The Bedroom Tax to rise by 52% next week? Hmm!

In a weeks time George Osborne will give his Autumn Statement (think mini budget) and speculation is rife that (a) Housing Benefit will face further cuts  as (b) Osborne will abandon his Tax Credit cuts the Lords rejected and needs to find those savings.

Firstly, this is all speculation….though every day since 8 May 2015 is one of speculation as to further ‘welfare’ cuts so no change there!

Over the weekend the Sunday Times said (a) and (b) above and wrapped up in IDS won Osborne lost language or in lay terms disingenuous bull.  Today the rest of the mainstream press picks this up and the Daily Mirror (as is its want) goes hyperbolic in its speculation and as also usual misses the point and is best ignored though it has caused a storm on social media sites such as Facebook.

I do wish anti-bedroom tax groups would stop and think rather than create hysteria and anger over whatever bedroom tax bullshit the tabloids produce as it is wasted energy.

A much more informative and considered take on this is given by Jules Birch at Inside Housing here (no paywall on this) and is required reading and in line with the highly speculated “£2bn” HB cuts Jules looks at some options:

autumnstatementjulesIt is rare I disagree with Jules and as rare as hen’s teeth for me to be critical of his analysis yet the highlighted section above is a long way short of his usual very high standards of analysis ….as he has missed the bedroom tax dimension of the 90% max HB posit and that will have huge further repercussions.

The maximum 90% HB issue – this is an old idea previously rejected by the coalition but then so was pay MORE to stay and at much higher income level of firstly £100k then £60k on a voluntary basis and now £30k / £40k on a statutory basis! In short old Tory ideas put off or abandoned in coalition are now becoming policy intentions for real hence the maximum amount of HB any tenant can receive being 90% may well feature next week in the Autumn Statement.

Social landlords receive £15.31 billion per year in Housing Benefit and so limiting HB to 90% saves 10% of this and cuts a minimum £1.531 billion from the HB bill just from social tenants. It will also cut a much smaller amount from private tenants yet impossible to estimate so I assume this will be equal to the pensioner being exempted in social housing.

Additionally the maximum 90% of rent HB issue hugely increases the bedroom tax HB cut.  The 14% for one ‘spare bedroom’ and 25% cut for two ‘spare bedrooms’ are a % deduction from the maximum eligible rent which now is the full rent in social housing.  Yet with the 90% maximum HB policy those 14% and 25% deductions rise hugely and the simple example below explains.

Rent £100 per week and 1 “spare bedroom” equals a £14 HB cut (14%) so the tenant has to make up £14 per week.  This changes to become a 14% reduction on the maximum HB of £90 per week meaning that only £77.40 per week HB is paid and the social tenant has to make up £22.60 per week – or in other words the 14% bedroom tax deduction increases to 22.6%

The same £100 rent and 90% max HB but with 2 “spare bedrooms” sees just £67.50 paid in HB leaving the tenant with a £32.50 per week shortfall – or the 25% bedroom tax reduction increases to 32.5%

Oh shit goes the cry from tenants and social landlords as this is a huge issue for social tenant and social landlord. The numbers make even worse reading.

The current bedroom tax HB cut is £357.4 million and this will increase to £543.8m so an additional £186.4 million of bedroom tax is levied which is a 52% increase.

[That projection is based on 81% of bedroom tax households having 1 “spare bedroom” which was the original impact assessment estimate from DWP.]

What is perhaps more scary is that often LHA – the private rented version of HB – covers 90% of the actual rent or even less so I can see Osborne selling this as being fair and IDS selling this as fair and an incentive to get employment.

There are very strong arguments against both those posits yet since when has that stopped the Tory spin machine with the bedroom tax and despite polls regularly showing the majority of the general public are against the policy!

In summary this is speculation yet the last paragraph above and the figures this means in terms of cuts (and the not so small matter of abject misery and poverty to social tenants!) gives real cause for genuine alarm.  As does this 90% maximum HB to rent issue being a rehashed policy just like pay MORE to stay.

A 52% increase to bedroom tax will rightly see horror for tenants and landlords and local councils as evictions are bound to increase in number too.  It is abject horror for communities and families too and increased horror as that is already what the existing bedroom tax does.

As you will see me write with increasing regularity, the need for the Tenant Campaign Group grows by the day just as the need to save the social housing model created in the Welfare State grows by the day.  The demands on DHP budgets and homelessness costs will grow by the day too and the thinking of social landlords especially housing associations requires a total rethink too in light of this huge threat and however speculative it may appear today, this time next week I suspect it will be a reality.

So just one more challenge and fight for the TCG to add to the privatisation issue which will happen sooner rather than later unless we see that dark threat off.  The areas of mutual tenant and landlord interest for the TCG grow by the day.

Hmm!

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9 thoughts on “The Bedroom Tax to rise by 52% next week? Hmm!

  1. Just as terrifying for landlords!
    My organisation has fought tooth and nail to help our tenants affected by BT. We started working with them 18 months before it was introduced to prepare them, help them downsize if thats what they wanted, income maximisation, help into employment… and now we are running a pilot whereby we will pay it for them, as long as they keep to certain conditions (simple bog-standard stuff, not the moon on a stick) to make sure that they don’t have to leave their homes with us because they cant afford to stay, and we don’t lose them to private landlords who can just reduce the rent at the drop of a hat.

    Reducing HB by 10% is going to be just as catastrophic to tenants’ income as reducing tax credits. And to LAs and HAs this is going to MASSIVELY exacerbate the problem with the income loss we’re facing as it is. A guaranteed loss of 55m from the rent cut, and potentially up to the same again if tenants cant manage the shortfall?! How are we actually meant to provide any services at all?

    1. Gemma, I’m aware of the pilot you discuss and other novel approaches in the NE (some of which I have helped set up ) with landlords yet such are all too untypical nationally and, for example, HA’s increased income from the affordable (sic) rent model is way more than the BT arrears losses.

      Yet you mention the rub and key driver in NE which is the small difference between HA and PRS rent levels of often less than 10% and sometimes parity when again nationally PRS rents are on average double social rent levels and the HA worry you have and face of tenants buggering off into the private sector does not exist.

      The same is true here in Liverpool with the 1 bed LHA rate (£395 pcm) affording some 65 3 bed properties at any one time and even a few 4 beds so a single person can have 3 spare bedrooms and not have bedroom tax.

      As usual national policy is set in London based on London problems which simply do not occur in much of the rest of the country and in the case of the bedroom tax attack landlords and tenants there with BT being a classic example. Also noting that 8.3% of social tenants in London are hit by bedroom tax when it is 19.3% in NE (17.3% – 21% range and uniform) and in NW 17.4% of all social tenants hit by BT but with a range from 9% to 31% in different LAs.

      When you then add the much greater risks from reduced benefit cap to come in April your final questions from a landlord perspective – “How are we actually meant to provide any services at all?” has one answer – with extreme difficulty!

      The TCG recognises that the landlord and tenant (and indeed LAs) share these mutual threats to the social housing model yet also recognises that the 83% of social housing outside of London is being shafted by the perverse housing conditions of the 16.9% who live in London and which bizarrely dictates national policy

  2. So if the government decides to go with this, do you think that they would apply it to those in supported accommodation, too? I seem to remember you pointing out recently that rents for this type of housing are higher than those of standard social housing , so presumably that group of tenants would be disproportionately penalised . Is that right?

    1. No they COULD NOT go ahead with this to supported accommodation (exempt / specified accommodation) as it would mean for example that every homeless hostel and DV refuge would close.

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