Bedroom Tax – Are social landlords about to be stung for £1.3bn?

Hansard is a fabulous resource as it states for the public record what every MP says in the Houses of Parliament and you can see from yesterday’s account of the bedroom tax debate (it is 107 pages of A4) just how ignorant MPs, especially coalition ones are of the bedroom tax.

Bedroom Tax and the social tenant being helped to move?

Column 388 exposes the Tory ignorance of the bedroom tax when a Tory MP interrupts Jacob Rees Mogg to say:

Bob Stewart (Beckenham) (Con): If someone living in social housing wishes to downsize and move to a smaller house, I take it—I ask my hon. Friend or the Minister to confirm this—that they would not have to find the costs in their own budget and that they would be helped to move.

Of course this is not the case at all and if it were then perhaps we could discuss how the coalition can say the bedroom tax will not affect social landlords finances when if the cost of moving somebody falls on them!  660,000 moving costs of say £2000 per go is a mere £1320 million isn’t it!! That’s £1.32bn by the way this Tory ignoramus thinks social landlords will cough up!

Yes Lord Freud who said last year thatAnd I repeat my determination that we will not undermine social landlords’ finances” Yes the same principal architect with Iain Duncan Smith of the bedroom tax and his determination!! Yes the same Lord Freud who said in the same speech about the bedroom tax above that:

  1. Some people will have to move, and we have always recognised that fact.
  2. Housing support should support the home size that people actually need – regardless of if a person is living in the private rented sector or in social housing.

Ah, so it is some but not all that will have to move (1 above) so if it is 50% then it’s just a £660m cost to social landlords then Lord Freud? Or is your colleague the member for Beckenham just plain ignorant that tenants will have to fund the move themselves?  You know he tokenistic Tory sitting on the government benches during the debate! Yes you should have briefed him much better shouldn’t you!

Simple question – Why haven’t the 250,000 overcrowded families in social housing picked up sticks and moved to the private rented sector?

This is a really interesting question and one that has been (deliberately?) ignored by the coalition.  If the rationale for the bedroom tax is that wasteful scrounging social tenant under-occupiers should move and so free up larger properties which (with a huge assumption) would be filled by existing private tenants and so reduce the overall HB bill as they would be paid less in HB, then why hasn’t the government considered the 250k+ overcrowded families in social housing that would go to a larger property in the private rented sector?

In short, the 250,000 overcrowded families cramped into 2 bed council houses moving to 3 bed privately rented properties!

Table 1 – English LHA rates by bedroom size 2013

£     65.74

 £   109.39

 £   136.21

 £   161.26

 £   211.16

Room

1 Bed

2 Bed

3 Bed

4 Bed

The above simple table shows the average LHA that will be paid out next year across England and taken from the DWP’s own release of April 2013 LHA rates. We also know the average social rent is £83 per week overall from the government’s EHS released a few weeks back.

From the above and accepting that a 2 bed social housing rent is £83pw and receives £83pw per week in HB we can see that the difference in public purse cost of moving from a 2 bed social property to a 3 bed private one is an additional £78.26 per week in housing benefit.

So if the 259,000 overcrowded families in social housing moved from a 2 bed social property to a 3 bed private one this would add £1.06bn per year to the overall housing benefit bill.

Conversely the 2 bed social housing units that have been ‘freed-up’ in your jargon would see 259,000 private tenants now receiving £136.21 per week in LHA receive just £83 per week in HB – a fall of £53.21 to the overall housing benefit bill.  For 259,000 this would be a reduction to the overall housing benefit bill of £719m.

So the net effect would see an additional cost to the HB bill of £338.5m per year (£1.06bn less £719m)

You haven’t factored that cost in have you? Yet that disproves your making better use of stock rationale in cost terms doesn’t it?  Oh I see so that’s just a clever piece of spin you thought nobody would notice? I see!

It’s no wonder you have (cleverly?) avoided this additional cost by not focusing on the 259,000 overcrowded social housing tenants that currently reside in social housing. Yes it is a bit remiss of social landlords and the formal opposition for not making this argument I agree – very remiss in fact.  But then again they haven’t exposed the social landlord will suffer the cost of moving £1.32bn issue either have they?  (Cue every Tory & Lib Dem MP breathe a huge sigh of relief that the opposition to the bedroom tax is just as ineptly thought-through as the policy itself!)

Wow, it’s a bloody good job there isn’t enough properties of the right size for both under-occupied and overcrowded social tenants to move to isn’t it IDS? If there was then it would cost you and the taxpayer a hell of a lot more wouldn’t it? 

So we are left with this being a cost-cutting exercise and one targeted on the poor social tenant.  Yet as I discussed here it will cost millions more if not a billion pounds per year more – so even the cost saving rationale is a lie too.

Anyone still think the bedroom tax is thought through?  Anyone care to agree with the junior minister Steve Webb and what he said yesterday about the impact assessment.  You know when he said:

Steve Webb: Our impact assessment is our best estimate based on what we expect the impact of the policy to be. That is all any Department ever produces. We believe that it is a robust best estimate.

Steve Webb was earlier challenged by Karen Buck that the bedroom tax will only save the £480m per year is everyone stayed where they are.  She received this incredulous response from Steve Webb:

“Our impact assessment has a range of modelling on how people will respond, but it clearly includes people staying where they are and paying the shortfall—that is where the saving comes from.”

As I have said repeatedly 660,000 lots of £14 per week is £480m and the exact same amount the government claim this will save!

Karen Buck is 100% correct and the ONLY way the bedroom tax can save the claimed £480m in the first year is if everyone doesn’t move.  The government has taken no effect whatsoever of ANY additional cost the bedroom tax will create – not one penny as £480m is the maximum reduction if everyone remains and there is no additional cost in homeless terms, domestic violence costs, added costs to NHS or social services or to the Police or to any other part of the public purse.

What was that again Steve Webb “Our impact assessment is our best estimate based on what we expect the impact of the policy to be. That is all any Department ever produces. We believe that it is a robust best estimate.”

A best and robust estimate?  Oh dear you do like your porkies don’t you?

PS Steve Webb – despite you and your colleagues  trotting out the new coalition name for the bedroom tax – the “spare room subsidy” 5 times in the debate; guess how many times “bedroom tax” was mentioned?  A mere 87!

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2 thoughts on “Bedroom Tax – Are social landlords about to be stung for £1.3bn?

  1. When I moved to my now home, out of choice I may add, There was no shed, no TV aerial, no privacy fencing, no slabs for the sit outside area. All these were missing. I had all these installed in my old accomodation and left them there out of curtisy for the new occupier, I moved home to be nearer my only child, my Daughter.
    I hired a van and my Son Inlaw and my Daughter moved my home to here where I now reside and had all this outlay to make my new home something like I left behind. This move cost me dearly and I have only just cleared the cost of moving, recently.This was my choice to move.

    However are these poor people who have no savings expected to downsize because the Government say they have too many un-used bedrooms? I now wonder what England is coming to..more like Russia I would say.!!!!

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