Don’t pay the bedroom tax – is coalition policy!

Don’t pay the bedroom tax is government policy!

Don’t believe me?  Take a look again at what DWP Minister Steve Webb said in parliament on 27th February in the last major bedroom tax debate and you will see that statement is correct and it is government policy for tenants not to pay the bedroom tax or to pay the housing benefit or LHA deducted from the benefit cap either!

Here is what Steve Webb said (Hansard 27 Feb 2013 : Column 345):

Steve Webb: If I may, I shall respond to the Chairman of the Select Committee, who made an important point about those who are “intentionally homeless”. Although it is for local authorities to make decisions on homelessness applications as they do now, under current statutory homelessness legislation, if the only reason for the person’s homelessness is a reduction in benefit that is outside their control they should not be considered intentionally homeless by the local authority. I can put that on the record and hope it is helpful

That amounts to Steve Webb telling the tenant not to pay either the bedroom tax shortfall or any shortfall the benefit cap creates.

If the tenant cant pay the shortfall in rent and is evicted on purely bedroom tax or benefit cap shortfalls – reductions in benefits that are outside their control – then the local Council has a full duty to rehouse them in suitable accommodation and accommodate them in temporary accommodation while the local Council sources such suitable accommodation. That is what Steve Webb has said on behalf of the coalition.

So government policy is for tenants to be evicted and incur debt and the trauma of becoming homeless and the disruption this causes to children etc.  It is also a policy of beggar the social landlord’s financial position.   And then it is a policy of a huge transfer of public purse cost to local Councils – costs which will far outstrip the HB saving central government receive.

Put another way if the tenant genuinely CANT afford to pay the rent shortfalls the government doesn’t care for the tenant, the landlord, the local Council or the public purse and taxpayer and the all round good of the country.  The principle and the political spin is THE most important issue.

The government doesn’t care if this sets tenant against landlord, which it already has.  It doesn’t care if it sets landlord against tenant which it already has.  It also doesn’t care if this sets Council against social landlords which it undoubtedly will as Council’s will see social landlords mitigating their financial risks by evicting, which of course simply passes on the cost to local Council budgets.

Yet that is precisely what the benefit cap will do. It will set Councils against social landlords

The government has been very clever in all of this.  Tenants have few if any ways of challenging the government directly so they have to do that indirectly through challenging the landlord and the Councils in the bedroom tax.  Yet both Councils and landlords have colluded in the bedroom tax out of mutual financial interest.  The Councils in simply accepting the landlord’s word on what a bedroom is and how many bedrooms each property has  – the farcical, irrational and legally unreliable bedroom tax decision making process – saves cost to both landlord and Council and in financial terms is mutually beneficial.

The minute landlords begin to evict tenants, a process which will be greatly accelerated with the average benefit cap deduction of £93 per week, then social landlords and Councils have very different interests.

The landlord seeks to mitigate cost by passing far greater public purse cost onto the Councils.  Private landlords where 54% of benefit cap affected households live will be evicted yet so will the social tenant who makes up 46% of those affected by the benefit cap with its average £93pw deduction to Housing Benefit.  Many social tenants – up to 41,000 of them -will not get a penny in HB with the benefit cap – due in 5 weeks!! – so how can they pay any rent?

War will break out between Council and social landlord given the huge financial risks involved and the distinctly non-mutual financial interests this creates between landlord and Council.

What I see happening is at most 5% of the 660,000 bedroom tax cases will be evicted or about 33,000 nationally and even then only about 5% of these will be bedroom tax arrears only giving a figure of about 1650 evictions for bedroom tax arrears alone.  So the transfer of financial risk to Councils from social landlords in homelessness is only 1650 cases with the bedroom tax.  Yet the transfer of financial risk and cost to Councils from landlords evicting benefit cap households will be up to 88,840 households – about 54 times as much!  The cost to Councils is enormous from the benefit cap – about £36m PER WEEK and up to £1.8bn per year if we assume average temporary accommodation cost is £400 per week which is a low figure.

So even if I have underestimated the bedroom tax alone evictions to ten-fold the financial cost of the benefit cap to Councils is still 5 times greater than the bedroom tax.

Yet the real interesting issue is the huge tension this will cause between landlord and Council – the two parties I state have been in cahoots before given the mutual financial interests in the bedroom tax decision-making process.

Councils, and especially those with no housing stock which is about 60% of then, are going to have to find ways to pressurise social landlords NOT to evict.  So the largely symbolic and meaningless “No Eviction” statements issued by Brighton and other Councils are simply nowhere near enough. If social landlords join private landlords and simply evict benefit cap cases (and what other alternative do landlords have?) then a huge rift in fact a chasm will emerge between landlord and Council!

That is going to be very interesting indeed as there has been scant recognition and even less discussion of the transfer of financial cost to Councils and the rift this will cause with social landlords directly because of the benefit cap. – Its yet another unseen manifestation of the welfare reforms and a very serious one indeed as Councils and landlords need a good and close working relationship.

Steve Webb, despite his caveat that the homeless intentionality decision is for local Councils to decide, has nevertheless given a very strong steer to all local Councils and merely passed on a bucket load of financial cost and risk to them.  The only response Councils will have to this is to exert pressure and influence on social landlords not to evict benefit cap cases yet social landlords have little if any alternative but to do precisely that!

Yet another unholy mess from the ill-conceived and ill thought through welfare reforms!

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