Support 100 years of independent journalism.

Labour’s policy on renters and Covid-19 is one pledge too long

A sensible package of measures has been overshadowed by a proposal that is both harmful and redundant.

By Stephen Bush

A row has broken out over Labour’s proposals to protect renters. The party has put forward a five-point plan, calling for, among other things, legislative changes to prevent evictions for tenants who fall behind on rent during the pandemic, an increase in the generosity and availability of housing benefit, and for tenants to be able to pay off their existing arrears once the crisis ends over a two-year period.

There is a lot that is good in the policy, but rightly, the focus has been on the bit that is very bad: that plan to make those in arrears pay back over two years. The novel coronavirus has created two challenges for governments around the world: defeating the disease and then preventing a prolonged and painful economic downturn afterwards.

The only way to stop the disease from spreading is to shut down most activity. That in turn, effectively suspends most of the labour market, which ultimately powers the overall economy – which is why we’re in the deepest recession since 1709.

To weather that economic crisis, the British government has borrowed freely to support the wages of salaried workers, issued government-backed loans of up to £50,000 to businesses, and has born four-fifths of the risk for loans raising still higher. The United Kingdom is on course to borrow around £300bn to manage the economic consequences of lockdown.

The question is: how do we revive the economy afterwards? The reality is that for many people, organisations and businesses, loans are not an adequate solution: only grants will do, because people won’t be able to meet the costs of servicing the loans. Take a restaurant – no matter how successful it is after lockdown, it will not be able to pass on the costs of six months without trading onto its customers.

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. The New Statesman’s global affairs newsletter, every Monday and Friday. The best of the New Statesman, delivered to your inbox every weekday morning. A handy, three-minute glance at the week ahead in companies, markets, regulation and investment, landing in your inbox every Monday morning. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A weekly dig into the New Statesman’s archive of over 100 years of stellar and influential journalism, sent each Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.
I consent to New Statesman Media Group collecting my details provided via this form in accordance with the Privacy Policy

And it’s the same for renters. There is no part of the UK where the average debt accrued over six months of non-payment wouldn’t all but wipe out the remaining disposable income (that is to say, what people have left over after essentials like food, rent and energy bills) of the tenant. In addition to the punishing misery that payment schedule would inflict on tenants themselves, it would do considerable overall economic harm. No disposable income means no spending on luxury items, which means that the industries struggling to emerge from the lockdown – like cinemas, restaurants, clubs, bars and whatever you care to name, really – would have their footfall drastically curtailed.

Some, perhaps the majority, of tenants in arrears would have no choice but to default. Some, particularly those at the start of their lives, would reason that six years with a bankruptcy on their credit rating was a less painful burden than two years of very painful living. Either choice would cause further difficulties across the economy.

This policy is obviously personally and economically catastrophic for tenants, but it is also financially ruinous for landlords. It’s not at all clear to me what the purpose of this pledge is, other than to turn a four-point plan into a five-point one. It obviously upsets and worries tenants to be told they will be given a bill they will find painful and perhaps impossible to pay off within two years. But it also provides no security to landlords as frankly it is highly uncertain they will ever get their money back.

Happily, there is an off-the-shelf solution available: housing benefit, or rather, the section of Universal Credit that has replaced housing benefit. You can fix basically every short-term problem in the British housing market thrown up by the coronavirus crisis by increasing the eligibility and generosity of housing benefit. You would have to make it retrospective, but almost all of the government’s crisis-fighting pledges have involved a measure of retrospectivity.

What makes Labour’s arrears pledge all the odder is the party has reached for this lever – calling for increased spending on housing benefit, but not calling for retrospectivity. That means that its arrears policy is simply pointless as opposed to disastrous.

The only circumstance in which it would be is if the Conservative Party opted to implement this policy ask and only this policy ask. Which would mean that in the event of the government opting for a policy that would cause misery and financial hardship for renters and landlords alike, all that it would achieve is for the government to be able to say that the opposition had proposed it first. In addition, it has crowded out the four other pledges, which are good and sensible, and triggered a war of words between the Labour leadership and Momentum.

Why not just have a four-point plan? It feels like this is a good example of Westminster falling in love with five-point plans because of the success of Gordon Brown’s “five tests” – but what made the five tests work is they were serious policy considerations – not that a four or a six-point plan would have meant that the UK entered the Euro or that William Hague won the 2001 general election.