The bedroom tax: only fair to private tenants?

Of all the arguments made for the bedroom tax, the most slippery is the one about it being ‘only fair to private tenants’. That should change after an all-party report published this week.

It’s the third and probably least used of three arguments made by ministers for what they call the removal of the spare room subsidy but it’s also the one that has received the least scrutiny.

Far and away the main rationale for the policy is that it will save money (£480 million this year) and cut the deficit. That’s why, as @Simplicitly pointed out on twitter this week, the government was able to use the financial prerogative of the Commons to close down debate in the House of Lords in the final parliamentary stages of the Welfare Reform Act.

These savings are called into serious question in a report from the University of York (see my blog for Inside Housing). Using the same methodology as the DWP, it concluded that the savings could be at least a third (£160 million) lower than the government claims. Add discretionary housing payments (£65 million this year) and the huge costs transferred to social landlords and local authorities and it’s not hard to believe that it may well end up costing more not less.

Among the flaws in the DWP’s estimate was an assumption that nobody will move as a result of the policy, something that directly contradicts the second apparent justification for it: fairness to overcrowded families who will be able to move into homes freed up by downsizers.

As is well known, that’s also undermined by distribution of the stock (overcrowding is most prevalent in London whereas under-occupation is highest in the North and Wales) and by the dire shortage of one and two bedroom homes in the right places.

This is one of the key issues highlighted in a report this week from the all-party Welsh Affairs Committee. A greater proportion of social tenants are affected by the bedroom tax in Wales than anywhere else and its geography means downsizing options are slim at best, especially in rural areas.

The MPs recommend that:

‘If local authorities are struggling to find alternative smaller accommodation for tenants government should undertake a speedy review of this policy.’

Nick Clegg alternated between the three arguments at deputy prime minister’s questions on Tuesday but being ‘fair to private tenants’ was the one he turned to first when he told Labour deputy leader Harriet Harman:

‘If there is a principled objection to this change, I do not understand why, in all the years during which Labour was in government, exactly the same provisions existed for millions of people in the private rented sector.’

Part of the reason this was in Clegg’s script was that it appears to hoist Labour by its own petard (and its pledge to repeal the bedroom tax). As he told Labour’s Debbie Abrahams:

‘We have to bring the housing benefits bill down somehow. I assume that our rationale for the change is exactly the reason why, in government for 13 years, Labour maintained the same rules for households receiving housing benefit in the private rented sector.’

And just for good measure, he told Labour’s Huw Irranca-Davies:

‘The whole system we inherited from the hon. Gentleman’s Government was one where we had 1.8 million people on the housing waiting list, hundreds of thousands of families living in overcrowded accommodation and other people receiving housing benefit for more bedrooms than they actually needed. That is the system we are trying to sort out. There are many features to this, which is why we decided that, in exactly the same way as his Government supported the rules in the private rented sector, we would apply the same rules in the social rented sector.’

Most of this will be familiar to anyone who has followed the debate over the last two years but the key question here is whether it is really true that the coalition is applying the same rules in the social rented sector ‘in exactly the same way’ as Labour did in the private rented sector. This is less well known.

For starters, the two sectors are very different and that makes a huge difference to the impact. Almost a third of private tenants have been in their home less than a year whereas more than 40 per cent of social tenants have been in theirs more than 10 years. While pensioners are exempt and there are slightly more one and two bedroom homes in the social sector, the lower turnover means they come up much less frequently and so downsizing will take far longer.

Other crucial differences are the vastly greater number of disabled people in social sector homes that have been specially and expensively adapted and the fact that rents are controlled in the social sector but deregulated in the private sector (this was actually one of the last government’s justifications for size criteria in the private sector). See the second comment below for more on rents and important differences in how the criteria work. See this blog by @Simplicitly for some more details.

What is true is that the size criteria caused some of the same problems in the private sector as they are doing now in social housing. Disabled children who need their own room and disabled couples who cannot share a bedroom for medical reasons found themselves harshly treated. The government lost in the Court of Appeal on the first grounds (though it still hasn’t laid the regulations putting things right) and has just lost a First Tier Tribunal in Hereford on the second.

However, the crucial difference is the way that the change is being implemented for existing tenants.

Which brings me back to the Welsh Affairs Committee. This is an all-party committee with five Labour members, five Conservatives, one Lib Dem and one Plaid Cymru member. It’s chaired by Conservative MP David Davies.

Select committees always aim to produce a report that all members can sign up to but this was impossible this time around. ‘There is a great deal of political disagreement over the Government’s policy to base the amount of housing benefit on the number of “spare” rooms in a property,’ the Welsh MPs say. ‘We are unable to find consensus on the merits of the policy.’

David Davies also points out that the Conservatives could not sign up to the recommendation of the majority of the committee that rent controls should be considered as one strategy to control escalating private rents.

It’s important to bear this political context in mind when you read the next paragraph, which is agreed by the whole committee:

‘We agree with the general principle of consistency between the private rented sector and the social rented sector for tenants receiving housing benefit. We note that previous reform of housing benefit paid to tenants in the private rented sector was phased in for new tenants, not imposed upon existing tenants. However, the phased approach was able to achieve its objective fairly quickly in the private rented sector due to the higher turnover of tenants in that sector.’

This statement agreed by MPs of all parties deserves to be quoted verbatim to any politician using the ‘fair to private tenants’ argument.

The problem with the bedroom tax is not so much the principle that tenants should generally occupy dwellings with an appropriate number of bedrooms as the way that the policy is being implemented. These are people’s homes that many of them have lived in for years. That may not give them the absolute right to spare rooms in perpetuity but it does give them the right to be treated fairly and sensitively. Instead the bedroom tax is being imposed straight away, leaving many of them with few prospects of moving anywhere cheaper and trying to find the shortfall from somewhere.

In reality, to meet the primary objective of saving money (assuming that still holds) the government has no choice but to be unfair to social tenants.

To apply the bedroom tax in ‘in exactly the same way’ as for private tenants, the government would have to phase it in for new tenants and not impose it on existing ones.

Or it could do what it looks like is going to happen with the bedroom tax in Northern Ireland: delay implementation for existing tenants for four years.

Either way desperate tenants would have more options, landlords would have more time to prepare and maybe the politicians would even have a chance to think again about a policy for which the justifications are crumbling one by one.