of the issue hugely. Do you think the same thing would be effective on some of the up-front fees?

Rhea Newman: Communications are really key to that. When the ban comes into force it will be really important in the lead-up to that to make sure that there are clear communications at a national and local level to try to reach all landlords, agents and tenants to make sure they are clear about what they should and should not pay. The clarity of the Bill helps to make sure those communications can then be clear.

[Richard Graham]

Q Rhea, you mentioned earlier that you were worried about the business of multiple deposits for people moving tenancies. Does the concept of passporting the deposit from one landlord to another deal with the issue?

Rhea Newman: We think passporting could have a key role to play in dealing with such issues. There are real challenges for people when they cannot get one deposit back and they are trying to put a deposit on a new tenancy, so there is certainly merit in exploring deposit passporting. We would be keen to work with MHCLG and organisations such as Generation Rent on that.

[Richard Graham]

Q Dan Wilson Craw, is there anything you would like to add on either of those questions?

Dan Wilson Craw: On the question of communication, council websites are really important. Tenants are supposed to get their heads around the guide, but it is a national document and they need to be able to find local information easily. Unfortunately, in our experience, a lot of councils do not really have much information on their websites for private renters. A lot of the time, if someone has a problem with their landlord, they phone up their council—this is an example that I came across—and get put through to the housing department. They are simply told, “This is how you apply for a council house”, and it is left at that, even though they have the right to have an environmental health officer come out and inspect the property.

[Richard Graham]

Q Do you agree that the environmental health officers are the right people in the council housing team? If you have a housing team that also has responsibility for following up on this, that is a more logical link.

Dan Wilson Craw: I think each council will have to work out exactly how to communicate the letting fees ban under their existing responsibilities and the best way of communicating it. Obviously it depends on whether it is a two-tier council. as well.

[Richard Graham]

Q Do you agree that that tends to be where the expertise is? People in council housing teams often have a strong feel for who is a good landlord and who is likely not to be, and of course a better awareness of the tenants.

Dan Wilson Craw: Sorry, I don’t quite understand.

[Richard Graham]

Q Within the Bill there are different options for who will have responsibility for enforcement. It could easily be at the first-tier level—the county council—but on the whole they do not have any direct experience of dealing with housing issues, whereas the housing teams in the second-tier councils do. They have environmental health officers and they deal with people who are looking for tenancies, so they know the customer very well.

Dan Wilson Craw: Absolutely. What the Bill appears to do—we support this—is to allow second-tier councils to take on the responsibility for enforcement.

[Richard Graham]

Q It does. My question was whether you support that and think it is a good idea. Is that a yes?

Dan Wilson Craw: Yes, it is.

Rhea Newman: In their responsibilities for enforcing across the private rented sector, it is really important that trading standards and environmental health officers work together. That joint work is fundamental. They obviously have resource challenges at the moment, which need to be addressed. We have always supported having one responsible authority—trading standards—in the Bill, but if they can work with their district councils, that is really important.

[Rishi Sunak]

Q Thank you to all of you for joining us today. You have all been working with the Department extensively in helping formulate the legislation, not least by providing input into the guidance that is currently being formulated. I really appreciate your help there, and I guess congratulations are in order. You have all campaigned for a long time on this issue, so I am sure you are delighted to see it come into practice. Thank you for your broad support for the aims of the Bill.

I have a very quick question about the principle of a holding deposit. Obviously, there is some debate about that. The argument that has been put forward—we heard it again the other day—is that having a holding deposit is sensible because it does two things: it ensures that tenants have a financial stake in the process and that they are not speculating on multiple properties, and it protects landlords, so they do not cherry-pick among tenants. If there were not a holding deposit, landlords might be inclined to pick safer tenants. I understand that you might have some different views about the detail of how it is implemented, but first I would love to hear whether you agree with the principle of a holding deposit. Katie, do you want to start?

Katie Martin: Yes. As I said, we do not object in principle to holding deposits. We think they should be measured to ensure prospective tenants are not taken advantage of. We also think it is really important that the legislation ensures that the landlords or letting agents cannot retain the holding deposit following a failed credit check or reference check. They should do that only if tenants have provided misleading information. The circumstances under which holding deposits are withheld should be closely looked at, but we do not object to them in principle.

Rhea Newman: We also do not object in principle. We think they can play a role. We are not sure, in practice, how much tenants speculate on multiple properties at the same time—in highly competitive markets, tenants often feel lucky to find one property that meets their needs—but we accept the principle of a holding deposit. We have always argued for a lower cap of about two days’ rent, because one week’s rent—I think the average is £192 across England—is a lot to lose if your circumstances change. Our main priority is to ensure the terms for refunding holding deposits are really clear. We think there needs to be a paper trail around what information is taken before holding deposits are given. Landlords and agents should tell tenants how it will be treated, and if they do not refund it they should provide evidence for why they are doing that. We think that, at the moment, the terms are not clear enough.

Dan Wilson Craw: I agree. We think holding deposits serve a function in a market in which it takes a while to get a reference from the tenant. If technology and the market were to develop post the fees ban, and a tenant could be referenced instantly, you would potentially not need a holding deposit.

We have a couple of concerns. Having this Bill to formalise the process of taking a holding deposit is really important. Under the Bill, a landlord or a letting agent could still take holding deposits from several tenants and ultimately give the tenancy to only one tenant. What it would do for tenants who had put down a holding deposit and did not get the tenancy is to put their flat hunting on hold for 15 days. We would quite like to see the Bill tightened up in that respect. Also, as was mentioned before—

Tenant Fees Bill (First sitting)

Richard Graham Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 5th June 2018 Public Bill Committees

[James Frith (Bury North) (Lab)]

I draw attention to my entry in the Register of Members’ Financial Interests. I have one property of which I am a landlord.

[Richard Graham (Gloucester) (Con)]

I draw attention to my declaration in the Register of Members’ Financial Interests. My wife and I have recently become landlords of a property.

[Dr Paul Williams (Stockton South) (Lab)]

May I draw attention to my entry in the Register of Members’ Financial Interests? My partner and I rent out two properties, and we are also tenants.

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[The Chair]

Q Mr Hyslop, do you want to add anything to that?

Adam Hyslop: To loop back to the previous point on enforcement, I would add that one of the great things that, hopefully, the Bill will bring through is the ability to self-enforce better. Currently, there is legislation that was designed to promote transparency and to make sure that tenants are aware of what fees will be charged, without seeking to limit those. That has not been totally successful, partly because it is quite difficult for a tenant to prove whether they were shown those fees and whether they were made clear to them. It is a somewhat abstract concept whether they were aware of the fees before they were asked to pay them at a later point in the process.

The good thing about a clearer and higher-level fee ban is that a tenant paying money is a far more provable event. A tenant can get to that point in the process and then simply refuse to pay the fee if it is presented to them. Even if they get past that phase and they were not aware that they were being charged a fee illegally, it is then easier to prove that they did pay a fee and to unwind that. I feel that self-enforcement is far easier with the legislation being proposed than with the current set-up.

[Richard Graham]

Q May I explore some of the comments that you all made? David Cox, you said effectively two things. First, you said that you do not support the Bill, and then you criticised it for the lack of an adequate enforcement mechanism. The two are totally different things, aren’t they? If you do not support the Bill, the fact that it has not got an adequate enforcement mechanism is neither here nor there. If you are not supporting the Bill because it has not got an enforcement mechanism, the focus is on your offering some suggestions as to how that could be helped. The shadow Minister’s comment about whether the price of the fines is going to be adequate to help finance good trading standards teams is pretty relevant to that. Why do you think that the Bill is not going to achieve its aims, when Adam Hyslop of OpenRent has clearly said that it will?

David Cox: We do not support the concept of the Bill; we do not think it will achieve its aims. I will return to that in a moment.

[Richard Graham]

Q Why?

David Cox: In terms of why we made comments about enforcement, we have to take a practical consideration, and the likelihood is that the Bill will go through and become law. Therefore, we want to ensure that what comes out the other end from this Committee and the parliamentary process is a Bill that will affect the whole of the market, not just those professional agents who are our members and who will do this, as we have seen with so many previous pieces of legislation.

[Richard Graham]

Q Okay, but let us focus on the first bit first. Adam Hyslop has said clearly that the Bill will achieve its aims. He had a couple of queries that we can come back to. You have said that it will not, but you have heard his experience. How can you defend your position against that?

David Cox: There are different types of agencies in the market. Adam’s business is very different from a traditional letting agent’s. The traditional high street letting agent that you walk into, or the one you are considering as a letting agent, is not offering the same service as Adam and OpenRent provides. As I understand it, they are very much more geared towards a listing service for landlords who want to self-manage. I do not think they have an option where they manage the properties on the landlord’s behalf—Adam will be able to answer that. Traditional agents do an awful lot more than the basic listing service, which is a service that they charge the landlord for. They charge the landlord for going out and doing the viewings, for example.

The tenant aspect is much more around issues as they arise, such as issues at the beginning of the tenancy, to ensure that agents are providing the best tenant and to ensure that the tenant is not getting into any financial difficulty as a result of taking properties that they cannot necessarily afford. In particular areas of the country, such as the north-east, a lot of letting agents will go that extra mile for the tenant, to help them apply for benefits and with their benefits paperwork. They do it because applying for the local housing allowance—or now universal credit—is an incredibly complicated process. Therefore, they sit there with the tenant and go through the application processes.

[Richard Graham]

Q Those are all important aspects of what letting agents can do. I argued, when we last debated this, that there is a critical role for letting agents in compliance—keeping landlords and letting agents within the law—ensuring tenants know where the fire escape is, and all the rest of it. Given the importance of those issues, why do both you and Isobel Thomson believe that, suddenly, letting agents are going to close down and there are going to be lots of job losses? Is that not so important that it is the key thing to market to both landlords and tenants?

David Cox: I would argue it is a cost issue. Capital Economics estimated last year that letting fees account for approximately 20% of the sector’s turnover, or approximately £700 million a year. In its most plausible scenario, it expects agents’ turnovers to reduce by about £200 million, landlords’ costs to increase by about £300 million a year—

[Richard Graham]

Q It sounds a little like what the betting association predicted when we changed the rules on the maximum amounts you could bet. Do you not think this is possibly exaggerated?

David Cox: These are the figures from an independent market research agency that has been used by all sides of the argument. Shelter uses the agency on a regular basis, as well to do independent analysis, and those are the results that it has come back with. There are about 55,000 letting agents in the country, and it estimates that about 4,000 jobs will be lost as a result of this.

[Richard Graham]

Q If I may ask one more question, Adam Hyslop, you were hinting that there could be a problem in terms of tenants having full protection on default fees. Do you mind expanding that a bit?

Adam Hyslop: Sure. This is probably the lower of the two points I would like to make today. The common practice at the moment is not only to charge admin fees up front but to have fees listed within the tenancy agreement—things such as cleaning and an inventory check-out report at the end of the tenancy. I believe the Bill’s intention is to ban those as well—they are not permitted payments. So, the intention is to prohibit them, but my concern is that, in practice, some of those will be left in and you will have tenants feeling obliged to pay them towards the end of tenancy agreements, even though they might be outlawed payments.

I do not know how this will be addressed in practice, but a lot of the—let us call them—disputes are where you have got a landlord asking a tenant to pay, say, £150 to clean the property at the end, when actually what is reasonable is for the tenant to restore the property to the level of cleanliness when they moved in, which could be by using their own cleaning company or doing their own housework, as it were.

A lot of these disputes end up with the deposit protection services. I do not know whether they will be briefed that these fees would be immediately thrown out if they were ever disputed. But, actually, before you get to that stage, it is a very low single-digit percentage of deposits that ever go to formal arbitration in these schemes, so there is a big piece to do, whether in the wording of the Bill or in guidance, to ensure that tenants know that these are also explicitly prohibited and that they should not accept any agent or landlord saying, “No, it is in your tenancy agreement. You signed up to it with free will at the start.”

[Richard Graham]

Q Perhaps the Minister will address that. The other side was the false declaration by tenants, and that did sound quite serious. What is your concern there?

Adam Hyslop: The current drafting is basically that a holding deposit is placed, and if a tenant passes referencing, everything obviously proceeds, and it would usually go to contract signing. If the tenant fails referencing, the current intention is that the holding deposit, with no deduction, is refunded back to the tenant. That is fair, and that is in line with how my own business operates at the moment.

What is more complicated is where there is a sense that a tenant provided what in the current drafting is “false or misleading information” to the landlord—information that could be exaggerating their own financial situation. So the landlord accepts the holding deposit, takes the property off the market, incurs the cost of referencing and then is left in a difficult situation when it turns out the tenant is not really who they say they are.

My concern around that—this may be stating the obvious—is that the point where a holding deposit is placed and referencing is under way is by far the most stressful part of a tenancy application process on both sides. You have got a landlord who is basically saying, “I really hope this tenant is who they say they are—I just want to get them signed up so that I have the certainty of them moving into the property at a future date,” and you have got a tenant going, “I really hope I get this property so that I do not have to reset my search back to square one,” with all the stress that comes with that.

Referencing is quite a complex process. Actually, what the tenant said to the landlord up front is not a particularly clear area. First, there is significant variation in the kind of application forms that a landlord or agent might put in front of a tenant. Second to that, the actual process of referencing itself is quite complex. A reference usually involves a credit check, an employment check and a previous landlord reference, but I believe that the overarching wording of “Did the tenant provide false or misleading information?” would in practice be quite problematic. Sometimes a referencing company will literally capture the tenant’s address history, where they work and how much they earn. I believe that the drafting of the Bill was done with the perception that referencing is a lot simpler than it is.

You can imagine some really simple cases. If I say that I earn twice what I earn, and referencing then finds me out—my employer says that I earn x—that is a clear case of false and misleading information. Actually, we find that when references fail, only 25% fail due to income and affordability. The other case in which you might provide false or misleading information is neglecting to mention that you have a former bankruptcy, a CCJ or something like that. Those are simple ones that the current Bill is completely fit for purpose for—if a tenant withholds or distorts that information, that tenant absolutely should lose their holding deposit, because they placed it under false pretences by making claims to the landlord that were not substantiated.

The majority of cases, however, will not be as clearcut as that. There will be things like whether a tenant was aware that they had a good credit score or a bad credit score which resulted in them failing the reference. There may be previous landlord references or elements of the employer reference that are not as simple as, “This person earns this amount of money”—it might be length of contract and things like that. Unless you have a completely exhaustive, fully transparent application form—a theoretical one—that the tenant fills in and where they declare everything about themselves, which can later be demonstrated to be false or misleading, then, in practice, there will be lots and lots of cases where it is unclear and some kind of arbitration is needed, or at least some kind of dispute arises.

What that means in practice, I believe, is that where it is the majority case—that is, the tenant may or may not have provided misleading information, and there is now a dispute about it—either you will have landlords who lose their holding deposit, despite the tenant applying in bad faith, because they are unable to prove that the tenant provided false and misleading information, or you will have tenants who lose their holding deposit because the agent or landlord asserts that they applied in bad faith. What that means is that the Bill will not actually protect the landlord or the tenant in that case.

I therefore conclude that the fairest way to put this into practice is to permit a cost of referencing—to have referencing as a permitted payment within the Bill. I would recommend that that is capped, because I do not want it to be an unlimited fee that becomes an admin fee of £300. We charge £20 for a reference per applicant, which is basically the market cost. The reason we do that is precisely this: referencing is very messy and will very quickly turn into disputes around whether it is false or misleading, or what people’s intentions were, unless there is a really clear way of saying, “You’re rejected because your referencing failed, but we don’t need to go through a full arbitration of whether it is false or misleading.” You cover the cost of your referencing, which aligns the incentives, so that the tenant covers the cost of referencing and will basically lose that amount if they invalidate it in the first instance.

[The Chair]

A number of Members are trying to catch my eye, so with the Minister’s permission, I shall hold him to the end.

--- Later in debate ---

[The Chair]

Thank you. I am going to move to Richard Graham very briefly, and then I want the Minister to have some fun.

[Richard Graham]

Q We all totally understand that there is a huge risk of unscrupulous agents or unscrupulous landlords continuing to exploit the most vulnerable, but a number of you, in this session and earlier, have said rather airily that you could just walk down the high street and find the—I think you used this figure—15% of agents with wrong information and so on. If you have that sort of information, why do you not share it with both local authorities and the MPs involved?

David Smith: But we do. We do tell local authorities.

[Richard Graham]

Q I can absolutely assure you I have never had a letter, from your organisation or anyone else, telling me anything about any agent in the city of Gloucester who is doing it wrong. I would be delighted to have it and I would follow up on it, and I think you would find that a lot of MPs would share the same view.

David Smith: It is not our habit to share it with MPs because you are not the direct enforcers, but we would be very happy to tell you about it if that were to happen.

[Richard Graham]

Q May I suggest that you change your habit if you think there is a real problem, and then we can help you to resolve it?

David Smith: Happy to.

Tenant Fees Bill

Richard Graham Excerpts

2nd reading: House of Commons
Monday 21st May 2018 Commons Chamber

[Richard Graham (Gloucester) (Con)]

It is a great pleasure to join this happy debate with a lot of consensus on both sides of the House. It is also a pleasure to follow the hon. Member for Bath (Wera Hobhouse), who reminded us that success has many parents and that that is a happier position to be in than the orphan without any parents.

Much has already been said, so I just want to add two or three thoughts. Last year, I became, with my wife, an amateur landlord. As this Bill took shape, I spoke to constituents who were tenants, agents and landlords, and I looked it in the light of our own experience. I quickly came to the conclusion that the market was not acting as effectively as it should, fundamentally because tenants are not equal partners in the negotiations and lots of family landlords inevitably devolve decision making to agents. As both the current and previous Secretaries of State have said, and as the shadow Minister, the hon. Member for Great Grimsby (Melanie Onn), said today, a small—I repeat, small—number of rogue agents have spoiled the situation. As the supply-and-demand equation has altered, so, in turn, tenants have become more squeezed.

Fundamentally, the role of agents in this process has changed. They are evolving quite radically from being an intermediary in an analogue age to a landlords’ compliance department in a digital age. Today, their fundamental role, which is very important, is to keep landlords and themselves out of trouble—indeed, even out of jail. The reason for this is not least the complexity of the law. Regulations need to be enforced. Most amateur landlords need high-quality agents to ensure, for example, that smoke detectors and fire exits work, that boilers are checked and that insurance is adequate. There is much more besides all the important environmental health provisions that councils are responsible for ensuring do not get breached. I believe that the role of agents therefore is to focus on keeping landlords within the law and providing a good service to tenants. A commission agent is fundamentally different from a compliance department.

I welcome the Bill and everything that Ministers have announced. I note one or two caveats from colleagues. I think that the fundamental goal of saving some £240 million a year in unnecessary fees will be welcomed across the country. The compromise on capping security deposits at six weeks’ rent—it is eight weeks in Scotland—seems sensible, but no doubt there will be further debate on whether it should be five or six weeks.

The Bill will not solve all the problems—the supply of housing is still too small and the prices are still too high for many tenants—but it is a chance for agents to adapt their business model in the way I have suggested, for landlords to get their properties in order and for tenants to help keep landlords straight. Because rents have risen, there is a risk of poor and even dangerous homes being rented by landlords who are cutting corners to tenants who are trying to cut costs. I urge Ministers to look at how they can work with local authorities to ensure that that risk is not increased and that local authorities seize the opportunity to levy fines where they are needed and to provide the resources for their housing departments to keep housing of the quality that we, and above all tenants, deserve.

Windrush

Richard Graham Excerpts

Monday 30th April 2018 Commons Chamber

[Sajid Javid]

My predecessor, my right hon. Friend the Member for Hastings and Rye, was a fantastic leader of the Department. She did some great work that I hope to build on.

[Richard Graham (Gloucester) (Con)]

Key to putting wrongs right will be the work of the new Windrush hotline, which has already responded very quickly to my efforts to help one of my constituents to get British citizenship. There is a wider opportunity for my right hon. Friend to recognise the migrant contribution to our nation, so may I invite him in principle to come to an event at the Gloucester history festival at which we will celebrate the arrival of the Empire Windrush this September?

[Sajid Javid]

My hon. Friend can invite me in principle.

[Mr Speaker]

I am sure the hon. Gentleman will be inviting the Home Secretary to deliver an oration, rather than simply to sit there decoratively.

[Richard Graham]

indicated assent.

[Mr Speaker]

I am sure that that will entice the Home Secretary.

Anti-Semitism

Richard Graham Excerpts

Tuesday 17th April 2018 Commons Chamber

[Stewart Malcolm McDonald (Glasgow South) (SNP)]

What a depressing issue to have to come to the House to debate. My hope, and the hope I am sure of all Members of this House, is that we all learn something from this debate, as opposed to just debating an issue.

As the MP with the second largest Jewish community in Scotland, dwarfed only by my constituency neighbour, the hon. Member for East Renfrewshire (Paul Masterton), I had the great pleasure last week of joining Glasgow’s Jewish community, the kindest, warmest and most generous people one could hope to spend any time with, at the Yom HaShoah memorial event in Giffnock, which I attended alongside the hon. Gentleman.

At that commemoration—I am sure that the hon. Gentleman will agree with me on this—there was a long, but really insightful lecture by the daughter of the celebrated Rabbi Gottlieb of Glasgow. Such was his reputation among all Glaswegians of the Jewish faith and of none that a civic function was put on by the city’s lord provost when the rabbi left Glasgow for Israel.

It is worth reflecting on the history of the Jewish community in Scotland. Scotland is the only country in the world that has never had an anti-Semitic text on the statute book. Indeed, the Declaration of Arbroath, which is often sung by those of us on these Benches and is one of the oldest surviving medieval texts in existence, specifically refers to Jews and Gentiles as equal citizens.

Glasgow’s Jewish community—and Scotland’s—have been a precious part of our history, and they deserve to be a precious part of our future as well, because they are a people who have been hunted to the four corners of the world for centuries. All of us in this Chamber this afternoon feel horror and shame that they still feel like a people hunted across the world, the consequences of which, of course, led to some of the darkest moments in our history.

Other Members have mentioned security. I have visited a whole range of museums in the three great cities of Paris, Berlin and New York, but there was only one museum in each city where I had to be searched before I entered. There was only one museum where I had to empty my backpack, check in my jacket and go through metal detectors. It was the Jewish museum in Berlin. It was the Jewish museum in Paris. It was the Jewish museum in New York. This shows a people still feeling hunted, with airport-style security at their museums and security outside their schools. Indeed, silly me thought that I could just walk through the front door at the Yom HaShoah event last week. Instead, I had to tell a security guard who I was before I could go in. Such is the fear and anxiety among the Jewish population in my own home town, as in other parts of Europe and, indeed, the world.

The intimidation and hate has manifested itself in many different ways. The Secretary of State, the shadow Secretary of State and others have mentioned social media in great depth. I am sure that we will hear a lot more about that as the debate goes on. But I want to turn to the issue of Israel and Palestine. It is rather depressing that we cannot debate anti-Semitism these days without coming to the issue of Israel and Palestine. When that conflict escalates, as it does over time, it is unacceptable to expect Jewish people in this country to shoulder any responsibility for that escalation. I do not hold the Muslim community responsible for the crimes of Muslim Governments across the world, so I will not allow anybody to hold responsible Jewish people in my constituency or elsewhere for the actions of the Government of Israel—a Government I have criticised, just as I criticised the Government of Saudi Arabia in one of my first speeches in this House and just as we criticise, rightly, the Government sat on the Benches across from us in this place.

[Richard Graham (Gloucester) (Con)]

To avoid any doubt about the message that we in this Chamber are sending today, does the hon. Gentleman agree that we reject anti-Semitism, Islamophobia and any form of racism, and that we absolutely reserve the right to criticise the Israeli Government for illegal settlement and to criticise Hamas for storing armaments in schools or hospital compounds? The two things are separate and different.

[Stewart Malcolm McDonald]

The hon. Gentleman is absolutely correct. I am an openly gay man. I understand that that might shock some Members. But members of Hamas would have me hanging from a lamp post if they could get their hands on me.

Supported Housing

Richard Graham Excerpts

Thursday 18th January 2018 Westminster Hall

[Richard Graham (Gloucester) (Con)]

I echo the right hon. Member for Birkenhead (Frank Field) in expressing my joy at serving under your chairmanship for the first time, Mr Sharma, and at welcoming our new Minister, the hon. Member for South Derbyshire (Mrs Wheeler). As previous speakers mentioned, she brings to the role considerable experience, particularly of local government and how these things work or do not work.

I suspect that there will be a degree of similarity in some of the speeches, because the issues are relatively similar, although we will all have slightly different approaches to them. I am happy to echo the comments of my friend, the right hon. Member for Birkenhead, about the Joint Select Committee report. The hon. Member for Dulwich and West Norwood (Helen Hayes) played an educating role for me, coming as I did from the Department for Work and Pensions side. It was the right hon. Member for Birkenhead who talked me into taking up something outside the comfort zone of the Work and Pensions Committee’s normal remit. It was a fascinating experience.

In his introductory remarks, the hon. Member for Sheffield South East (Mr Betts) suggested that the aim of the Joint Select Committee’s report was to make the Government feel uncomfortable, but I am afraid that was not my objective at all. I felt that our job was to try to come up with solutions to what has been a pretty difficult issue for a long time. If one needed confirmation of that, there is the fact that among the emails that we received from various charities and lobbying groups was an interesting email from the charity Homeless Link, which said it

“recognises the challenge facing policy makers—it is a hugely complex sector, making finding solutions equally complex. However, supported housing provides a lifeline for thousands of vulnerable people and it is therefore imperative that we get it right.”

I think that all of us would agree with every word of that. Homeless Link went on to say that it

“welcomes the Government’s commitments around homelessness and rough sleeping.”

That is a very promising start.

The brief from the Communities and Local Government Committee rightly highlights the areas in which the joint report, the Committee and the wider sector are very supportive of the Government’s initial report in October 2017, responding to our recommendations in April. Crucially, the Government decided not to apply local housing allowance rates to tenants in supported housing. That was a clear recommendation in our report, and arguably the single most important one. I welcome the Government’s response in October, and hope that all right hon. and hon. Members here do likewise. My hon. Friend the Member for Nuneaton (Mr Jones), who was the Minister for this portfolio at the time, made it clear that, broadly speaking, the Government’s response built on the report that we had submitted.

The right hon. Member for Birkenhead and the hon. Member for Sheffield South East both highlighted that there remains concern about what I would call the issue of the guarantee. For example, I received an email from Joe Feeley, the chief executive of Emmaus in Gloucestershire, which does an outstanding job for the people it helps, in which he said:

“Although the proposals state that funding for supported housing costs would be ring fenced, we are concerned that in the long term this is difficult to guarantee.”

The right hon. Member for Birkenhead made precisely the same point. Philosophically, we might all take the view that it is pretty difficult for any Government to guarantee everything forever, but it would be helpful if the new Minister could reassure Emmaus, and Members across the House, about how supporting housing costs will be ring-fenced, and the Government’s intention to continue that throughout the life of this Parliament.

[Mrs Madeleine Moon (Bridgend) (Lab)]

I thank the hon. Gentleman for giving way, because I am here specifically to speak about Emmaus. One of Emmaus’s concerns is that it may be limited to the two-year period of funding. It would be so helpful if the Minister confirmed today that, although we cannot have an open-ended commitment, it will be a lot longer than two years.

[Richard Graham]

I am grateful for that intervention, because clearly the two-year issue is one aspect of this matter. However, I think the wider issue is probably around the definition of “short term”, as has been mentioned. I had an interesting briefing from representatives of Rethink Mental Illness, who said that they

“warmly welcome the decision not to proceed with the LHA cap, and to place long-term supported housing funding on a sustainable footing.”

However, they went on to raise

“concerns about some of the proposals for ‘short-term’ supported housing”,

which I think is normally defined as being under two years. That seems to be the issue that worries Rethink Mental Illness and other mental health organisations. Rethink Mental Illness has issued a joint letter with nine other organisations, aiming to tie down a little the definitions of “short term” and “very short term”. I hope that the Minister can shed some light on that, but we will all have to bear in mind that the consultation closes on, I think, 23 January. It will be difficult for the Government to say too much in advance of that, so I assume that the main purpose of today’s debate is for us to get our points in before the Government’s response to the consultation, which will no doubt include some of these points from charities.

[Sir Edward Davey]

On that key point, those in the Treasury always want to control everything and to ring-fence funds, so that nothing more can be used. However, if the funds run out, the need of the people whom we are talking about is still there. We need to get that point over to Treasury Ministers, and I am sure that the Minister would wish to do that, so this is supportive of her case to the Treasury. It seems to me that expenditure should be demand-led, not Treasury-capped and controlled. The idea that we would exclude people who are among the most vulnerable in our society because the money had run out seems to me absurd and wrong.

[Richard Graham]

The right hon. Gentleman makes his point with his usual passion. I will not offer a lecture to the Treasury on how they should provide and quantify the amounts of money for particular parts of the supported housing provision that the Government are looking at reshaping. At this stage, we are trying to register our concerns, as he has done, on aspects of the supported housing report that we feel are not yet reflected in the Government’s position. We are also trying to encourage the Government, when looking at the response to the consultation, in which all these points will no doubt come up, to think widely—this is the great advantage of having the Minister in her new role—about what the Minister knows from her experience, and what I and other Members will share today from our experiences, about what works best on the ground.

That brings me to my last main point, which is about domestic violence refuges. Two really good points have been made. The first, made by the hon. Member for Sheffield South East, is that domestic violence refuges are slightly different because in many cases the individuals want to be out of the area—not just the parish, as my friend, the right hon. Member for Birkenhead, mentioned, but quite often outside the constituency in which the violence happened. However, they will not all want to go to the same constituency, of course; they will want to move to different places, not least depending on where they have family links.

I can easily recall a woman fleeing from stalking in my constituency who wanted to be very far away, not only because of her fear of the individual who had stalked her, but because she wanted to go with her young children to where her mother was, to receive that additional family support. The issue is not just one of national funding, or having a national network, but of access, and how that works practically. If somebody fleeing domestic violence wants to move, for the sake of argument, from Gloucester to Birkenhead to take advantages of family links there, how will that work in practice? I can imagine that such access could be difficult.

I know the new Minister has experience of domestic violence refuges; I think I am right in saying that she helped to set one up in her constituency. That side of the argument is about the importance of localisation, as the hon. Member for Sheffield South mentioned. These things are very often best done on the ground by people who know how to do them. Bishop Rachel of Gloucester, in her new role, has very much championed a refuge that the diocese has effectively provided in the centre of our city. That is a really good example of a local initiative that I certainly would not want ruled out as a result of a very top-down approach, led by the man or woman in Whitehall who knows best.

[Wera Hobhouse (Bath) (LD)]

Does the hon. Gentleman agree that it is important that the full cost is met, so that local authorities do not end up with a shortfall? That is the most important thing that I am calling for as Liberal Democrat spokesperson for local government.

--- Later in debate ---

[Richard Graham]

I quite understand where the hon. Lady is coming from. That will always be a concern for all of us. The Minister knows, given her experience of running a local council, that local government is always concerned about money and the balance. No doubt she will say something about that.

All hon. Members have come to this debate in an open, warm-hearted spirit. This is not a party political debate; it is about finding a solution to a difficult problem that has plagued successive Governments for some time, and for which there probably will never be an absolutely perfect remedy, not least because there will never be an unlimited supply of money, notwithstanding the optimism of the right hon. Member for Kingston and Surbiton (Sir Edward Davey) about changing the Treasury’s way of doing things. What we can do is further explore the report’s recommendations to which the Government have not offered a complete response yet—no doubt they are waiting for the results of the consultation before doing so. Perhaps we can encourage the Minister to share some of her early thinking today.

I will finish by asking the Minister two questions. The first is about domestic violence refuges. Will she share a bit of her experience and her instincts about local initiatives by charitable, faith-led organisations that want to create local refuges for people who are happy to stay within a constituency? There is also the wider issue of how we help those who want to be a long way away, and how they can access refuges elsewhere.

My second question is about young people in supported housing, some of whom are put off looking for work by high rents and, sometimes, the impact of short-term employment on their benefits. Will the Minister share what she thinks the new funding model will do to change that? How will it give more support to such young people?

--- Later in debate ---

[Peter Aldous (Waveney) (Con)]

It is a pleasure to serve under your chairmanship, Mr Sharma. The right hon. Member for Birkenhead (Frank Field) is no longer in his place, but I congratulate him and the hon. Member for Sheffield South East (Mr Betts) on securing this debate through their efforts, and those of their Committee members, to produce their groundbreaking and constructive report of 1 May 2017.

I welcome the new Minister, and pay tribute to her predecessor, my hon. Friend the Member for Nuneaton (Mr Jones), for his work over the past 18 months in helping us to move towards the goal that we are all striving for: that of putting the future funding of supported housing on a secure, sustainable and long-term footing. It is vital to do that if we are not to let down vulnerable groups, whether they are elderly, young, have physical disabilities, are fleeing domestic violence, or face mental health challenges and anguish. The demand for such care and support is rising, because we have an ageing population, and increasing levels of mental ill health and learning disabilities.

This is a difficult task, as the sector is made up of many sub-groups with different challenges and needs. It is necessary to do a lot of background work, to listen to the views of all interested parties, and to make proposals that will stand the test of time and help to secure much-needed investment in the sector.

It is important to recognise the good work that many people and organisations have done over the past 18 months. Providers, charities and their representatives have participated in consultations and have provided the Government, MPs, and peers with well-reasoned proposals. Credit is due to the Government for carrying out the first evidence-based review for 20 years, and for conducting two consultations in which they fully engaged with the sector. They listened to their concerns and have set up task and finish groups.

The Government have also provided a significant amount of money for supported housing schemes, such as the shared ownership and affordable homes programme, the care and support specialised housing fund, and funding for women and girls fleeing domestic violence. It is also important to recognise the very influential joint report of the Select Committees. They did a great deal of listening and thinking, and they have come up with constructive proposals that significantly move forward the complicated process of finding the right solutions.

It is appropriate to highlight the work that Lord Best, Housing and Care 21, Riverside, the Home Group and Hanover Housing Association did to analyse data from approximately 43,000 supported housing and older people’s tenancies across the United Kingdom, to demonstrate that the Select Committees’ supported housing allowance proposal represented a viable and workable approach.

[Richard Graham]

My hon. Friend has been doing a great job on this subject for a long time, as other Members have said. When Lord Best and the five supported housing providers, including Riverside, analysed some of that data, they were very supportive of the Government’s principle that there should be some control of costs in the sector, and of having diversity in approaches, recognising that costs vary substantially across the country. We hope that that will be reflected in the Government’s eventual position. Does my hon. Friend agree?

[Peter Aldous]

I do. That illustrates the point that the big challenge is in how to respond to local needs but not, as the hon. Member for Dulwich and West Norwood (Helen Hayes) said, create a postcode lottery effect.

The Government’s revised proposals, which they announced at the end of October, were generally a step in the right direction. I hope that through the consultation that closes next week, it will be possible to address the outstanding concerns, so that the Government can arrive at a funding scheme that we can all support.

Like colleagues, I received many briefings before the debate, and I will highlight some of the feedback. The Home Group, which is active in the north-east, Cornwall and East Anglia, including Lowestoft in my constituency, advised me that the Government’s October announcements gave it the increased confidence that it needed to get on with building supported housing services. It announced a £50 million investment package, which will commence in March, for three new supported housing schemes in Havant, Calderdale and Scarborough. It advised that the removal of the local housing allowance cap enabled it to commit to those developments, but it emphasised that it is vital that the detail of the new supported and sheltered housing funding proposals—such as the service charge cap—does not undermine the development of additional capacity, which we desperately need.

The Home Group believes that the overarching policy direction in this consultation is the right one; there is differentiation between short-term, sheltered and extra care, and long-term supported housing, which enables providers like it to design different funding mechanisms that cover legitimate costs. It recognises the diverse nature of its client groups in the sector. It stresses that it is essential that the three models work coherently alongside one another, as a pathway. As one of the UK’s largest providers, it works nationally with customer groups that fall into each of the three funding models. A customer may come to a service due to crisis, and thus will be eligible for short-term funding; however, they may depend on long-term support. It is therefore essential that a customer can move seamlessly through the pathway, and that a single scheme can efficiently incorporate two or more of the funding models.

We have heard that providers’ main concern with the proposals is about short-term housing. Those who have raised worries include the National Housing Federation, Anchor, Hanover Housing, Housing and Care 21, Riverside, YMCA, St Mungo’s, the Salvation Army, the Supported Housing Alliance, Rethink Mental Illness, and Emmaus, which has a community in Norfolk, near Bungay, which serves my constituency. The long list tells a story.

Riverside, St Mungo’s, YMCA and the Salvation Army have highlighted three concerns. First, the ring-fenced local authority block grants do not provide the same protections and rights for those living in short-term supported housing as for those living in long-term supported housing. They regard that as a backward step and a return to an institutional model. Secondly, they highlight that the proposed policy is moving in the opposite direction from universal credit, which seeks to encourage independence, with claimants managing their own housing costs. Thirdly, they point out that a discretionary local funding system would not provide the assurance required by providers seeking either to develop much-needed new schemes or to invest in the necessary upgrading and repairing of facilities.

Generally, funders lend on a 30-year basis, and the current model of benefit-backed rental income has enabled the sector to borrow significant sums at highly competitive rates. In contrast, local authority contracts normally last between three and five years only; that will not provide the necessary security of revenue to obtain private finance. There is no guarantee that ring fences will remain in place; indeed, recent history suggests that they are dismantled pretty quickly.

Fourthly, although authorities already commission services that reflect local needs, the proposals will extend this commissioning approach to housing costs, including rent and service charges. That will make providers completely reliant on local authorities for all funding. There is a worry that housing providers’ loss of independence will undermine sector viability and stifle innovation. Already, an example has been brought to my attention of a local authority specifically requesting, in tenders, that housing costs be reduced.

Finally, the organisations point out that establishing a new funding system for short-term supported housing requires complex arrangements that impose expensive administrative burdens and bureaucracy on local authorities. Their alternative proposal, to which I urge the Government to give serious consideration, is threefold. First, they propose that housing costs remain in the welfare system. Secondly, instead of devising a complicated new funding system, the Government should review the administration of universal credit, and in particular the speed with which claims are administered, so that it can work better for cases of short stays. Thirdly, in services where the typical length of stay is such that universal credit cannot cover housing costs—for example, where the stay is a matter of days or weeks as opposed to months—localised funding should be an option. This localised funding model could help with the wait for housing costs to be met during the initial assessment period.

There has already been mention in the debate of the need, highlighted by the National Housing Federation, to tighten the definition of short-term services in the consultation paper. It is very wide and should be tightened, so that it is clear that the local system covers short-term emergency accommodation, where people stay for a period of weeks, rather than months. That would be in line with the recommendation in the joint report, and it would make the system fit better with universal credit.