Bedroom Tax – it wont create homelessness but the OBC will – 8 times as much

Over the past month I have been writing and reading much about the bedroom tax and there is a lot of nonsense about.  I have seen comments that it affects all social tenants not just those on HB and many similar nonsenses and while that it not surprising some of the comments and articles have been particularly inept as have some of the obvious points people assume – for example the 14% and 25% deductions are not from the HB you get, they are from the rent level.  So if your rent is £100pw and you get £80pw in HB it is 14% or 25% from the £100pw and not from the £80 HB amount.

However one of the huge misconceptions is that the bedroom tax will create evictions and homelessness.  This is flawed for a number of reasons but let’s assume the tenant doesn’t pay the bedroom tax deduction and the rent is £100pw.

This means the tenant will be accruing a £14pw arrear each and every week and so after 5 weeks they are £70 in arrears and after 50 weeks they are £700 in arrears.  £700 is the equivalent of 7 weeks rent and a social landlord will be unlikely to secure an eviction on £700 or 7 weeks arrears.  Even the much maligned Ground 8 which is the only ground the social landlord can use and know a court will award an outright eviction requires 8 weeks of arrears or £800 and this is over 57 weeks of not paying the £14pw bedroom tax deduction.  There is also a legal question over whether a social landlord can use this Ground 8 and whether it is ‘proportional’ to do so.

The £25 per week deduction would take 32 weeks to accrue 8 weeks rent arrears so almost 8 months and hence eviction directly and solely related to the bedroom tax deduction thus causing homelessness is not a quick process.

By comparison the overall benefit cap of a maximum £500pw in all benefits sees an average benefit cut of £93pw and that £93pw is taken off your housing benefit.  If we know the average social rent is £83 per week then 8 weeks arrears is 8 x £83 or £664 and it will take just over 7 weeks to get to that stage.

So as we can easily see the OBC makes eviction and homelessness inevitable as the £93pw deduction is almost 7 times the level of the average £14 per week bedroom tax deduction. We can simplify this and say the bedroom tax may, in time, lead to eviction and homelessness, but the OBC WILL and WILL QUICKLY lead to eviction and homelessness.

I have criticised social landlords for their lack of challenge to the bedroom tax and with some justification at least overt and in the public domain challenge to it.  Yet their level of challenge to the overall benefit cap has been so much worse and largely non-existent.  This is all the more surprising when the OBC impact assessment says 46% of those affected currently live in social housing.

Last year I spent a lot of time raising the OBC issue, largely to a housing only audience or readership, and revealed how it is much worse in financial terms to the social landlord than the bedroom tax.  Yet, still the line adopted by social landlords was our rent is only £80 per week so this means very few social tenants are affected from the £500pw cap.  It would mean only those households with 5 children or more are affected  (such families get £459 per week in other welfare benefits leaving just £41pw as the maximum HB they would get towards rent)

This year, at least in the last 4 weeks, I have been writing about the bedroom tax almost exclusively and these posts have been viewed by as many people as all my blog posts throughout the whole of 2012 – in 4 weeks!  Tenants and non-tenants have clearly been reading these posts and it is not just the housing professional audience from last year that accounts for this 13 fold rise in reading / blog views.

So that is why two things are important.  Firstly bringing the OBC much bigger danger to eviction and homelessness to the new audience and; Secondly explaining that context.  If it takes 57 weeks for a bedroom tax affected tenant to get to the ‘necessary’ level of rent arrears to cause eviction and homelessness but only 7 weeks for the OBC affected tenant, then in that 57 weeks for every one bedroom tax affected tenant there are 8 OBC affected tenants.

Hence the OBC will see 8 times as many social tenants evicted for arrears and made homeless for every 1 the bedroom tax does.

The social landlord cannot simply say too few tenants are affected as the 46% of social tenants affected is a staggering 78,200 social tenants.

I have read somewhere recently, though I cannot source at the moment, that the average eviction cost to a social landlord is £6,900 or so including the arrears so when we factor that in this becomes a £540m cost in the first year to social landlords – more than the bedroom tax of £480m.

The social landlord must have far greater faith in its FTA policies than I have! (Former Tenant Arrears) – ignore that reader that’s an in-joke for housing professionals!

So, it is time the social landlord started challenging the overall benefit cap and openly so.  It is time the government realised openly that the OBC will cost more than it claims to save – and note very well that the above does not include a penny of the extra costs of accommodating families in temporary homeless accommodation and these costs are huge.  While most will not have to pay £12,768 per calendar month for this – Yes that is a monthly cost and yearly one of over £150k – that Westminster are paying, the temporary homeless cost is enormous and could well be over £3 billion per year if the average national weekly TA homeless cost is £500.

So we see a cut and alleged saving of £93 per week giving a direct cost of £500 per week and an overall added cost to the public purse.

The social tenant and non-tenants (and even the ‘professional journos’ and Labour MPs that have recently jumped on the bedroom tax bandwagon) that now read my posts will be rightly alarmed at such figures.

If my bedroom tax post scan be characterised as What is a bedroom the OBC posts I posted last year is characterised by Where the hell will large families live? If the overall benefit CAP means they can’t afford to live in council housing – the cheapest national housing option they have two choices (a) stay in homeless temporary accommodation permanently or (b) split up the family so a household of a couple with six children becomes 2 households with a single parent and 3 children.  The housing benefit bill is going to rocket and the OBC will force families to break up.

Just as the general public is becoming horrified at the consequences of the bedroom tax yet thought initially that the paying for alleged spare bedrooms was right, the same public who were 74% behind the overall benefit cap of £500 per week for the same superficial reasons will also be horrified when the OBC rolls out nationally in the summer.

Just as I argued then the Labour Party arguing for a regional cap was a stupid against the overall benefit cap we will doubtless see the Labour Party look at the OBC and the huge public outcry it will cause and launch and anti OBC campaign just as they launched an anti bedroom tax campaign 3 days ago!! Remember the public outrage of Newham shipping out its homeless cases to Stoke anyone shortly after the £500pw cap was announced and Joe Public said it was wonderful? This is now commonplace with all London councils so then think that this OBC is not a London only issue; this homeless diaspora will happen nationally in both the private and social housing sectors because of the OBC.

I was tweeting while watching BBC Question Time last night and a tweet from Full Fact (from memory) said 90% of the welfare reform / benefit cuts have still to happen.  The OBC is THE biggest of the lot and ahead of direct payments or council tax payments or Universal Credit. It is due this summer so time for all to get their fingers out – the social landlord, the tenant, the activist, the Labour Party and the general public.  Yes, before you ask the mixed-age pensioner couple will also be affected by the OBC and yet again the coalition have said semantically that pensioners are exempt!  What was that you say DHPs? Yes the DHP budgets have to attempt to cover this £93 per week deduction too and you thought they were only available for bedroom tax affected?

Unusually, for me, I haven’t littered the above with links to my many previous blogs about the OBC and there are many, maybe upwards of 20.  Reading them will also see further huge complexities about the systemic flaw in the OBC which will see more and more tenants – social and private – caught by the OBC each and every year – Yes the nightmare scenario I describe above gets worse every year with more families evicted, more homelessness and more public purse cost to go with that human misery.

Anyone still think this coalition knows what the hell it is doing?

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4 thoughts on “Bedroom Tax – it wont create homelessness but the OBC will – 8 times as much

  1. I take the point that the OBC is a worry too, but I think we should not forget the Bedroom Tax; sure it will take up a long time to ratchet up enough debt to qualify for an eviction, and sure evictions is not the straightforward process some people imagine. I happen to be a landlord too, so I know. However, I am not writing because I am a landlord. I am very worried about a single friend who is a social housing tenant. She is only in her 40s but suffers from severe arthritis and lost her mother, who used to help care for her, fifteen months ago. They had a two bedroomed housing association flat which was her childhood home. She is still there – I had to step in and help negotiate already to protect her rights on the basis of the old fashioned tenancy with rights for descendants which her mother held. She needs to stay there. She is still distressed about the loss premature loss of her very capable mother. Not only is the flat her place of security and safety in the area she knows and around the people she knows, but she needs the spare bedroom for the various friends who stay to offer practical and emotional support.

    Now she is facing both the worry about the ‘Bedroom Tax’ and worry because the housing association want to put the rent up anyway. She fears she may have to leave and I am not sure how to help her further. Sure she may have to run up a big bill before the H.A. would seriously think of evicting her, BUT this assumes that all H.A. tenants are happy to live with the pressure and worry of knowing that they have not paid all their rent and that they could (no matter how theoretical) be evicted at some point. Knowing that it would take a year before they even think of that is most definitely not going to leave her saying ‘I have a year before they throw me out of my place of safety – yipeee! I will forget all about it.’ Sorry, but it doesn’t work like that.

    1. Julia,, I wasnt advocating not paying the bedroom tax deduction I was simply putting the errant overplaying of the bedroom tax impact on eviction and homelessness in comparison to the overall benefit cap.
      This also shows that a crude cap will cost more to the public purse as we are already finding out with the LHA caps

      1. You wrote:

        “However one of the huge misconceptions is that the bedroom tax will create evictions and homelessness. This is flawed for a number of reasons but let’s assume the tenant doesn’t pay the bedroom tax deduction and the rent is £100pw.

        This means the tenant will be accruing a £14pw arrear each and every week and so after 5 weeks they are £70 in arrears and after 50 weeks they are £700 in arrears. £700 is the equivalent of 7 weeks rent and a social landlord will be unlikely to secure an eviction on £700 or 7 weeks arrears. Even the much maligned Ground 8 which is the only ground the social landlord can use and know a court will award an outright eviction requires 8 weeks of arrears or £800 and this is over 57 weeks of not paying the £14pw bedroom tax deduction. There is also a legal question over whether a social landlord can use this Ground 8 and whether it is ‘proportional’ to do so.

        The £25 per week deduction would take 32 weeks to accrue 8 weeks rent arrears so almost 8 months and hence eviction directly and solely related to the bedroom tax deduction thus causing homelessness is not a quick process.”

        So despite your hypothetical ‘for the sake of argument’ assumption to show how insignificant the bedroom tax supposedly is, you are assuming that people WILL pay the bedroom tax? In which case I am not quite sure why you bothered with all of the above at all. Sorry, but my friend has already nervously done the calculations and she does not feel that she can pay this extra, and I don’t think she would want to hang around for a year not paying it to find out what would happen to her – very stressful. I am not suggesting that your concern about OBC is unimportant, but please don’t try playing this off against the bedroom tax. Find another way of publicising it. Trivialising people’s concerns about ‘the bedroom tax’ is not helping vulnerable people at all.

      2. I suggest you are misreading and it was never my intention to trivialise individuals concerns over the bedroom tax or the bedroom tax itself. Simply it was to put the pernicious bedroom tax into context and say worse is to come. The country is focusing upon the bedroom tax YET there is far worse to come and if people are (rightfully) angry over the bedroom tax I am hoping they will become apoplectic over the OBC and the cumulative impact of Bedroom Tax, OBC, Universal Credit direct payments, loss of council tax benefits that will also come this year. I do not apologise at all for raising these issues as they need to be known and whether you have taken your view because of my poor articulation or you have read something unintended into them is inconsequential compared to the damage and stress the full impacts will cause.

        I also put out a new post today which says no tenant is receiving full and impartial advice over the bedroom tax and the bedroom tax creates a life-changing decision, which it does. Yet to have to make such life-changing choices in the absence of all the facts is just plain wrong yet EVERY tenant is having to do this!

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