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.

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10 Comments on “The bedroom tax: only fair to private tenants?”

  1. Sasson Hann says:

    When this policy was first announced in the Autumn of 2010 Grant Shapps specifically said that it would NOT apply to existing tenants. Of course, as usual, they say one thing and then do something completely different.

    The only way a system like this would work – with cross party agreement so that whoever was in power would take on such a system – is by instigating a progressive social housing building programme based on prospective social housing need. Yes, we need smaller homes/flats, but also larger homes and bungalows/supported housing for the old and the disabled. In time, with enough dwellings built, then the tax should be applied if a tenant didn’t want to move, but it still should not apply those people who had homes prior to the instigation of the tax, especially since most have spent a lot on their properties.

    I’m saying this IF a government decides to implement such a policy. BUT even where there exists a supposed fairer system like this, it provides the argument that people who cannot afford to buy a house should be subject to a situation where they have to keep moving many times throughout their lives, and this can lead to much instability in lives of people who are already poor.

    This is why secure tenancies were introduced, to mitigate such problems, so it would still prove to be unfair when tenants had lived in a property most of their adult lives. The poor can’t afford to keep redecorating, painting, moving etc. And most of all, people make houses and flats their homes.

    What this tax is saying then about the poor is that you may well obtain a dwelling, but it will never be your home because you don’t deserve a home.

    I understand that governments seek to cut welfare budgets, but really what has lead to such a large budget? Starting with Labour and continuing with the coalition, they have allowed my social housing provider to increase rents way above inflation for years now under the guise of ‘convergence’. Conservatives in the late 70’s scrapped rent controls in the private sector. How much of these policies have affected the increase in the housing benefit bill?

    Why was this allowed to happen? Poor people’s homes are being sacrificed for the sake of making money off property; most people can see this, but rather it is the poor who are not involved in such decisions who are being penalised, er, for being poor!! So the government say ‘lets put up rents’ and when the rents rise they then claim the housing benefit bill is too big. Who’d have thunk it?!!

    The fact is that successive governments have brought about and manipulated this situation, and then everyone suffers, and not just the poor, but middle-income families who are unable to get onto the first rung of an ever inflating property market. So to assuage their complaints the government promote lies and propaganda in the media that makes the poor the scape-goats for the whole situation, just like many governments over hundreds of years, and a majority of the population are still being fooled by them.

    I don’t think that poor people and the disabled have ever felt so stigmatised by it all. At least in the past the one thing that we could rely on was a roof above our heads.

    I’m just revamping my house at present, my home. I joked with my carers, no, I really laughed my head off with them that by the time it’s all done I’ll get evicted. I laugh at it now rather than remain depressed and despondent. I’m not going to allow the government to make my life a misery, so what happens to me will happen.

    I have good family and friends and they won’t see me lose my home, but there are so many people that have no one. Who are going without food days every week. Who have no heating. And now they don’t have a home either.

    There has to be a better way for us, for everyone.

  2. In addition what Jules fails to mention is that bedroom tax is fundamentally different to LHA size criteria restrictions, for example; in sheffield the rate for a 3 bedroomed private rented house is £115 pw, therefore if someone claims LHA and is entitled to a 3 bedroom rate, if they are able to rent a 4 bedroom house for £115 per week that is ok as the HB restriction is in actual fact on the level of rent payable, not on the size of the property. Whereas in social sector there are not levels of rent set for each property size – the reductions are percentages from the gross rent rather than set rent levels dependent on someones family size.

  3. Bill says:

    Jules

    I think you have missed a fundamentally important point about this.

    There is a very good reason why size restrictions should apply to private tenants and not to social housing tenants (although the actual restrictions for private tenants are too tight).

    In the social housing sector there is a mechanism for aligning housing stock to need, needs based letting. Social housing providers manage their stock to ensure the best fit between housing stock and need. If a single person went along to a social housing landlord and asked to rent a three bed house they would be refused.

    For the private sector there is no mechanism for aligning housing stock to need. The only thing a private landlord is interested in is can a prospective tenant pay the rent. If I went along to a private landlord as a single person and wanted to rent a 10 bed house they would happily accept if they were confident I could pay the rent.

    So in the private sector some mechanism to ensure that housing benefit does not pay for people renting homes much larger than they need is required. The social sector has always has a mechanism in lettings policies.

    This fundamental difference between social and the private sector landlords is occluded in the case made for the bedroom tax.

  4. Clive Arnold says:

    My wife is disabled, I’m her carer, we rented from the council when we first got married, we were ‘given’ a two bedroomed property in a shitty block of flats where people regularly insulted my wife because of her disability. Council said we had no chance of a house and it was “like it or lump it” Home swap? Who would move into such a place from a house?

    We rented privately, 2 bedroomed property (house) rent was much the same as a council property, we had to pay for the extra bedroom, plus we got less in Housing Benefit, the respite from the morons of society was worth it even though we were scrimping to live there.

    Now people in council properties have to pay for their extra bedroom, do I think it’s right as someone who rents in the private sector? No, a disabled person and carer shouldn’t have to pay for that extra room (we use our extra room to allow a stay-over carer so I get some respite from my caring role)

    Do people who live in council properties think it’s right we who rent privately pay for an extra bedroom? Yes it seems.

    I don’t care how or when LHA is/was implemented, all I know is that we pay for our extra bedroom and get less Housing Benefit to cover the one bedroom than if we lived in a council property. We don’t live in an expensive place, most people in private rented places I know don’t either.

    Labours LHA IS as much of a bedroom tax as the Tory one is, for Labour to commit to scrapping the Tory BR tax (and watch for the caveats on that) without scrapping their own BR tax is hypocritical.

    But while people think those who rent privately are all easily able to afford it we will still get hit, so thanks for that


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