Liverpool Bedroom Tax news release – Nowhere near enough Cllr Brant

Last week I posted about a bedroom tax ‘dirty tricks’ campaign by Liverpool City Council.  This then got a response from Deputy Mayor Cllr Paul Brant which I also commented upon as being woeful.  This is all covered here.

On Friday last week Liverpool City Council then issued another press statement through its PR unit at Dale Street News.  The text of this is at the end and it contains welcome news not least that the appeal deadline has been extended by a further month.  Yet of course this is only for those who have already requested information or an explanation of the original decision – it does nothing for those who did not submit anything as they were dissuaded from doing so by the alleged cost of doing so – one of the dirty tricks.  So it’s a cautious welcome.

Yet LCC needs to do so much more and need to decisively align itself with the 1985 Housing Act which does state what a bedroom CANNOT be in law despite the lack of a definition of what is a bedroom in the guidance.  This has been misread and misunderstood as while it correctly states the DWP will not in future define a bedroom it does NOT means there is no definition of what a bedroom can or cannot be already in legislation.  The 1985 Housing Act does state what CANNOT be a bedroom. Further as I explain here this decisive move, which is already in part at play in Bristol and Nottingham is in the best interests and best financial interests of tenant, landlord, businesses in and the economy of the city and the Council itself.

This latest news release also contains a few more subtle issues not least about Discretionary Housing Payments or DHPs which are important to note.  It says LCC has paid out over £200,000 in DHPs (the majority of the £400k paid out) and this is very interesting and has significant consequences for tenant, landlord and the Council.

Liverpool City Council received £1,606,233 in DHPs from central government and was allowed to add to this with £2.41m of its own money up to a maximum of £4,01,583.  Briefly every council is allowed and expected to put it £3 of its own money for every £2 it gets directly from central government. I reserve comment on the morality of this and merely say this is yet another transfer of financial risk from central to local government.

Does anyone know whether Liverpool City Council has put in this £2.41m of its own money?  That should be the first question asked of Cllr Paul Brant and indeed of every council up and down the country.

If LCC hasn’t put this £2.41m into the DHP pot then it has spent 25% of its annual £1.61m DHP budget in the first 6 weeks which means little is available for the rest of the year and for all the other non bedroom tax purposes it was intended to pay for.

The DHP budget is to pay for all housing top-ups not just the bedroom tax and extrapolated from the official figures in the S1 or 2013 guidance as I stated here only 17% or one-sixth of the DHPs should be spent on bedroom tax shortfalls in the year.  More money has been allocated in DHPs for the benefit cap with its average £93 per week deduction – alone this is £2.38m in Liverpool and the benefit cap comes online in 7 weeks time – and the vast majority of DHP money, about 68% is spent on private sector tenants.

Crunch the numbers and this means total yearly spend on bedroom tax DHPs in Liverpool is £273k yet LCC has already spent over £200k on the bedroom tax so about 75% of its entire yearly bedroom tax provision in 6 weeks!

This of course means there will be little money left to pay for the 490 benefit cap families who like the many thousands of private tenants for whom there soon will be no money left in the DHP pot they will be evicted and cost Liverpool City Council a fortune in temporary homeless costs.  These 490 families with the benefit cap will have a cut of £2.38m per year in benefits and so the £1.61m in DHPs that central government gave to Liverpool needs to be viewed in that context – the benefit cap claimants alone would take up 150% of the whole DHP budget before a single bedroom tax claimant who have a benefit cut of circa £8.6m.  So £11m for the bedroom tax and benefit cap alone in Liverpool to which we can add a minimum £20m need for DHPs from private tenants.  Massive evictions and homeless cost is inevitable in simple terms and huge cost to Liverpool City Council.

Across the country we see reported 400% increases in applications for DHPs and all other Councils will be in the same boat as Liverpool when the benefit cap comes in on the 15 July – no money left and huge increases in evictions from the social and private rented sectors.  Yet this is the reality of central government giving local government just 6% of the welfare reforms shortfalls in DHPs. If councils dont add their expected amounts then 15 out of every 16 wont get a DHP.  If LCC and other Councils do add the maximum amount then 17 out of every 20 applying wont get a DHP.

Liverpool and all other local councils are going to see massive increased costs in homelessness.  Where Liverpool and other councils trim services from to get this additional money is of course another issue entirely! As is what services need to be cut to pay for this!  Still what a clever trick the localism agenda is from the coalition which sees local Councils being blamed for these cuts obviated by coalition policies!!

This cannot go on as it is economic madness to the public purse and to local councils as well as being thoroughly outrageous in making many tens of thousands of additional families homeless.

We know private landlords will evict private tenants at the drop of a hat if they do not get DHPs, which private tenants won’t get because of the bedroom tax.  That is not a political statement just one of reality and fact.  It is extremely likely that social landlords will have to evict social tenants on financial grounds and use of the dreaded Ground 8 – the only eviction or possession ground in which the judge has no discretion – will emerge out of social landlords financial necessity.  The social landlords will then get blamed for the welfare reforms and not central government

The social landlord and the social tenant will to all intents and purposes be at war with one another rather than both being on the same side against the government.  The local council and local HB claimant (the tenant) will be at war too and again the tenant will blame the council with some justification, just as they blame the local social landlord, again with some justification – although the real villain of the piece is central government.

Frankly, IDS and the DWP and the coalition must be laughing their heads off!  Their pernicious policies are pitching tenant against landlord and tenant against councils when it should be tenant + landlord + council all pitching against central government!

I am sure the swivel eyed loons think this is truly Machiavellian when the reality is the welfare reforms are closer to one of Baldrick’s cunning plans such is their ineptitude.

(Ok that last comment is political but nonetheless valid but it’s time to put an end to all this coalition created enmity between tenant and landlord and tenant and Council. 

It is time to think again and I restate some earlier thoughts on this which are even more needed now given that one large Liverpool based landlord Riverside has said 50% of bedroom tax shortfalls have not been paid and a further 25% of tenants have only part-paid.  Nobody expected such huge non-payment figures.  Riverside stated last year that they had doubled their provision for bad debts from 2% of the rent roll to 4%.  I stated at the time it may need to double again to 8%.  Hence figures of 50% of tenants not paying a penny and 25% only making part-payments of the shortfall are staggering in their size.  Other social landlords have stated that 18% have not paid a penny such as Halton Housing Trust and others 25% such as Spectrum Housing – These are alarming figures for the social landlord and especially as many of the welfare reforms have yet to come into effect.

If these levels of arrears continue many smaller social landlords will go bust and quite quickly; many tenants will be evicted and quickly and many councils will see homeless costs spiral and again very quickly.  I have always said the welfare reforms are an attack on social housing itself not just landlords and tenants and that is precisely what they are as these early figures show dramatically.

Liverpool Council – needs to adopt the position of Bristol and Nottingham and rule that (a) any room under 50 square feet is not a bedroom; and (b) any room between 50 and 70 square feet is only half a bedroom.  Both of these are in the 1985 Housing Act.  Note well that to do this would also conform to the A4/2012 guidance issue to Liverpool City Council by the DWP. 

What this would do is significant.  (a) As a good estimate about 4 or 5% of purported bedrooms are less than 50 square feet in the city and so this would take about 585 households out of the bedroom tax.  Yet (b) about 20 – 25% of purported bedrooms are less than 70 square feet and this would take a further 2300 to 3000 or so households out of the bedroom tax or reduce the shortfall from 25% to 14%.

It would also reduce the need for DHPs and also save the council significant sums in homelessness costs.

The social landlords – They need to reclassify in the same way using the 50 and 70 square feet law as a guide.  They will lose less money and so be able to function as they wish to do.

For example – let’s assume a 2 bed property has a rent of £84 in Liverpool and a 3 bed a rent of £92.  The Smith family have a 2 bed need and are the tenant of a purported 3 bed property yet is in reality and after the application of the 1985 Housing Act a 2 bed plus boxroom measuring 9 feet by 7 feet.  The property becomes a 2.5 bed house.

The rent is adjusted to £88 per week the midway point between the current 2 and 3 bed rent levels.  The landlord loses £4 per week yet takes away a potential arrear of £12.88 per week this being the £14 deduction for the bedroom tax.  That £4 per week can easily be made up over the next 3 years or so by increasing the rents at the maximum permissible under the HCorp formula of [(RPI+0.5%) + £2]

The bedroom tax issue goes away for the landlord, the tenant and the council in homeless and DHP cost.  Central government is pissed off as it does not get the deduction and saving it was looking for yet all of the above is entirely lawful and I argue entirely necessary.

Given that landlords and councils would be exposed to less financial risk by such a reclassification the landlord’s financiers would be more pleased too and would not need to downgrade landlord’s credit ratings as they did for a second time last week.  I’m sure these financiers would also welcome that landlords would be less likely ‘at war’ with their customers.  Social landlords and councils could then afford to be more ‘lenient’ and to work more closely with tenants to minimise tenant costs which is what they are principally setting out to so and also with more job creation initiatives. Yet currently these are perceived as much too little much too late which is unfortunate as they do have some merit.

Yet if social landlords do not take this necessary action then the huge non-payment figures will only increase when HB gets paid direct to tenants which starts in October.  The minute the tenant takes control of rent payment – which is what direct payment is all about – the social landlord is on a very sticky wicket in financial terms.  Instead of sending out heavily red-inked threatening letters to tenants as they are doing now over tiny amounts the social landlord will be on its knees begging the tenant to pay rent from October.  If social landlords choose not to see that then they deserve to go out of business!!

Late last week I saw the most challenging statement yet from any social landlord.  This was from Bolton at Home and is by far the most challenging statement issued by any social landlord in the bedroom tax.  Yet it still doesn’t go far enough.  Reclassification along the lines of the 1985 Housing Act is needed as the first step – and after all a court may rule this in any case next week or next month and so the combined Ostrich and Nuremburg syndrome we have witnessed to date from social landlords is an obsolete strategy in any case.  Burying the head in the sand and all-out efforts to deny the 1985 Act applies are futile.

I return to Liverpool City Council and directly address Cllr Paul Brant.  He is also the chair of the board of Riverside ECHG as well as being the deputy mayor and will understand the implications of the landlord reclassification on 1985 Act lines and the position of the Council in having the powers to rule on the bedroom size issues.  He will see the logic in this and the financial sense to the landlord and to the Council.  I am sure he will also see the political benefits such a decision would bring personally and to his party as well as the benefits it would bring to Liverpool business owners who are rightly worried about £20m+ going out of the local economy.

The only losers in such a decisive step is central government savings from the bedroom tax.  The public purse overall would save more as less of the additional cost to the Councils is taken away.  And that sums up the reality here.  This is NOT a political strategy it is an economic one that is in the best interests of the people of Liverpool from the benefit claiming tenant to the multi-millionaire businessman and all in between.

Liverpool City Council ruling that any room under 50 square feet cannot be a bedroom and any room between 50 and 70 square feet is merely half a bedroom is necessary for the tenant, the landlords, local businesses and above all the Council.  It remains to be seen whether Cllr Paul Brant and the Council will take this decisive step.  They have it in their powers to do so and it is in the best financial interests of all concerned…apart from the coalition government who frankly should not have embarked on this pernicious back of a fag packet policy in the first place.

Cllr Paul Brant should put on his barrister’s hat and re-read paragraph 12 of the A4 guidance of 2012 again as this clearly allows Liverpool City Council and all other Councils nationally to do the same.  It says:

“We will not be defining what we mean by a bedroom in legislation and there is no definition of a minimum bedroom size set out in regulations. It will be up to the landlord to accurately describe the property in line with the actual rent charged.”

It does NOT say there is no legal definition of a bedroom ONLY that the government will not legislate for one in the FUTURE.  It merely says, correctly, there is no size issues set out in (HB) regulations.   Bristol and Nottingham have decided that any room under 50 square feet cannot be a bedroom in line with sections 325 and 326 of the 1985 Housing Act; though bizarrely not the 50 to 70 square feet issue seeing such rooms as half a bedroom and for the 14% bedroom tax deduction to apply the tenant needs to under occupy by one (ie 1.0) bedrooms.

It’s time to lobby Liverpool City Council and Cllr Paul Brant in particular as this is his area of responsibility within the Council to make such a stand.  They can do this and it is morally right, legally acceptable and in their financial interests – So why the hell haven’t they and every other Council already done this becomes the question? 

I welcome cautiously the concessions of this news release but LCC need to go much further and do so very quickly.

_________________________________________________________

The text of this LCC news release is below.

Liverpool City Council is issuing guidance to tenants who are challenging the spare room subsidy, also known as the bedroom tax.

Around 11,000 people in the city are affected by the welfare change, which results in reduced housing benefit payments for people of working age. 

Following feedback from tenants who are requesting information to help them submit an appeal, the council is issuing the following guidance:

  • There is no charge for submitting an appeal or asking for information from the Council to support the appeal (eg: correspondence between the council and their landlord)
  • The council will be writing to people who have requested information asking them to set out their case for an appeal, and will extend the time limit to lodge an appeal for a further month
  • Where landlord and tenant dispute the number of bedrooms in the home the Council will treat any such cases as appeals and look carefully at the circumstances to review the decision
  • If people believe we have assessed their claim using incorrect or out of date information, eg: the number of people living in a property has changed, they should contact the Benefits Service

Deputy Mayor and Cabinet member for Finance, Councillor Paul Brant, said: “I fully appreciate that people are extremely concerned about the financial impact of the Government imposed welfare changes, and I am determined we do all we can to help people through the process.

“This is the biggest change in the administration of benefits for a generation and we are constantly reviewing what we are telling those affected and making tweaks and changes to improve the system.

“We have taken on board the feedback we’ve had from tenants and are making a number of improvements.

“We are working closely with social landlords to help and support tenants who find themselves in financial difficulty to help them out.”

The council has already paid out £400,000 in Discretionary Housing Payments since the start of April to people in the most need, with the majority of it being paid out in relation to the bedroom tax .

More information about the spare room subsidy or ‘bedroom tax’ can be found at http://liverpool.gov.uk/benefits-and-grants/housing-benefits/reduction-to-housing-benefit-or-bedroom-tax/

Some limited funding is available for Discretionary Housing Payments for people in the most need. More details and the application criteria can be found at http://liverpool.gov.uk/benefits-and-grants/housing-benefits/discretionary-housing-payments/

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