The poverty premium is taking a crippling toll on people who can least afford it. It’s estimated that every year those living in poverty pay an extra £490 for the basics of energy, phones, white goods, food and furniture. But how can it be fair that the poor pay more?
The problem is that the rental payments of Britain’s 11 million renters aren’t recorded or recognised in the same way that mortgage payments are. This means some of the least well-off pay the most to borrow. All the while, over two-thirds of renters – in both private and social housing – are paying their rent in full on time. The life chances of these tenants could be transformed if their rental payments were taken into account, so why aren’t we doing anything to correct this economic injustice?
The good news is, things are beginning to change. I’m proud to be supporting John Bird’s Creditworthiness Assessment Bill in the Lords, which vaulted its committee stage last week. His Private Member’s Bill will mean that rent and council tax payment history will be taken into account when someone applies for credit. As our Treasury spokesperson Susan Kramer said at Friday’s committee, the virtue of John’s bill is its simplicity. While governments often come up with incredibly fragmented, complex and convoluted attempts to solve a problem, this measure will offer fairer access to more affordable credit for millions of Britain’s renters.
A version of this scheme has already been tested by Big Issue Invest. Records show that 83% of social tenants stand to see their credit scores boosted because of their rent payment data, and the evidence also shows a jump from 39% to 84% in digital identity authentication in other words, rent data is included in their credit files.
Just last week, we found out that the proportion of 35 to 54-year-olds who rent privately has doubled in 10 years. Renters have every right to be treated as full members of society, and yet they’re currently being excluded from the affordable credit options they rightly deserve. John’s Bill will change that.
Importantly, this is about offering a long-overdue ‘hand-up’ for those aspiring to own their home. Much like the Lib Dem plan to build 300,000 houses every year – and our campaign victory banning lettings fees for private tenants – this bill is a practical way to help Generation Rent get on in life.
With Lib Dem and cross-party support, John’s Bill should make its way to the Commons and pave the way for fairer access to more affordable credit.
Show your support by helping spread the word about The Big Issue campaign online. And together, we can keep up the pressure and #makerentcount.