Council housing: government scraps plans for mandatory 'pay to stay' scheme

22 Nov 16

The government has stepped back from its controversial ‘Pay to Stay’ plans, which would have charged better-paid council tenants higher rents.

Yesterday’s announcement by housing minister Gavin Barwell drops the mandatory requirement for councils to implement the policy, and puts it on a voluntary basis. It signals another shift away from some of former chancellor George Osborne flagship fiscal consolidation plans.

Under the plans, from April next year households earning over £30,000 (£40,000 in London) and in local authority housing would have had to start paying rent at or close to market levels.

Local authorities, CIPFA and others in the sector had protested that the policy was impractical and would be burdensome to implement.

In a ministerial statement, Barwell said: “Since the summer, the government has been reviewing this policy. We have listened carefully to the views of tenants, local authorities and others and as a result, and we have decided not to proceed with a compulsory approach. Local authorities and housing associations will continue to have local discretion.”

He added that the government remains committed to ensuring social housing is used 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.”

Mandatory fixed-term tenancies for new tenants would be a better way of ensuring councils give priority to households in greatest need, Barwell suggested.

“Councils will review tenancies at the end of each fixed term to ensure that tenants still need a socially rented home,” he said.

“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.”

Joanne Pitt, principa local government policy advisor at CIPFA, said the institute was very pleased the government had acted on the advice of its consultation.

“The proposed approach and the timing for implementation would have placed enormous financial pressure and uncertainty onto the social housing sector,” she said.

“Today’s decision is an excellent example of the Government listening to what the sector is saying and acting on the advice.”

The Local Government Association welcomed the shift in the government’s position. Chair Lord Porter said it would be a “huge relief” to households across the country.

“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,” he said.

“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.”

Terrie Alafat, chief executive of the Chartered Institute of Housing, also welcomed the move.

She said: “It is particularly welcome that the housing minister said the measure would have clashed with the government’s commitment to help families who are struggling to get by in his reasoning for dropping the policy.

“We would now urge the government to apply this same test to other policies which might put such families at similar risk.”

  • Vivienne Russell

    Vivienne Russell is managing editor of Public Finance magazine and

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