Govt must end debt crisis for renters to avoid homelessness trebling in 2020
Responding to a report by Generation Rent, which has found that ‘homelessness is set to treble this year … as a result of the economic shock of coronavirus’, Liberal Democrat Housing Spokesperson Tim Farron said:
The fact that homelessness is set to treble this year is yet more proof that the consequences of the pandemic are set to be devastating for those struggling to get by. The Government must take action now to stop these statistics becoming a reality.
This Conservative Government seem content to ignore the realities of the debt crisis renters are finding themselves in, whilst simultaneously withdrawing their support. Unfortunately rent holidays are not enough – they must also provide security for those tenants who are now in arrears.
The Liberal Democrats are clear that the Government must back Generation Rent’s campaign to introduce a new Coronavirus Home Retention Scheme, which would clear rent arrears not covered by the welfare system, as well as further raising the Local Houisng Allowance. The consequences of this pandemic are far from over, and as long as this crisis continues, so must the Government’s support.
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One Comment
This is an important initiative from Tim Farron. The IFS analysis of the effects of coronavirus on household finances and financial distress https://www.ifs.org.uk/publications/14908 gives some useful background.
Key findings
– By May 2020, the number of jobs was 4% lower, median after-tax household earnings were 9% lower and median household income (including benefits) was 8% lower (equivalent to an income loss of around £160 per month). These impacts had largely been felt in April, but with few signs of recovery in May.
– The crisis has so far impacted the earnings of the poorest households the most. Households in the poorest fifth – as measured by their pre-crisis income – have been hit hardest in terms of earnings, with a fall in their median household earnings of around 15% (or around £160 per month).
– However, if we look at total income rather than just earnings, the poorest have not fallen further behind on average. This highlights the important role of the benefits system in containing inequality and poverty. It partly reflects the government’s temporary increases in benefits – set to last until April 2021 – and partly the simple fact that the benefits system replaces a relatively large share of lost earnings for the lowest earners.
– Non-payment of household bills increased sharply after lockdown, and increased further between April and May. By May, the number of households making mortgage, rental and council tax payments was, respectively, 14%, 11% and 9% down. This represents a further deterioration since April, perhaps suggesting that some households are increasingly struggling to make ends meet as the crisis persists. Poorer households seem to be falling behind by more on council tax and utility bills. Non-payment of mortgages is spread more evenly across the income distribution.
– In some cases, these unpaid bills will be important and sensible ways of weathering the storm (for example, mortgage holidays) – but they still mean additional debt that will be carried forward. Looking at those who paid a given bill in January 2020 but did not pay that bill in May 2020, the average January bill amount was £1,660 for mortgages, £650 for rent, £170 for council tax and £139 for utilities. Increases in accumulated debts of these magnitudes are not sustainable, so this underlines the importance of a quick recovery in household incomes.