Why ‘Pay to Stay’ is a new tax on work
The Department of Communities and Local Government (DCLG) is proposing that council tenants should pay a market value rent if their joint income is above £30k. The following blog is an extract from Cllr Cotton’s speech at Council on Tuesday 1 December in which he spoke against the ‘Pay to Stay’ proposals and gained council backing for his response.
“Eighty years ago, Birmingham’s councillors started one of the biggest house building programmes in Europe. Their vision - of decent homes, of strong communities, affordable and accessible to all - was a compelling one. It is the same vision that motivates us today, as Birmingham Municipal Housing Trust - currently the single biggest house builder in the city - continues to develop new homes for the current and future generations. Strong, mixed communities, where people of all backgrounds live, work, and play together.
“By imposing an arbitrary cap on the earnings of tenants, Pay to Stay threatens the foundations upon which social housing in this country was built. It says ‘these homes, these neighbourhoods aren’t for you’.
“If we are to take the policy at face value we apparently have a class of super-rich tenants who are taking advantage of the lower rents that we currently charge. But what the Government is proposing is a cap at £30k annual income for all authorities outside London, with effect from April 2017. The cap will apply to the combined two highest incomes of people living in the property. If you slip over the £30k line, your rent will start to go up to market levels.
“A couple who are earning the National Minimum Wage will earn £7.20 an hour from April next year. This couple’s combined annual income would come to £28k. It would only take a small increase to push this couple over the line. And the same goes for those households earning just a little more than the Minimum Wage. We estimate that these households are around half of the Council’s tenants. What they will get, as a reward for their hard work, is a rent rise of around £28 a week.
“And what about localism? The proposals take no account of differing income levels across the country. There is no option to design something that reflects the realities of local earnings levels or local housing needs.
“Then we come to the really shocking part – ‘Money raised through increased rents will need to be returned to the exchequer to contribute to deficit reduction.’ A new tax on tenants. Levied in Birmingham and sent straight to the Treasury.
“On top of that, we are expected to pick up the tab for implementing the policy too – around £1m to set up the systems and significant ongoing costs to implement it.
“Pay to Stay undermines the work we are doing to build strong, mixed communities. It imposes a new tax on work and puts extra burdens on Birmingham’s Council and Birmingham’s tenants. Our tenants deserve better.”
