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Written question asked by Andrew Love (Labour) on Monday, 9 March 2015, in the House of Commons. It was due for an answer on Wednesday, 11 March 2015. It was answered by Brandon Lewis (Conservative) on Tuesday, 17 March 2015 on behalf of the Department for Communities and Local Government.

Tenancy Deposit Schemes

Question

To ask the Secretary of State for Communities and Local Government, what estimate he has made of the amount of interest paid to private tenants from custodial tenancy deposit protection schemes in each of the last five years; and if he will make a statement.

Answer

The interest payments to tenants under the scheme are as follows:

2010: £418,681; 2011: £199,579; 2012: £120,288; 2013: £82,084; 2014: £59,184.

The falling figures reflect record-low interest rates, and also the changes that were made to the contract after 2010. If I may explain:

The service concession agreement that was agreed by Labour Government with the custodial tenancy deposit protection scheme contained a guarantee that the Government would meet any shortfall arising if approved fees were not covered by the interest on deposits held. If interests were low, then the Government would pay the scheme money.

As a result of the low interest rates that emerged due to the financial crash in 2008 and 2009, such an agreement left taxpayers liable for a massive shortfall, which was estimated to reach over £30 million by the end of the contract in 2012.

In May 2010, the Coalition Government inherited this unacceptable situation and looming liabilities for taxpayers. As outlined my rt. hon. Friend, the Member for Welwyn Hatfield (Grant Shapps) on 19 July 2011, Official Report, Column 828W, following extensive negotiations in summer 2010, we removed the guarantee and all associated liabilities as part of a revised agreement.

The Government is currently inviting bidders for the new custodial tenancy protection scheme contract for 2016 onwards, and we are asking bidders how and when they could offer tenants’ interest as part of their bids.

Secondary information

Type
Written question
Reference
226760
Session
2014-15
Grouped for answer
Yes
Subjects
Tenancy deposit schemes
Link
View this Written question on www.parliament.uk