The 'bedroom tax': A looming social security trap

Absurdly, a 'bedroom tax' could lead to increased spending on welfare and, ultimately, a social security trap - the very opposite of what it hopes to achieve

Sam Reeve
On 6 March 2013 16:37

After state pensions and tax credits, housing benefit payments comprise the largest proportion of welfare spending. In 2010/11, £21.61 billion was spread across 4.9 million claimants. The most recent figures put the Housing Benefit bill at £23 billion.

As part of a package of reforms that will change the face of welfare, Ministers have determined that it is not unreasonable to re-examine why the state is providing funding for people renting properties bigger than they need. The thought process is perfectly rational; there are an estimated one million spare rooms within the social housing sector, with one-third of tenants occupying properties bigger than needed, as deemed by the Coalition.

With another 250,000 families living in overcrowded accommodation, the need to better allocate existing housing stock is evident.

On April 1st, 2013, an “under-occupancy” charge will apply to council and housing association tenants deemed to have more bedrooms than they need. Official figures show that 660,000 households will be affected, with savings to the taxpayer of £505m in 2012/13, and £540m the following year.

That said, rigid application of new regulations, and the adverse consequences this will cause, has ensured that the policy has been the centre of discontent. It is difficult to justify the impending chaos with projected savings, which at best amount to 2.3 percent of Housing Benefit payments.

The forthcoming amendments have been labelled a “bedroom tax”, though the Government has maintained that such benefits changes merely constitute a surcharge, arguing that the underlying aim is to free up more living space for overcrowded families and encourage people to get jobs through enhanced social mobility. Indeed, during Prime Ministerʼs Questions on February 6th, 2013, David Cameron declared that the issue is a “basic question of fairness”, arguing that those in privately-rented housing do not receive benefits for unoccupied rooms – a stance he reaffirmed on February 27th.

Research shows that 95,000 people in England will be forced into arrears because there are no smaller homes for them to move into. With deductions from housing benefit to be taken regardless of the insufficiencies of current housing stock, Cameronʼs assertion that “[t]his is not a tax, this is a benefit” could hardly be further from the truth. The malice of this onslaught on the low paid is perfectly demonstrated by the Governmentʼs own savings calculations, which assume by default that people will not move and will suffer a subsequent fall in income.

Further resentment will result from the uneven geographical impact of policy changes. Largely as a result of the regionʼs industrial past, which saw strong traditional family values and an abundance of family-size homes, the north has not previously experienced the demand for one- and two-bedroom properties experienced elsewhere. Consequently, the entire region will be disproportionately affected; the DWP impact assessment shows that the share of northerners disadvantaged will be 38 percent greater than would be expected. This despite Coalition rhetoric that ʻwe are all in this togetherʼ.

This reduction in family income will hamper opportunities to grow the regionʼs struggling economy, which in turn will make it difficult to attract the necessary investment to recalibrate the social housing stock by building new properties, undermining economic recovery. As Derek Long, Head of Northern Operations at the National Housing Federation, suggests, this may be the beginning of a vicious circle.

To highlight this, Jayne MacDonald of Endeavour Housing in Stockton has said that the majority of social housing tenants in the region “literally won't have a spare penny and there is nowhere for that money to come from”. As Endeavour Housing has 153 families under-occupying two-bedroom homes but no one-bedroom properties for them to move into, rent arrears beckon unless allowances are made. With moving not a viable option, a failure to address this matter will confirm that the “under-occupancy” surcharge has evolved into a “bedroom tax”.

blog comments powered by Disqus

We are wholly dependent on the kindness of our readers for our continued work. We thank you in advance for any support you can offer.