Liverpool Council and the bedroom tax. The legal fiction of houses built on sand

I have always maintained:

  • the bedroom tax decision making process was and is a sham and ALL tenants (HB claimants) have legitimate cause and grounds to appeal the bedroom tax decisions
  • councils acted disgracefully and unlawfully in imposing the bedroom tax deduction based not on fact but on guesswork
  • that minimum room size could be an issue in the bedroom tax when most said definitively it was not
  • councils could and should determine a bedroom has to be a minimum of 70 square feet
  • councils are cowardly in not adopting the minimum 70 square feet position, and
  • threats if they do adopt this position whether by Freud or DWP are hollow and councils financial position (ie HB subsidy) would not be affected if they did adopt minimum room size.

It is easy for me to rant about this in this blog.  The real key is to persuade councils to reconsider their positions on the bedroom tax.  Until now my scores of bedroom tax blogs have focused on grounds of appeal and many tenants took this advice and many have been successful at appeal.  It is outrageous that tenants are forced to appeal to get the correct decision and that is a national disgrace and outrage.  However until now we have yet to have a full statement of a councils position on the bedroom tax and room size.  Now we have such a full statement issued by Liverpool City Council which I comment upon on a line-by-line basis and I ask that Liverpool City Councils goes back and reconsiders its position and stance.

Liverpool City Council has produced a statement  on 30 October 2013 with regards to their bedroom tax stance and position.  I find this an inept and ill-considered position which is misleading, factually incorrect and a response and position of incompetence and also cowardice by Liverpool City Council. Additionally, I also comment that Liverpool City Council are seeking to deny tenants legal rights in appealing the bedroom tax decisions and that is unlawful and ill-considered too.

Oh and by the by I conclude that social landlords reclassifying bedroom tax properties shows they too are stupid and in fact give councils an excuse not to act as they should in the bedroom tax.  So social landlords should think on this too!

I do correctly praise Liverpool City Council for subsidising the council tax replacement scheme by £1.7m this financial year.  They did that out of concern for this aspect of the welfarre reforms and it results in a rate of 8% being paid whereas neighbouring boroughs charge their residents 20% and 22%.  This suggests LCC is aware of the impacts of the welfare reforms and would not seek to knowingly penalise more vulnerable tenants than they could yet that is precisely what their bedroom tax stance and position does and here critically I argue this is based on a core legal fiction and as such everything that flows from this legal fiction – that ‘it is up to the landlord – is also legally flawed and a sham.

Liverpool City Council’s position on the bedroom tax and room size has no legal credibility whatsoever and you don’t need to be a lawyer to understand that. The overwhelming majority of councils adopt a similar position so when you read Liverpool or LCC it is highly probable the same arguments will apply to your council wherever you are in England, Scotland or Wales. I restate that LCC’s position is based and predicated on the absurd notion that “it is up to the landlord” and this is at the core and their position and what flows from this absurdity is also a legal fiction

Read on.

Response to Question to Housing Select Committee

Room Size and the ‘Under Occupation Penalty’

 1.0              Purpose and Background

 1.1          The purpose of this note is to provide a summary of the information and advice which the Council has received in relation to the application of room size criteria to decisions on Housing Benefit entitlement in social sector tenancies following the Governments imposition of the ‘under-occupation penalty’ from April 2013. The note also highlights the potential consequences of the Council attempting to apply a room size standard to the administration of Housing Benefit rules around the ‘under-occupation penalty’. The note is provided in conjunction with the Council’s internal legal advice.

Yes the bedroom tax policy was imposed upon local government but how it was administered does depend on how each local council interpreted the DWP guidance issued in the A4 HB circular of 2012 and the SI 3040 that followed the A4/2012.  There was scope for interpretation at local council level and especially because DWP refused to define a bedroom.

I also ask you note the last sentence “…provided in conjunction with the Council’s internal legal advice”  and bear that in mind when you read the absurd legal position and legal fiction of its basis Liverpool City Council is adopting

2.0              Application of a Room Size Standard to Housing Benefit

2.1               Government guidance has made clear that the Council should rely upon the information provided by the landlord about the number of bedrooms when applying the ‘under occupation penalty’. Liverpool’s Benefits Service collected bedroom information on around 45,000 properties from social landlords in order to apply the Government’s rules on this matter.

This is factually incorrect and is a legal fiction.

Paragraph 12 of the A4/2012 guidance says it is up to the landlord to accurately describe the property.  It does not say anywhere that it is up to the landlord to (a) define a bedroom or (b) state how many bedrooms each property has.  These two factors (a) and (b) need to be determined before Liverpool City Council can decide to apply the bedroom tax deduction or not.

Further LCC is the sole decision maker when it comes to applying the bedroom tax 14% or 25% deduction which can only be applied to a bedroom however that is defined.

Moreover the A4/2012 guidance advises how the councils contact the landlord to get bedroom tax data and critically paragraph 20 says there is no obligation whatsoever on the landlord to provide any data at all to the councils.  The exact wording is

“There is no obligation on landlords to reply to a request for information”

So how can councils rely on data (which the guidance does not say in any case) from landlords which the guidance unambiguously states did not have to provide anything?

Liverpool City Council has plainly got this wrong and critically so.

No council can rely on data that does not have to be provided by landlords.  It is absurd to  this and incompetent legally and in all other ways to believe it.

The notion that it does rely or even could rely on such data is an absurdity and is a legal fiction.  Moreover this is also critical as everything that flows from this legal vice in LCC’s thinking that is based on this legal fiction is a house built on sand.

Further to adopt this false premise is in part a cover story for local council’s decision making processes such as LCC and all others operated in the original bedroom tax decisions. In brief, the cost of councils finding out the facts of each individual case as to how many bedrooms each property has and whether or not certain rooms are and were in fact ‘bedrooms’ would have been prohibitive.  So instead we see LCC rely on the legal fiction that it is up to the landlord which LCC chose to adopt (and on an unlawful blanket policy basis of fettering their discretion) and in doing so nearly 12,000 households in Liverpool had a bedroom tax deduction imposed by a sham and unlawful decision making process.

2.2               Most recently Department of Work and Pensions (DWP) circular U6 in September 2013 restates the Government guidance in plain terms; it says “This bulletin is to inform LAs that when applying the size criteria and determining whether or not a property is under-occupied, the only consideration should be the composition of the household and the number of bedrooms as designated by the landlord, but not by measuring rooms.”

Excuse my flippancy on this hugely important issue but LCC must have a sense of humour that Scousers are renowned for when they state the U6/2013 HB circular is in plain terms!  The U6 and the subsequent U& are panic writ large and truly bizarre.

Yet note the language used which is direct from the bizarre U6 circular.   “ inform LAs…when determining whether or not a property ..”  The DWP is correctly stating the decision is up to each local authority (LA) and NOT up to the landlord which is a key point many miss and even the DWP confirm it is up to the council to determine.

The bizarre U6 does then state “…the number of bedrooms as designated by the landlord..”  Yet this U6/2013 was issued at least 7 months AFTER all bedroom tax decisions were made by LAs and they were working to guidance which says the landlord was under no obligation to provide any data whatsoever!  Apart from being a U-turn by this government in a panic response to the bedroom tax appeal rulings, this new ‘guidance’ has no bearing whatsoever on the original decisions made by Liverpool City Council.

That is only 1 reason why the U6 is so bizarre and the above verbatim quote emphasises that even more “…the number of bedrooms as designated by the landlord, but not by measuring rooms.”  So how are landlords to define bedrooms then DWP?  Perhaps landlords should define room under the stairs as bedrooms as after all that space was good enough for Harry Potter!

That is not flippant comment either.  Liverpool City Council has taken on board this ‘guidance’ from DWP in the U6 and merely accepted it as being correct. That is abject cowardice by LCC as well as complete incompetence on their part.  Yet as you will note this truly bizarre position has been accepted by LCC’s internal legal department!

2.3               If the Council were to start to apply a room size standard to Housing Benefit decisions it would be acting outside the DWP guidance. Independent legal advice to the Council confirms that provisions in the Housing Act 1985 do not apply to Housing Benefit.

I too have seen independent counsel (barrister) opinions which said the same and the 1985 Housing Act room and space standards do not apply.  However what LCC know full well that legal opinion holds less weight and has to hold less legal weight than a court decision.

The Fife first tier tribunal decisions are a decision of a court in relation to the bedroom tax.  They are not mere opinion; they are the ruling of a court and one unusually determined by a QC who not only considered that the 1985 Act applied (1987 Act in Scotland) but gave full and precise reasons why it does apply.

Liverpool City Council is presumably relying on the oft-heard statement and correct one that first tier tribunal decision do not set a legal precedent.  Entirely correct yet the ‘Fife decisions’ are still the decision of a court and hold higher legal status that an independent counsel opinion – which is mere opinion – and a higher legal status than DWP guidance which is just guidance.  This is either legal oversight or incompetence on behalf of Liverpool City Council or cowardice, or of course both.

2.4               A number of authorities are looking again at how they have decided the number of bedrooms in their own Council housing, but they are not applying the standard to other landlords when working out Housing Benefit. The Benefits Service has not identified any other local authority which is applying a room size standard to the decision for Housing Benefit.

Here Liverpool City Council are also restating a myth and legal fiction.  A council cannot elect to decide a housing benefit decision (the bedroom tax) in a different way for a HB claimant (ie tenant) of a council landlord to a tenant of a housing association.  That would be clearly unlawful and discriminatory. Again the merit of this legally advised view is called into serious question!

Further perhaps Liverpool City Council should speak with Croydon Council who in response to a FOI from False Economy as to how they determined the bedroom tax decision said they applied the 1985 Housing Act room size definitions and also advised HAs within Croydon to submit their data on those same lines as I reported here after False Economy kindly send me these responses.

2.5               All local authorities that pay Housing Benefit are repaid for what they spend on Housing Benefit via an annual grant, providing the DWP considers it has been correctly spent. There are some elements which the Council has to fund independently but this is a very small percentage.

It may be a small percentage for Liverpool but nationally this figure for 2013/14 was estimated to be £400m in the OBR report on last year’s Autumn Statement/  Hardly a small amount and especially in relation to the DWP’s claimed £480m bedroom tax saving which fails to consider this public pure cost. Again this is fact and I reported this here if you require more detail

2.6               Housing Benefit expenditure by the Council is subject to an external audit each year. If the auditors find evidence of incorrect expenditure this money is taken back from the Council. Last year Liverpool spent £277M on Housing Benefit.

A general statement not worthy of comment.

2.7               Earlier this year Lord Freud wrote to local authorities threatening withdrawal of subsidy should they be seen to be re-designating properties as having fewer bedrooms and where the rent was not reduced. The letter states that “Where it is found that a local authority has re-designated properties without reasonable grounds and without reducing rents, my Department would consider either restricting or not paying their Housing Benefit subsidy”. The letter says that there would be a separate audit in addition to the normal Housing Benefit expenditure audit. As this has not happened before it is difficult to estimate the potential financial loss but at the worst extreme Lord Freud’s letter threatens complete loss of the grant.

This is risible and legally incorrect too according to Leeds City Council who has taken independent legal advice on this Lord Freud threat.  Strange that Liverpool City Council see independent legal advice as definitive of their position when it suits as in 2.3 above yet ignore that here at 2.7.  This is duplicitous.

The Freud letter says “…where a local authority has re-designated properties...”  That is a legal vice too as local authorities do not and did not designate properties in the first place!  The landlords designated properties not LAs.  Further what does designate and re-designate mean here as I can find no legal definition of this or any definition or reference to this in HB regulations.  The Freud letter is NOT part of HB regulations of statutory directions, it is a letter! Yet Liverpool City Council chose to call this guidance and even direction (see below) though of course it is neither!

Further “…a local authority has re-designated properties without reasonable grounds and without reducing rents…”  This is a key phrase and I have emboldened two issues.

Without reasonable grounds?  Refer to my comments above that a FTT ruling is still a court ruling and so a court has decided that room size is a reasonable ground. Can anyone argue (reasonably) that a council following a court decision is unreasonable?  Of course not.

However the real issue is “without reducing rents.

Liverpool City Council is at pains to point out that it can only so what HB regulations say it can do.  So what do HBR say on reducing rents?  Absolutely nothing and all and a council cannot reduce a landlords rent at all and has never had that power!  Councils could restrict the amount of HB they pay to a social landlord, which is a different matter to reducing rents, yet can only restrict HB payment levels if the rent is deemed and argued to be “unreasonably high” and that is a key phrase.

We know from national and official figures from the social housing regulator the HCA that the difference between a 2 bed rent level and a 3 bed rent level in social housing is £5.97 per week (and note last week in Magenta Housing in Wirral which neighbours Liverpool it was just £1.95 per week between a 2 and a 3 bed.)

So if Liverpool City Council took the position that a bedroom had to be a minimum of 70 square feet (the 1985 Act position and the court ruled position in Fife) what would this mean?

A 3 bed property becomes a 2 bed plus ‘boxroom’ and note this is more than a straight 2 bed property.  So could Liverpool City Council make a HB decision that would have to be upheld legally that a 2 bed plus boxroom at £90 per week was unreasonably high in comparison to a 2 bed only property at £84 per week?  Of course they could not.  This exposes Freud’s threat position as being meaningless and without any legal foundation whatsoever. 

However yet again Liverpool City Council fail to see this or more likely consider this and instead hoist up the white flag of cowardice to Lord Freud’s hollow threat.  Lord Freud’s letter is a total nonsense and Liverpool City Council accepting what he says is rank incompetence and a further legal fiction.

2.8               The letter from Lord Freud indicates that the DWP would expect landlords to reduce the rent where it was decided that the accommodation has fewer bedrooms than previously stated (this would be included in the original tenancy agreement). It seems clear that if the Council decided to re-designate the property as having fewer bedrooms, without the agreement of the landlord and a reduced rent, it would at least be at risk of having to fund the costs. However there would possibly be a much wider risk to Housing Benefit subsidy.

No and I have covered this point under 2.7 above.  Additionally Lord Freud has no powers whatsoever to make landlords reduce their rents so he can expect all he likes!  The council position that it would have to fund the difference is total nonsense and again covered under 2.7

2.9               It should be noted that the DWP circular HB U6/2013 referred to at 2.2 of this note was published within days of two First Tier tribunals’ decisions being published around space standards and DWP immediately stated its attention to appeal the decisions and took the opportunity to reiterate its stance. The Government is therefore making it clear that it is acting on this issue. It is likely that any action taken by the City Council which is contrary to the directions given in June 2013 and September 2013 would be challenged by Government.

Factual and perhaps pedantic point that the U6 was not published within two days of the Fife cases.  I first published the first Fife case, that of Annie Harrower-Gray on 6th September and the DWP release the U6/2013 on the 24th September a matter of 18 days after not 2 days a Liverpool city Council maintain.

Annie called me within 2 minutes of receiving her decision in the post thanking me for my advice which she had followed and then she scanned and emailed her judgment transcript within 20 minutes to me. I released this the same day on my blog which is verifiable; the U6 is a matter of public record as to its release date.

I agree the DWP is making their position – that of seeking permission to appeal a court ruling – yet that is what they are seeking.  The U6 is guidance (and I am being generous with that terminology as don’t stick your hand in the fire is guidance!) and the Fife rulings are the decisions of a court and hold higher legal weight.  Yet again Liverpool City Council shows the lack of competence in this position they hold and if this is their legal view a lack of legal competence too.

2.10           The Council believes that social landlords may wish to look again at how they have decided how many bedrooms a tenant has. Tenants may wish to challenge this with their landlord if they cannot reach agreement. In instances where there is a dispute the Benefits Service would of course make a decision based on its view of how many bedrooms the property has.

This is farcical and also highly legally questionable.  If a tenant maintains they have only two bedrooms and not three for bedroom tax purposes they have a legal right to review of that by the council.  They do not and should not be pushed into a prior stage to access that legal right to review by being forced to go to the landlord first.  This is Liverpool City Council giving out unlawful and highly questionable advice and they should desist in doing so immediately.

Liverpool City Council by saying “in instances where there is a dispute” assume a landlord would agree to a reclassification first and presumably absorb a financial hit. This of course is LCC seeking to pass the buck onto landlords rather than make a decision themselves – yet another white flag of cowardice!

Yet the bedroom tax like any HB decision and any decision made by a council who are a public authority needs to be based on fact and NOT on the word of a third-party in the landlord.  That is a highly legally questionable position for Liverpool City Council to take too.

Liverpool City Council are seeking in this position to water down and introduce conditions on an absolute right a tenant claimant has and they simply cannot do this.

2.11           The Council has taken steps to remind families of some of the potential for gaining an ‘extra bedroom’ under the rules; this includes if there is a disabled child who needs his or her own room or if an overnight carer is needed.

Post facto!  The council has taken steps ONLY AFTER they imposed the original bedroom tax decisions based on guesswork and through a sham and unlawful decision making process.

The same Liverpool City Council chose to universally accept the word of the landlord first out of convenience and financial expediency and imposed the bedroom tax deduction.  That is and will always remain a disgrace.  Liverpool City Council is only now – post facto – discovering the facts on which it should and legally has to make the decisions in the first place but never did!

2.12           Information to customers has also highlighted that they may apply for support under the Discretionary Housing Payments (DHP) scheme, although the scheme will only ever be able to help a limited number of people.  The Council has recently decided to increase the DHP fund by £350,000 to help assist households affected by the ‘under-occupation penalty’.

Liverpool City Council wishes to appear noble and attract ‘brownie points’ with this comment of adding £350k to the (I agree) woeful DHP allocation.  They could have added up to £2.4m according to the rules so £350k is less than 15% of what it could have done!

That said the DWP expecting any council to supplement DHPs after taking so much money from local government was always disingenuous, and related is that Liverpool City Council have subsidised the council tax replacement scheme by £1.7m this financial year and I fully applaud that decision and LCC deserve credit for this.

2.13           As of 28.10.13 the Benefits Service has awarded DHP to the value of £979K, with 3,956 cases benefiting from an award. Over 82 % are due to the under-occupation penalty.

This surprises me and is not sustainable.  The original £1.6m DHP allocation LCC received has become £1.95m with the £350k mentioned at 2.12 above.  Yet only 16% of the total DHP was allocated for bedroom tax / under-occupation penalty purposes with the rest being allocated for benefit caps and private tenant cases.

This means of course that benefit cap cases and private tenant cases will get far less than allocated by the DWP and with the much higher benefit cap cuts and the ease of which private landlords can and do evict this decision will cost Liverpool City Council more in homeless costs.  In paying out more to bedroom tax cases than allocated any council incurs more costs itself.

However the real issues here are that Liverpool City Council has not considered the real and very pressing issues above with any degree of competence or what may be termed the due regard they should.  The positions they adopt are all based and predicated on a legal fiction that it is up to the landlord.  They also give the exact opposite in terms of due regard to the hollow Lord Freud letter and these positions are taken to cover up their unlawful sham decision making processes they operated in the first place out of financial expediency as it would cost them too much to do them properly.  The original bedroom tax decisions are also based on fact not guesswork as they are duty bound to do by being a public authority.

Liverpool City Council’s incredulous position needs to be challenged and reconsidered by the Council. Until they do and regrettably the only way for vulnerable bedroom tax tenants to get a correct decision, which they should have received in the first place, is to appeal the sham decision making process Liverpool City Council undertook in such a shameful manner.

The Solution

Liverpool should rule that a bedroom for bedroom tax purposes has to be 70 square feet.  They can do this as it is reasonable to rely on a court ruling over DWP guidance and the hollow Freud threat.

When this results in producing in 20 – 25% of cases former 3 bed properties becoming 2 bed + boxroom properties the landlords rent level and the HB in payment should not and cannot reduce because those levels are not arguable to be “unreasonably high” which is the only way the council can restrict the HB payment.

The social landlords income and asset value are retained and so landlords are not exposed to the risk they face should they reclassify – which is an option they should NOT take. KHT did all other social landlords a huge disservice when they reclassified and too a financial hit by reducing rents.  While they did this out of practical reasons and to receive some income rather than none at all, they set a ‘precedent’ which others have followed which obfuscates the real issues of (a) what a bedroom is and (b) that it is up to the councils to decide on that for bedroom tax purposes.

Social landlords should be helping their tenants to appeal and should be pressuring local councils to adopt a position that a bedroom needs to be at least 70 square feet in floor space.  It is in everyone’s interest for that to happen apart from the incompetent DWP and coalition government who imposed this in the first place.

Yet instead of that we see social landlords trying to score brownie points with a tiny percentage of reclassifications which obscure the real issues and Liverpool City Council overtly denying the legal rights of HB claimants to appeal as well as cowardly accepting the bully boy threats of Freud which have no substance and choosing to believe the disingenuous posit and legal fiction of the DWP that now it is up to the landlord!

Liverpool City Council really need to reconsider this and unfortunately the only option for the 25,000 or so men woman and children affected by this pernicious bedroom tax is to take legal action by way of appeal to get what the council should have done in the first place – a decision based on fact and a lawful one.


5 thoughts on “Liverpool Council and the bedroom tax. The legal fiction of houses built on sand

  1. Hi Joe, can you give us a link to the FOI answers obtained by False Economy? In particular I’d like to be sure that Croydon and the other boroughs are actually making decisions on the number of bedrooms as opposed to mere rhetoric urging the Housing Associations to redesignate their property. Thanks a lot Ruth

  2. Joe are you sure that that statement was made in October Select Committee meeting? I been to the last select committee meetings there was a question about DHP in the Step. meeting.

    Also would the future retirement of Caroline Field have anything to way Riverside Group are “engaging” with community groups anti the bedroom tax?

    Is it any coincidence that Hugh Owen blogs about bedroom tax while at the same time Riverside send out NOSPs for BT only arrears. I wonder do Riverside want to make people homeless from Christmas?

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