Parliament debate: Housing minister rules out law to prevent St Michael's Gate repeat but may hit firms' wallets

The housing minister has ruled out introducing legislation to prevent a repeat of the St Michael's Gate scandal, but he will consider reducing the money private firms can make from putting up the homeless in overnight accommodation.

Tuesday, 10th January 2017, 6:31 pm
Updated Tuesday, 10th January 2017, 6:32 pm
Stewart Jackson during the debate

After months of anger from the people of Peterborough, Gavin Barwell publicly addressed the evictions at St Michael’s Gate for the first time at a parliamentary debate hosted by MP for Peterborough Stewart Jackson.

Mr Barwell agreed with Mr Jackson’s assessment that it was an “Alice of Wonderland world” where a company can evict long-standing tenants (essentially making them homeless) in order to then charge councils to move homeless people into the properties.

But he said legislating against it would lead to landlords being less willing to rent out properties, thus lowering the numbers which are available.

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Speaking at the debate in the Grand Committee Room, which was attended by just himself and Mr Jackson, he said: “It seems a highly irrational way for a company and city council to behave.

“The key answer here is to increase the supply of housing.”

Peterborough City Council is paying housing firm Stef & Philips nearly £3 million over three years to use the homes at St Michael’s Gate for overnight accommodation for homeless people.

This is only happening because 74 tenants and their families are being evicted from the estate, with renovations taking the number of available properties up to 88.

The council claims that if did not take up the properties a London borough would move their homeless people in their instead.

Mr Barwell, who praised the Peterborough’s Telegraph for campaigning on the issue, said the Government was spending millions of pounds to help councils tackle homelessness and was going to create the largest number of affordable homes since the 1970s.

Speaking to the PT after the debate, he said: “Stewart was saying this was done to make more money and landlords do that all the time. I understand how people feel, but it’s legitimate for a landlord to decide what to do with an asset. If you pass a law to stop that, far fewer landlords will rent out their homes.”

Instead Mr Barwell has agreed to review the management fees private firms can charge for putting up homeless people in temporary accommodation.

Currently they can charge councils £60 per household per week on top of a household’s housing benefit claim.

If a new white paper on housing (set to be introduced into a parliament in a few week’s time) bans companies from charging the management fee, it could see them making much less money.

The minister added that the Government has toughened the law to make it harder for councils to move people outside of its catchment area.

Addressing Mr Jackson, Mr Barwell said: “I can’t say this will never happen [again]. What I can reassure him is we made it more difficult. The long term solution to this problem of councils placing people in different boroughs is to end the housing crisis in the country.”

He later told the PT: “I would say I have every understanding of how [the residents] feel. I think there are real questions about the behaviour of the company in this place.”

Mr Jackson during the debate described Stef & Philips as “unscrupulous”, adding: “I believe, frankly, what the company has done is morally dubious and unethical.”

Calling the situation a “calamity,” he said: “We are in an Alice of Wonderland world where we have created homeless people in order to house homeless people. A lot of my constituents are angry about that.

In a surprise twist the MP even apologised to the residents of St Michael’s Gate because he was not able to help them any more and because the system had let them down.

He said the money Stef & Philips was charging the council to use the properties at St Michael’s Gate as temporary accommodation for homeless people was £966,000 compared to the £659,000 that residents were previously paying on rent.

He added that nine families from the estate had been accepted by the council as being homeless.

However, he rejected accusations that the rise in homelessness was caused by Universal Credit or the benefit cap. Instead he blamed “large scale levels of immigration that’s had the effect of saturating the private rental market.”

A reduction in rogue landlords because of a licensing scheme was also given as a reason for a decrease in available homes.

Mr Jackson called on Mr Barwell to “look at the loophole in housing benefit regulations” with regard to the £60 management fee which is paid for by the taxpayers.

He added: “I would like [the minister] to work with the Local Government Association to tackle the issue of local authorities shuffling around the most vulnerable people who are homeless because they unwilling or unable to house them themselves.”

Speaking to the PT after the debate he said: “I think the minister has done his very best in what is a unique situation. He’s right in saying the problem is we have to reduce homelessness by increasing homes for rent and purchase.

“He said he will look at the loophole on management fee, which is creaming off the taxpayer. That gives me some confidence.

“It’s good we’ve raised the issue. I’ve known the minister a long time and he’s a sincere guy. He will look at the issues we’ve raised in the debate. The fight goes on and let’s look at the white paper.”

The PT wants another debate in parliament, this time to stop councils from moving homeless people from their own catchment area to another without the permission of the host authority.