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It is right that Labour is facing difficult questions over its call for renters to pay back arrears in two years. But many critiques of the policy also fall down, writes Peter Apps
On Friday, shadow housing secretary Thangam Debbonaire wrote a comment piece for Inside Housing that listed the Labour Party’s five-point plan for protecting renters after 25 June, when the current ban on evictions ends.
The policy has sparked a storm of criticism from within Labour’s ranks, with 4,000 Labour members signing an open letter calling for a rethink and some prominent backbenchers also chiming in with criticism.
The five-point plan runs as follows:
The criticism has zeroed in on point three of five – the idea that renters should pay back arrears they build up over a two-year period.
This is understandable: two years is likely to be far too short for those in substantial arrears and has rattled renters who worry that such a swift repayment plan would be burdening them with unpayable debt in the midst of a deep recession.
As Stephen Bush, political editor at the New Statesman, wrote over the weekend, it isn’t entirely clear why Labour felt the need to spell out such a prescriptive measure, which has done little other than distract from the party’s wider plan.
There appears to be little logic to the two-year plan: it might be far too long for someone with small arrears and an income that swiftly bounces back and far too short a period for someone who loses their means of paying the rent altogether for a prolonged period.
Defenders have argued that the measures are simply designed as a short-term steps to avert a looming crisis, tempered by what the government might realistically adopt.
But this doesn’t really hold up: the first two points are enough to achieve that and the remaining three are a proposal for how to deal with the medium-term crisis of huge arrears during a global recession. They deserve to be critiqued as such.
But a lot of the criticism of the policy is also flawed.
The open letter insists that Labour should have gone one step further and demanded a cancellation of all rent arrears.
It essentially calls for a vast bailout to cover the missing rent directly from the state’s coffers. This would actually be an enormous transfer from the taxpayer to fairly wealthy landlords, guaranteeing what is currently an insecure income stream at great public expense.
Others argue that landlords – private and social – should ultimately swallow the hit, but none have really tackled the question of how to avert the severe economic and legal blowback (as explained here) that would result.
For example, cancelling substantial arrears with no compensation for a small portfolio private landlord could well result in them defaulting on the mortgage they have on the property. This would then result in a repossession by the bank and homelessness for the tenant – the exact result the policy was trying to avoid.
In the social housing sector, rental income is money that pays for maintenance and upkeep of housing stock – you cannot strip this away without the business simply falling over.
What is actually needed is something a bit more nuanced: a system that protects those who would otherwise sink and buys time for those who experience only a temporary drop in income.
Ms Debbonaire’s plan works well for the latter category and less well for the former. So what should be done?
“What is actually needed is something a bit more nuanced: a system that protects those who would sink and buys time for those who experience only a temporary drop in income”
The answer is that the state already has machinery that is supposed to protect people who run into housing stress, and that is the benefit system. This is where the solution should be sought.
In response to the crisis, the government has increased housing benefit entitlement (Local Housing Allowance) to cover the lowest 30th percentile of market rents. But this just reverses a nasty benefit cut from 2015 and does not go far enough to match the scale of the crisis.
Labour was therefore correct to call for benefits to be broadened in point five, but should have gone further (such as calling for benefits to be temporarily backdated to cover arrears). Calling for a hiatus in repayments while this system is put in place would have made more sense.
Some critics appear to see this as early evidence of Labour tacking right on housing under Sir Keir Starmer. Really, it is too early in the political cycle to know. For what it is worth, the closing passage of Ms Debbonaire’s column suggests continuity, not change.
For now, though, this is a single-issue policy response that Labour has got largely right but a little wrong.
The worst consequence of this mistake was to overshadow the key point: that the country is driving headlong into a self-made homelessness crisis if the current evictions ban is not extended. Averting this should be the main focus of all those who care about good housing policy.
Pete Apps, deputy editor, Inside Housing