Of all the Government’s welfare reforms, the so-called bedroom tax is rapidly becoming its most controversial.
Liberal Democrat president Tim Farron was among Coalition politicians who voted for the immediate termination of the policy following a Parliamentary debate on its flaws. Senior Liberal Democrat MP, Andrew George voted with him, saying it would create the ghettos of the future and is Dickensian in its social divisiveness. The Deputy Leader of the Liberal Democrats, Simon Hughes, argued that the Government should exempt anyone who had applied to live in a smaller property.
The vote on its abolition was lost by 26 votes and came after Shadow Work and Pensions Secretary Rachel Reeves launched an attack on the housing benefit change in Parliament. She said: “Let me be very clear – if I am Secretary of State in 2015, this will be the first thing that I will do, reverse this unfair and pernicious tax.”
Under the controversial reforms, housing benefit is cut by 14 per cent for those deemed to have a “spare” bedroom and 25 per cent for claimants with two or more extra bedrooms.
Iain Duncan Smith was in Paris at a summit on youth unemployment, leaving Liberal Democrat Pensions Minister, Steve Webb, to defend it. The policy, which critics say penalises some of Britain’s poorest and most vulnerable without offering a viable solution to the country’s social housing shortage, has drawn comparisons with the hated Poll Tax. Like the Poll Tax, which the Thatcher government insisted was a “community charge”, the Coalition believe the bedroom tax should be referred to as removing the “spare room subsidy”.
Writing on the Conservative Home website, Duncan Smith said the Government had “grasped the nettle” of Britain’s housing issue and “ended the thoroughly unfair subsidy that saw the taxpayer forking out for almost one million spare bedrooms in the social rented sector”. But a rising number of housing associations and experts have produced evidence suggesting the policy is fundamentally flawed and unlikely to provide either the financial or housing solutions it promised.
1. It may not save money
One of the stated aims of the policy was to reduce the housing benefit bill, but there is mounting evidence that it could hardly dent it. In the Government’s original calculation of the savings from the changes, it was assumed people would accept the cuts in their housing benefit and stay put in bigger properties with less money. But research from York University suggests at least a fifth of tenants move to a smaller property to avoid the reduced income.
Since smaller properties are often in the private rented market this can actually cost local authorities more in housing benefit than a bigger council house. The Government has also increased the amount of money it spends on discretionary housing payments – emergency funds for those struggling to keep up with rent – but many local authorities say they are running out.
2. Social housing shortage
The fallout from Right to Buy over the past three decades – combined with a rising population – means there is a chronic shortage in local authority housing.
The shortage is so acute that 96 per cent of those affected by the bedroom tax would have no smaller social housing to move to, according to Labour analysis of government figures.
Experts argue the only real way to tackle the shortage in social housing is to build more homes, but cuts to council budgets make this an impossibility for many. The last financial year has seen the lowest number of new homes built since the 1920s, with just 135,117 completed.
3. Councils have the ‘wrong’ homes
Until recently, councils were encouraged to build homes for families to grow into, meaning in many areas there are simply not enough one- and two-bedroom properties.
The situation is so farcical that one housing association, Magenta Living in Liverpool, is considering demolishing three-bedroom homes it can no longer let because families do not want the extra charge. In the meantime, those wanting to avoid reduced housing benefit are renting smaller properties in the private sector, which cost the local authority more.
4. Penalises most vulnerable
Almost two-thirds of the more than 600,000 people affected by the bedroom tax are disabled. Since the policy came into force in April there has been a tranche of legal challenges relating to the necessity of a “spare” room for those who need to store specialist equipment or who cannot share a room with a partner or sibling because of their condition. Disabled children who need their own room are now exempt from the charge, but adults still face the extra cost.
Labour MP Stephen Pound described how his brother, who is “in total renal failure”, faced losing his home because he was keeping his dialysis unit in a “spare” room. Mr Pound said his brother was not exempt from the charge and told the Commons: “[He] faces losing his home of 20 years.”
5. Wasted money spent on adaptations
Councils spend tens of thousands of pounds adapting social housing for disabled tenants. If families are forced to move, they will need the same adaptations all over again, creating an extra cost for the local authority.
6. It won’t tackle overcrowding
The latest figures show that around 375,000 households across England and Wales are living in overcrowded homes in the social rented sector. The Government argues the policy will tackle this but in many of the places where overcrowding is an issue there are no smaller homes for those families to move to.
7. Increasing debt
Families hit by the tax are forced to move or face losing an average of £720 a year, causing rising personal debt. A recent survey of housing associations in England found more than half of residents affected had been unable to pay rent between April and June. Another study found that a quarter of those impacted are in rent arrears for the first time.
8. Pensioners exempt
Although few people would like to see pensioners have to pay the bedroom tax, their exclusion is illogical. With their children largely moved out, they are likely to be one of the biggest groups of under-occupiers. Political pundits have suggested the decision to leave them out may have had more to do the power of the elderly vote than worries about their welfare.
9. Families will be split
Separated parents have pointed out the damaging impact of the policy on those who have only weekend access to their children. Several fathers say their children are only allowed to stay overnight for a full weekend if there is a bedroom for them to sleep in. Yet the spare room subsidy means divorced fathers living alone are no longer eligible for housing benefit which covers more than one bedroom.
10. Lack of political support
As well as vocal Labour opposition to the policy, Liberal Democrats – and even some Conservatives – are coming out against it. The Liberal Democrat conference passed a motion opposing the reforms with an overwhelming majority and earlier this week Chief Secretary to the Treasury Danny Alexander’s father branded the policy “unfair”. Tory MP Jeremy Lefroy said that the Government needed to look at making changes to the policy, adding that councils must not evict tenants who can no longer pay their rent.