Government backs down on ‘pay to stay’ social housing plan

The Government has backed down over its controversial “pay to stay” policy for those living in social housing.

Housing minister Gavin Barwell has said plans to charge higher rents for social housing tenants on higher incomes will not be compulsory, after a consultation over the summer.

Councils and housing associations will be able to choose whether they implement the policy, rather than being forced to do so by the Government.

In a ministerial statement, Mr Barwell said: “The Government remains committed to delivering its objective of ensuring social housing is occupied by those who need it most.

“But we need to do so in a way that supports those ordinary working class families who can struggle to get by, and in a way which delivers real savings to the taxpayer.

“The policy as previously envisaged did not meet those aims.”

Under the policy, households with an income of more than £31,000 would have been forced to pay rent close to market levels.

In London the maximum amount a household could have earned was just £40,000, before the higher rent kicked in.

Shadow housing minister John Healey said: “This welcome u-turn is a victory for Labour’s year-long campaign against the ‘tenant tax’, which was set to hike rents for thousands of middle income households.

“Having recognised this move was a big mistake, ministers must now re-think the rest of their failed housing decisions over the last six years.

“After disastrous figures last week showing that the number of new affordable homes for social rent has fallen to the lowest level since records began, top of the list must be reversing the forced sale of vital council homes and the huge cuts to investment in new genuinely affordable homes.”

Mr Barwell, however, also says the Government will continue to “consider whether other options exist to ensure that high income tenants in social housing make a greater contribution to costs”.

He also points to new fixed term tenancies for those in social housing, which he says will enable councils to review their tenants and “ensure that tenants still need a socially rented home”.

Mr Barwell added: “The Government’s guidance to councils will make clear that they should take into account a household’s financial circumstances when looking at this, and that, except in exceptional circumstances, tenancies should be targeted on those on lower incomes.”

He also says the Government wants to tackle housing tenancy fraud, such as illegally sub-letting properties or lying to secure tenancies, which costs in the region of £850 million a year.
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More than 70,000 households were set to be affected by the changes across the country, pushing tenants’ annual rent up by more than £1,000 a year on average.

Local authorities had also complained about the additional bureaucracy it would place on them to check the incomes of their tenants.

Liberal Democrat housing spokesman Lord Shipley said: “Finally the Government have realised their plans to charge people more for their homes were not only unfair, but unworkable.

“At a time when many people face huge financial pressures with costs are increasing, yet wages failing to go up to compensate, the last thing people need is higher rents.

“It would have disadvantaged those only just making ends meet and disincentivised taking on extra work or accepting a pay rise.

“Furthermore, there would have been a significant administrative cost in assessing incomes of individual households which would have been hard for councils to recoup.

“The Government’s job is to solve the housing crisis not make it worse – that’s why we’ve repeatedly opposed these plans.”

Lord Porter, chairman of the Local Government Association, said it would be “a huge relief to households across the country”.

He added: “We have been working hard with the Government to make sure it was aware of the difficult, lengthy and costly process in seeking to implement the policy – which was likely to cause anxiety for families and be hugely unpopular with tenants.

“Making pay to stay mandatory would have affected thousands of social housing tenants across the country, with the average affected households seeing their rents rise by £1,065 a year.

“Councils would have needed to invest millions in new IT systems, hire new staff and write to over a million social housing tenants to try and understand household income and approve individual tenant bills

“Pay to stay risked becoming an expensive distraction from our effort to build homes. A renaissance of council housebuilding is needed now more than ever if we are to stand any chance of solving our housing crisis.”

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