Bedroom Tax, nudge theory and the irrational high court decision with its London centric errors

There is an excellent legal discussion of the bedroom tax here which I would highly recommend from LAGhousinglaw at Arden Chambers

It is thought provoking and an excellent article as one would expect from such a respected source though I strongly disagree with one part of the argument it states and say why below.  This needs context and a key aspect of the LJ Laws bedroom tax judgment the article states is:

In holding that it was justified, Laws L.J. said that the “strategic aims of the policy” should not be underestimated; these were identified as being “not only a desire to save public funds, but also to shift the place of social security support in society”, [64].

The article then discusses what “shift the place of social security support in society” means and argues:

“Many social landlords have raised significant concerns over their ability to offer alternative accommodation. One housing association in Merseyside has 2,347 households affected by the bedroom tax which require one-bedroom accommodation. Its research established that around 407 one bedroom properties become available each year, meaning that if all 2,347 wanted to move it would take six years to move them. Nor is moving into the private sector an option because it will always be the case that if a public sector tenant cannot afford the rent where he or she is, he will not be able to afford a private sector rent. After all, the very definition of social housing rents is that they are below market rents.”

I strongly disagree with the highlighted section of the argument on affordability as presented above which was quoted in a Merseyside context and (a) the figures show this not to be factually correct and (b) raise a very significant difference between the bedroom tax in social housing and the LHA equivalent in privately rented housing, and (c) this may be the case in London which has 80,000 bedroom tax affected social tenants or just 12% but NOT in the provinces which have 580,000 bedroom tax affected tenants or 88% of bedroom tax affected households.

Does the judgment and this otherwise excellent argument have a London-centric bias which distorts the true picture of the national impacts of the bedroom tax policy?  I would argue it does.

Let’s use a couple with 1 child in a 3 bed HA property in Liverpool with a 14% deduction on a rent of £90 per week. This family receive £77.40 per week in HB and have to pay the HB shortfall / bedroom tax of £12.60 per week.

The same family who still have a 2 bed housing ‘need’ would be entitled to £109.70 per week or £475 pcm in LHA – the 2 bed LHA rate in Liverpool – which could afford in full a 3 bed private rented property in Liverpool.

  • A 2 minute check on Rightmove reveals 310 3 bed+ properties available now for £475pw or less in Liverpool’s private rented sector and,
  • Liverpool has bang on the national average of private tenants claiming LHA at 32% of all claimants in the city and so is very representative in that key regard, unlike Blackpool which has 72% of HB claimants being private and our old friend Welwyn and Hatfield at the other extreme with just 12%.

NB – The bedroom tax plays out very differently in differing areas of the country with this very significant dynamic and a further point of due regard in LJ Laws judgment?

So to return to the Liverpool example not only would the same tenant household get nearly 42% more in LHA than they would in HB they do not have to pay a top up.

The Liverpool figures quoted will apply broadly across the NW (which has 43% of working-age tenants affected) and most other areas of the UK yet not in London (which only has 22%). As the NW alone has an estimated 110,000 households affected compared to London’s 80,000 we can also see that nationally this position holds.

Hence the bedroom tax policy actively and directly leads to a much higher HB bill and only encourages the movement from SRS to PRS to avoid paying the bedroom tax and NOT the downsizing rationale and agenda withing the SRS as the coalition claim.

That is a truly perverse incentive and means the lazy / ne-er do well / feckless / scrounger (delete as appropriate) who is taking advantage of the public purse by having a purported spare bedroom in the SRS is encouraged to do precisely that in the PRS – at a 42% higher cost to the public purse!!

The mobility is thus from SRS to PRS.

The government has argued that this will free up larger SRS properties so that current PRS tenants would then move in and hence a reduction in the HB bill would take place as the higher cost LHA paid to the now private tenant will reduce to the lower SRS rent level. Yet in Liverpool we see a glut of 3 bed SRS properties and social landlords there such as LHT offering existing tenants a £50 high street voucher if they can recommend a tenant for these now empty 3 bed properties (so much for housing allocation policy and that legal context!)

So while the argument quoted in the article is valid for London it is not valid for the rest of the country and the provinces have 580,000 bedroom tax affected tenants to London’s 80,000 according to DWP.

Which makes both the coalition behavioural nudge theory of the bedroom tax to shift the place of social security support in society and the judgment of LJ Laws even more perverse and irrational and for me very superficial and ill-considered with regard to the impact of the bedroom tax policy and how it plays out nationally and especially outside of the capital.

Advertisements

9 thoughts on “Bedroom Tax, nudge theory and the irrational high court decision with its London centric errors

  1. it is not designed to make scene it is designed to empty the poor out of London and bring in the middle to upper classes its a back door to their ethnic cleansing they wanted in the first few months of the coalition

  2. Why is there no mention of the sick and disabled in adapted housing that are paying the bedroom tax of over £24 a week…ie myself, We cant afford this money going out but are too scared to stop paying it as we just cant afford to be homeless due to unpaid bedroom tax. The disabled and sick should be in a different category.

  3. The Disabled who have had their properties adapted SHOULD be exempt. When you consider the cost of these adaptations. And what it would cost to adapt a ‘smaller’ property. For many, they need an overnight carer. Therefore need a ‘spare bedroom’. Many disabled people couldn’t even pack a box!!
    Then there are those with Mental Health issues. Who could not cope with moving. Need support in the area they live in. Etc. Etc.
    Added to the fact of no available smaller properties.
    One relevant question…… who is then going to move into these already adapted larger properties then?? Someone, with the exact disability needs?? Or, are the councils going to convert these larger properties back to their original state at a cost of thousands of pounds!!
    And, many people won’t move into a larger property, because in a few years when their children have ‘flown the nest’. Then THEY will have to pay the ‘Bedroom Tax’!!

    So, MANY flaws. The only way forward is to get rid of the whole thing!!

  4. It is pure madness! The more that comes out about BT the more stupid it gets! As Debbies say’s, the people in adapted properties should have been exempt from the start. Now we know there are only enough smaller homes to house 3% of the tenants required to downsize, this should be abolished before any more money is wasted, and before any more tenants fall into massive arrears.

  5. “One housing association in Merseyside has 2,347 households affected by the bedroom tax which require one-bedroom accommodation. Its research established that around 407 one bedroom properties become available each year, meaning that if all 2,347 wanted to move it would take six years to move them.”

    Actually, the idea that every victim of the bedroom tax could be housed in six years is not even remotely true. Many people become eligible for one-bedroom properties besides those hit by the tax, but more than that there are new casualties of the policy every day as children leave home for myriad reasons or as couples separate, leaving one party needing a one-bed. It is unlikely that the totality of those subject to the bedroom tax will ever be housed in one-beds; and in the meantime many people on the waiting list who have been chasing a one-bed flat for year upon year will find their prospects of success diminishing almost to zero.

  6. *So to return to the Liverpool example not only would the same tenant household get nearly 42% more in LHA than they would in HB they do not have to pay a top up.*

    In essence, SRS tenants can expect to be richly rewarded for helping the government agenda to shift public money from the SRS to the PRS?

Please leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s