Housing and Planning Bill

Written evidence submitted by Phillip Purves (HPB 03)

2015 Housing and Planning Bill: "Pay to Stay" policy extension proposals –

Further to the publication of the 2015 Housing Bill, which, if passed in its present form, will give sweeping powers to the Secretary of State to enforce a wide variety of measures by Statutory Instrument with a minimum of parliamentary or public scrutiny, I have the following comments to make:.

1. The Bishop of Portsmouth's entirely justified characterisation of the Tax Credit Cuts as "morally indefensible" in the recent HoL debate has been widely publicised and, as we now know, the government has been forced to at least delay, if not to rethink, these iniquitous proposals.

2. I hope that an equally robust line will be taken on the "Pay to Stay" proposals for Social Housing tenants: under these, a couple on as little as £15,000 a year each (gross) could be forced to pay commercial rent to stay in their home, which would amount to a financial assault on working people worth something like 3 or 4 times the proposed tax credit cuts and push untold numbers of them and their children into poverty and probably homelessness.

3. In response to the proposals, the definition of someone as a "high earner" who is earning only £30k gross outside London (some £23k net, before Council tax is deducted, which will bring their real take home income down to only about £21.5k net), is preposterous: this threshold is far too low, especially in such areas as Oxford, which is regularly reported to be among the least affordable areas in which to live in the whole country, with average property prices, at about £400k, approaching 15 times average full time wages, putting even the most modest properties far out of reach, even for many couples working full time, and where rents, even for 1 bed properties on the outskirts, are running at over £1,000 per month.

4. As indicated above, this policy would also capture many working couples, earning as little as £15,000 (gross) each, who would see one partner's entire income swallowed up by the rent on the commercial market, far in excess of what is deemed "affordable" by such respected bodies as the Joseph Rowntree Trust, or even the government's own figure. "Affordable" is defined in the recent Resolution Foundation Report, "Home Truths", as 35% of net income; the "Pay to Stay" proposals could see 50% or more of gross income swallowed up in rent, with every prospect of this figure rising by 5% or more per year thereafter.

5. In addition, the "Pay to Stay" policy will be a significant disincentive to work or to social or educational betterment for many on just below the threshold: a person on £29k (gross) would see their rent doubled or even tripled if they went for a promotion or wanted to work extra hours and it is quite likely that those who find themselves just above the threshold could seek lower paid employment or fewer hours, to ensure that they remained below it.

6. The policy sits very ill with the government's stated priority to be the "Party of Working People", to provide security for people, to encourage and reward aspiration and to make work pay: it does exactly the opposite.

7. The argument in favour of the policy appears to be that, because so many are condemned to a lifetime of paying extortionate rents in the effectively unregulated and out of control private rental market, those in social housing should do the same, on the pretext that they are "subsidised", which is a misleading term, to say the least: the fact that social rents may be lower than commercial rents by a considerable margin does not mean that that margin is filled by any form of subsidy, still less that social tenants "claim" this subsidy, as several press articles have pretended. Adopting this policy simply adds to the number of the working poor, rather than effecting any improvement in what is widely accepted to be a crisis, brought on by the failure of successive governments' housing policies.

8. If imposed without any form of tapering or other relief, this policy will simply impoverish many thousands who have worked hard, gained skills and qualifications, have attained a modest level of income and are paying their way – who, in short, have, in the Prime Minister's words, "Done the right thing." It will do nothing to ease the housing crisis and risks making many more people mired in debt and / or homeless. The long-term educational, health and life chances of any children caught up in this policy do not bear thinking about.

9. If the (very dubious) principle behind the scheme is accepted, the threshold at which it should apply should be no less than the £60k per year figure (outside London) envisaged in the existing policy; even at this level, as a number of recent reports have indicated, many would find themselves priced out of any but the most modest home.

10. The policy also promises to be expensive and cumbersome to administer, as it entails means testing all social tenants on a regular basis. It is unclear how the policy will accommodate those on variable working hours or those who work on a commission basis and risks causing additional unnecessary hardship and injustice for that group, whose income is likely to fluctuate above and below any threshold set. This risks incurring vastly increased costs for Councils and Housing Associations in administering and enforcing the policy: new ICT systems (an accident waiting to happen, as the history of successive governments is littered with failed and ruinously expensive ICT projects, which have cost the taxpayer billions) and the staff to run / operate them; means testing everyone on an ongoing basis; having an army of snoopers to identify people who have not declared income above £30k (with a lot of innocent victims amongst those with fluctuating incomes), the likelihood of appeals, court cases etc. = even less money available for building new homes.

11. In my view, the "Right to Buy" and "Pay to Stay" policies are two sides of the same coin, which are designed to make social housing part of a means tested benefit system and to residualise / ghettoise both any housing stock remaining after Right to Buy - and those poorer tenants who live in it. This is likely to have the most profound long-term negative social consequences.

12. I would urge that this proposed policy be radically revised to mitigate or preferably avoid the obvious social injustices contained within it.

November 2015

Prepared 10th November 2015