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 the Coalition deem their needs to be. With another 250,000 families living in overcrowded accommodation, the need to better allocate existing housing stock is evident.
On 1 April 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. However, 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% 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 Minister’s Questions on 6 February 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 27 February 2013.
Research by the National Housing Federation (NHF) 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, Cameron’s assertions 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 Government’s 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 region’s industrial past, which saw strong traditional family values and an abundance or 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% greater than would be expected. This despite Coalition rhetoric that ‘we are all in this together’.
This reduction in family income will hamper opportunities to grow the region’s 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, NHF Head of Northern Operations, 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”.
New Housing Benefit rules also place housing associations in an extremely difficult position; the responsibility to safeguard tenants while continuing to provide affordable homes has to be balanced against a responsibility to assist those impacted by Housing Benefit cuts. Housing associations, therefore, simply cannot afford to leave rent accounts unsettled. For this reason, suggestions of reclassifying properties based on the size of any spare bedroom are unsustainable.
Paradoxically, when uncomfortable examples of eviction come to the fore, housing associations will be primary contenders for the blame while Ministers espouse the party line that Discretionary Housing Payments (DHP) were made available to help the hardest cases. While local authorities and the courts are unlikely to make tenants homeless as a result of arrears incurred as a result of Housing Benefit changes, the very existence of DHPs is an implicit acknowledgement by the Government that these cuts will cause enormous difficulties, particularly for the poorest in society.
With the amount to be distributed totalling just 5% of projected savings, the Coalition’s hardline approach to welfare cuts becomes evident. Reductions upwards of £500m per year will necessarily condemn many to debts and arrears – a situation made worse by the simultaneous localisation of Council Tax Benefit. With few directives to regulate the precise distribution of discretionary funds, assistance will inevitably differ between local authorities and vary with time. It is important, then, to acknowledge that changes are being imposed by the Government, while local authorities are being set the impossible task of dealing with the fallout.
While the need to reform the social housing sector is clear, the Coalition’s policy is marred by glaring flaws and anomalies. Foremost, despite three-bedroom properties under housing association management often being cheaper than one-bedroom accommodation in the private sector, policy changes dictate that tenants must move if they do not wish to witness reductions in Housing Benefit. With tenants who are deemed to be over-occupying being encouraged to consider a lodger, one must question the extent of any potential savings; any lodger is also likely to receive Housing Benefit. Counterintuitively, these cuts potentially incentivise larger families as a “solution”, in many cases attracting additional benefits and circumventing Housing Benefit cuts.
Notably, Armed Forces personnel will not receive a blanket exemption from the new rules; those serving tours of duty longer than 13 weeks will still be liable to face cuts, though it remains to be seen whether provisions in local Armed Forces Covenants will provide a buffer for Servicemen. There will also be no mandatory protection for foster carers, while some pensioners will lose their protection when welfare benefits migrate to Universal Credit from October 2013.
With only a month until implementation, the issues surrounding Housing Benefit rules need to be addressed swiftly. As an interim measure, the changes should be postponed until these matters have been resolved. With DWP to “look again” at how new rules will be applied to disabled people there has already been tacit acceptance that amendments are needed; arguments that it is too late in the day for change are misplaced.
Any changes will require sufficient time for tenants and landlords alike to prepare. To properly manage the negative impact that cuts will have, any new policy should be focussed on fresh applications for Housing Benefit and current claims experiencing changes in circumstance. Where suitable accommodation becomes available to facilitate active downsizing, these opportunities should be taken, with penalties imposed only where transfers are refused. At the very least, a controlled tapering period, with cuts introduced at a gentler pace and in a more targeted fashion to exclude vulnerable groups, should be considered.
A failure to act now will confirm the hardship that the “bedroom tax” is threatening to bring, potentially leading to increased spending on welfare and resulting in a social security trap – an absurdity given the professed aims of the policy.
*UPDATE*
- On 12 March, the Government announced that both foster carers and the families of Armed Forces personnel would be protected from the upcoming Housing Benefit shake-up. However, while the U-turn is certainly welcome, safeguarding two groups susceptible to the changes despite often relying on this financial assistance to enable their vital contributions to society, this is not to say that the policy has been “fixed”. Indeed, with this protection being taken from the existing Discretionary Housing Payments budget previously allocated to local authorities, flexibility to help other vulnerable groups, such as those living in accommodation adapted for specific disabilities or requiring additional space for medical equipment, is necessarily reduced. Offering these protections is certainly a step in the right direction, though is de facto acceptance of policy imperfection. Without further amendments, unnecessary hardship is likely to ensue.
