Will bedroom Tax cost £1bn per year MORE to the taxpayer ?

Late this afternoon Inside Housing published a report called “Survey finds more than a third of bedroom tax-hit tenants in arrears”  An eye-catching headline which outlines a research report by just council landlords experiences.

This being an Inside Housing article the report does not say  what the arrears levels were before the bedroom tax came in and thus negates the headline as just an ‘eye-catcher’ and not related to the content of the article!

The real issue in this article is what is presented almost as a throwaway line in the middle of the article:

The survey also found a significant rise in the number of landlords resorting to court action, 55 per cent, compared to just 2 per cent when members were last surveyed in June 2013.

The language does not emphasise the fact that the number of council and quasi-council landlords (ALMOs) issuing court actions against their tenants has risen from 2% of them to 55% of them – THAT IS A TWENTY SEVEN FOLD INCREASE or in very simple terms like your yearly salary increasing from £20k to £550k per year!  It is a quite astronomical increase.

Yet it is what this means that is the huge issue.  If over 27 times more council tenants are being hit with court actions then there is going to be a hell of a lot more council tenants getting evicted and shortly.

That inevitable increase in eviction of council tenants because of the bedroom tax and it is inevitable is a direct cost to the taxpayer that has to be set against any claimed savings to the taxpayer the DWP claim it ill have.  There is no doubt there is a huge correlation between the two.  So how much does an evicted tenant cost the councils becomes the question.

Inside Housing earlier in the month provided an estimate of how much each eviction costs a local council and the overall yearly cost of eviction to councils and I quote: –

Tenants on the verge of eviction are being helped to remain in their homes by a recently formed social enterprise that is saving their landlords significant sums in the process. Daniel Douglas finds out how

Aadil Ismail* speaks four languages fluently; Arabic, Bengali, Hindi and Urdu. He can recite vast swathes of the Quran verbatim. His house in Bethnal Green is crammed with shelves upon shelves of books. But for six months, his kitchen cupboards were bare and he had no money to eat.

Mr Ismail, a mild-mannered, intelligent 54-year-old man, could easily have been one of the 116,000 households across the UK who turned to their councils for help last year because they were homeless, costing local authorities more than £1 billion every year.

Simple maths and divide £1bn by 116,000 cases and you get an average cost of £8,620 per case. So given the average bedroom tax per year is £760 we can see that an eviction cost equates to 11 YEARS BEDROOM TAX TO THE TAXPAYER!

Yet if that is not bad enough dear reader we see a £1bn cost to local councils who have the duties to deal with homeless cases even if they don’t have any housing stock too.

The IH report of today said the number of councils taking court actions with the bedroom tax  has risen 27 fold from 2% of council landlords to 55% of council landlords. Eventually – and sooner rather than later – that means the number of homeless cases will rocket and even if its is only a 2 fold or doubling of those evicted rather than a 27 fold the overall cost to local councils increases from £1bn per year to £2bn per year – an increase of £1 billion per year.

The DWPs official data on HB shows a £330m per year cut yet the opportunity cost of this pernicious policy sees increases to the taxpayer of £1bn per year or 3 times that amount in added homelessness costs.

The £330m per year ‘saving’ the figures suggest HB will reduce by this year of course takes no account of any expenditure associated with it such as Discretionary Housing Payments or the added admin costs for local councils or the court costs for local councils in preparing for and sending staff to defend bedroom tax appeals or the costs to central government who bear the much higher added costs of the Tribunal services  – So if the bedroom tax does actually save the taxpayer any money after all of these factors are taken in, which I and many others doubt, then it is a negligible saving.

However councils will not evict their own tenants as each eviction does cost the equivalent of 11 years bedroom tax and councils would be financially stupid to evict because of that.

So what is likely to happen is that council landlords will simply let their tenants build up higher levels of arrears and not evict and be forced into adopting that as an unofficial but real strategy. What other choice do they have? Even if they do evict and find all bedroom tax arrears cases as intentionally homeless it will still cost them, less admittedly, but still a significant cost as the evicted and declared intentional homeless tenants will appeal and if they have children then it is a cost to councils social services departments – a huge cost

Sorry did I say the bedroom tax will cost local councils only £1bn per year more?  Yes I did and that is a likely underestimate too because of the added homeless costs and reduced rental income to council housing departments and increased costs of rent collection and…yes I could go on and on here.

So dear reader if you happen to bump into a little green man from Mars on your travels I can rest assured that he will be the only person who does not know the bedroom tax costs the taxpayer far more than it could ever possibly have saved!

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Psst…You got any spare dosh floating around?  Yes? Ok let’s keep this between ourselves for now…

I have this cast iron scheme that guarantees huge yields and returns and all underwritten by IDS and the government.  What we do in outline is buy up the run down large properties which are going for a song, slap a little magnolia emulsion around as we sub-divide into tiny cupboards (sorry bedrooms which IDS says only have to fit a single bed in  so about 16 square feet in total) the 1m empty homes that nobody would reasonably put his worst enemy’s dog into and what is now a 3 bed property we can easily lease to councils as 6 or 7 bedroom temporary homeless hostels and even better these Romanian plumbers charge half the price of the Polish ones to fit in the cheapest boilers and showers in the communal areas…oh and you’ll never believe how little we pay the Bulgarian joiners to put in the communal kitchens…well when I say joiners…

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Sorry reader I forgot to mention the above is not my work its a ghost written piece by my old mate Sebastian Fox though you my know him better as Michael Green who is a bit on his uppers as he knows he’s due for the boot from this cushy job he’s had the past few years.  But hey course you can trust him if anyone knows how to sell flannel ….  Due to huge demand to get in on this scheme we’re having sealed bids in brown paper envelopes with cheques addressed to Campaign Against Social Housing or C.A.S.H. for short to me by Friday

 

UPDATE

Had 17 emails asking the same question – Sebastian Fox and Michael Green aer two of the pseudonyms used by Grant Shapps in his dodgy internet trading companies…You know the Chair of the Conservative Party and the first Housing Minister under the coalition …yes him that introduced Affordable (sic) Rent and launched Right to Buy 2…the one that makes Arthur Daley look more reliable than the Pope only without the charisma!

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12 thoughts on “Will bedroom Tax cost £1bn per year MORE to the taxpayer ?

  1. The survey also found a significant rise in the number of landlords resorting to court action, 55 per cent, compared to just 2 per cent when members were last surveyed in June 2013.

    I read this differently – if there were 100 landlords going to court previously, there are now 155 landlords. That in no way quantifies the number of tenants being taken to court! The previous 100 landlords may each have been taking action against 5 tenants, whereas the 155 landlords now may each be doing so against only 1 tenant! thus it could have been 500 tenants at risk before but only 155 now!

  2. Reblogged this on Vox Political and commented:
    This is a useful reblog to follow up the Vox Political article on Rebecca Evans’ week on benefits as she points out that most people hit by the bedroom tax had no way of coping with it – and this points out that evictions are up more than 27-fold since it was brought in, at a court cost to the taxpayer equivalent to 11 YEARS worth of bedroom tax payments.
    You don’t have to be a sniffer dog to smell the corruption.

  3. I am rubbish at maths, but surely if there were 100 landlords, then 2% of them taking tenants to court would be 2 landlords, while 55% of landlords out of that hundred is – wait for it – 55 landlords. If 55 landlords were taking 1 tenant each to court, that would be 55 tenants attending court, so 2 landlords would have to own a lot more properties each or have been incredibly ruthless and then suddenly seen the light when the bedroom tax was announced, to be taking over 27 tenants each to court, prior to it’s introduction (remember the comparative figure is one tenant per litigatious landlord). I am not sure if exact figures are available to check against, but hopefully you get the drift. I suppose it is possible that a lot more tenants were not paying their rent before the introduction of the bedroom tax, but once they had to pay more when the tax came in were now dutifully paying, but this seems unlikely. It seems so much more likely that, though some landlords may have bought more properties, any rise in the number of properties owned by landlords is not the main reason behind the huge differences in court appearances for non payment talked about. It is more plausible that the tenant has been unable to pay the rent, when that rent has been increased by the bedroom tax, and that is the root cause of the rise in the numbers of landlords taking tenants to court. Indeed each of those 55 landlords out of every hundred taking legal action may be taking multiple tenants to court instead of 2 landlords in every 100 taking, for example, 1 tenant to court each – so it could be far worse than the figures suggest. This would mean that the bedroom tax has put more tenants at risk – it would be reasonable to conjecture that up to 53% of tenants (and perhaps a lot more than that) are now at risk. Of course an increase, if any, in tenancies would alter that crude figure – though I am sure not enough to show a downward trend like is suggested. But, as I said, I am rubbish at maths.

  4. Has the legality of removing people’s legal right to buy, been tested in anyway. By forcing people out of their homes their right to buy is removed when they transfer from a local council home to another landlord. At least my local council is saying if I move to any other housing except them I will lose the 15 years I have built up to date.. If this is true then I am even further restricted in where I can move as to preserve my right to buy I can only apply for council housing.

  5. Reblogged this on Britain Isn't Eating and commented:
    The bedroom tax has been a massive success for the Tories, not so much for the councils and their tenants or the taxpayer in general though. Excellent points by SPeye Joe so read on…

  6. its a tax to far on the poorest yet it looks good for tory faithfull but will cost more than whot theyl tell one a lot more so it should be shelved completely but then the tories lies persist saving monies jeff3

  7. Reblogged this on Beastrabban’s Weblog and commented:
    The real shocking statistic in this isn’t that the Bedroom Tax is actually costing the taxpayer £1 bn, but that there has been a massive 27 per cent councils trying to evict their tenants for arrears. SP Eye Joe believes that this will simply result in more councils simply refusing to evict tenants with arrears because of the extra costs involved in housing and social care for the homeless. I’m far more pessimistic, as I can see the current legislation requiring councils to provide for the homeless being repealed or significantly cut back as a way of making additional savings, streamlining legislation or whatever other euphemistic spin the Tories want to put on the policy of making it easier to stop people having a roof over their heads.

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