Babies, Bathwater, and the Bedroom Tax

 

As evidence mounts about the failings of the Bedroom Tax, we must not lose sight of the important issues it was originally intended to address.

As evidence mounts about the failings of the Bedroom Tax, we must not lose sight of the important issues it was originally intended to address.

The Story

It’s now been one year since the Reduction of the Spare Room Subsidy policy, aka the Bedroom Tax, was introduced across the UK. The Government’s stated aim with the policy was to make better use of available social housing stock, encouraging those under-occupying  to downsize and free up larger properties for households with larger families.

The general consensus among housing commentators is that these aims have not been met. Indeed, the policy is commonly viewed as an unmitigated disaster.

Cracks in the Bath

The bedroom tax states that if you have one ‘spare’ bedroom there is a 14% reduction in total eligible rent for housing benefit purposes; this rises to 25% if two or more bedrooms are spare. While the policy allows for one bedroom for each person or couple living as part of the household (with a number of exceptions, such as two children of the same gender under the age of 16 being expected to share), regulations do not offer any definition as to what constitutes a bedroom.

(Initially, there were rumours that rooms under 70 square feet would not be counted as rooms for the purposes of the bedroom tax; this was debunked by the National Housing Federation, though – the rumour based on a misreading of the space standards set out in the Housing Act 1985 for the purpose of defining statutory overcrowding.)

As such, landlords have had to define what constitutes a bedroom within their own stock. This is a major crack – how can a national policy be applied when there is no national consensus on how to apply it? This has caused confusion and consternation among landlords expected to enact the regulation, and not all have been willing to do so: Leeds Council, for example, chose to side-step implementing the policy by reclassifying more than 800 “spare” rooms in its social homes as “non-specific rooms”, meaning tenants in affected properties would not be classed as under-occupying their homes and, consequently, would not have to pay a surcharge as a result.

Another crack: when a major local authority can, with creative wordplay, simply choose to not enforce a Government policy, what does that say about the policy’s legitimacy?

The reason for Leeds Council not pursuing the bedroom tax was twofold. Firstly, financial –  it would cost the council more to evict tenants and re-house them than it would to simply accept that many could not pay for the under-occupation charge – and secondly, moral:

“The idea of taxing poor people for bedroom tax is perverse.” – Councillor Peter Gruen, Leeds

That the bedroom tax – designed in part to supposedly reduce the benefit bill – would cost a local authority more to implement than not is a poor financial reflection on the policy. But arguments regarding the morality of the bedroom tax have not been restricted to anecdotal reckoning – the bedroom tax was taken to the High Court in July 2013 by protesters citing the regulations were not lawful.

However, while the High Court accepted that the bedroom tax in relation to adults was discriminatory, this was objectively and reasonably justified – and therefore lawful – because discretionary payments are available to cover Housing Benefit losses as a result of the bedroom tax; as a result there was no breach of human rights. The Court of Appeal would later uphold this decision in February 2014.

That our High Court accepts something is discriminatory but justified because there’s a pot of money to maybe help some of those affected is, quite frankly, one of the most baffling legal decisions made in recent times. It is akin to saying “Yes, we know that stabbing someone is wrong, but we’ll allow it because the victim can apply for medical attention afterwards.” Which is just…ridiculous. And wrong.

With no clear guidance on implementation, outright insubordination from local authorities, and High Court legal challenges that actually exposed the policy as discriminatory, the bedroom tax was shown as a flawed policy in less than 12 months. But the cracks go beyond policy design; the bedroom tax hasn’t just failed to achieve its stated aims – it’s made things worse.

Dirty Bathwater

“Overall, the Bedroom Tax has had a negative impact on those it has affected…” – Here and There: One Year On – The Bedroom Tax Hits Home, Grand Union Housing Group

One of the primary stated aims of the bedroom tax was to free up larger properties for larger families, and encourage those who are under-occupying to downsize. The problem is that there is not enough smaller accommodation available for people to downsize into – indeed, as we discussed last week, there isn’t enough accommodation available in general.

Grand Union’s case study of six housing associations makes interesting reading: the chart below shows the number of applicants listed on housing registers identified by property size. It also indicates the band of need where data is available, which was in Central Bedfordshire (where Aragon Housing Association and Aldwyck Housing Group are based) and from Soha Housing.

Source: Here and Now: One Year On - The Bedroom Tax Hits Home; Grand Union Housing Group

Source: Here and Now: One Year On – The Bedroom Tax Hits Home; Grand Union Housing Group

As we can see above: the larger the property, the smaller the demand. Following this, Grand Union Group call into question the Government’s assertion that there are large numbers of families waiting for larger properties. The chart suggests that it is in fact one-bed properties that are most in demand…and this demand is a direct consequence of the bedroom tax.

But if the notion that the bedroom tax has increased demand for smaller properties simply because tenants need to avoid an additional financial charge seems counter-productive to the bedroom tax’s stated aims, then unintentional consequences of the policy will be even more galling. In areas where there is no significant overcrowding, larger properties have been offered to smaller families who can afford to pay the additional bedroom tax in order to avoid increasing the number of void properties (and presumably house those families, who despite not being ‘large’ still need a place to live) – the opposite intended effect of the regulation.

Beyond the failure of the bedroom tax’s stated aims, there is real financial concern for tenants forced to live under the policy: 42% of tenants covered by Grand Union Housing Group’s case study sample that are affected by the bedroom tax are in rent arrears. The National Housing Federation found not only that 76% of those it surveyed were concerned about falling behind on rent, but that 46% have needed to borrow money to help pay their rent since the policy’s introduction in April 2013.

The bedroom tax is even having an effect on tenant health and well-being. Aragon Housing Association note a marked increase in reports of damp and mould being made to repairs teams in the past year despite a relatively mild winter. On investigation surveyors discovered very few properties were truly damp – rather, many tenants felt they could not afford to pay to heat their homes. Such hard choices are also identified by an Ipsos MORI survey carried out on behalf of the National Housing Federation: of those surveyed and affected by the bedroom tax, 26% have cut back on heating – worse, 32% say they have cut back on food.

Discretionary Housing Payment (DHP) was supposedly the lifeline for those adversely affected  by the bedroom tax – and as we discussed earlier, also the only reason the High Court found the bedroom tax lawful – but as pointed out in a letter to Inside Housing the aggregate allocation of DHP for bedroom tax was never going to be sufficient: with only £30 million –  one-sixteenth of the expected £481 million DHP bedroom tax cut – allocated to local authorities, we can deduce that if every bedroom tax household applied for a bedroom tax DHP, 15 out of every 16 applicants would fail.

But while there is much evidence with which to criticize the bedroom tax, we should not lose sight of the stated reason the policy was introduced: to better distribute limited housing stock and tackle overcrowding.

Putting Baby in the Corner?

“The question should be, ‘Why aren’t you focussing on those who are in overcrowded accommodation? What about them?” – Ian Duncan Smith to Camden Council

Overcrowding is a serious issue. It has a negative social impact on community, families, and individuals, it greatly increases the chance of households contracting serious illnesses, such as tuberculosis and meningitis – not to mention a variety of equally debilitating mental illnesses – and there is evidence showing children in overcrowded homes are more likely to miss school. There are also accompanying ‘hidden’ financial costs, such as the requirement for additional health, education, and welfare services to deal with the above consequences.

Of course, the bedroom tax’s stated aim to better distribute limited housing stock and provide appropriate accommodation for larger families relies upon the assumption that there is a shortage of larger homes for larger families; as we saw from Grand Union Housing Group’s report this view can be challenged, at least by that specific set of regional data – demand for three-bed properties was far below demand for one-bed properties.

Now, this is only a snapshot of one area of the country. London, for example, has a much higher proportion of overcrowded households than any other region; of the London households on the waiting list for social housing in 2008, 17,109 households needed a home with four bedrooms or more.

(Interestingly, while a household can be penalised for under-occupying a property, no subsidy is offered for families forced to live in overcrowded properties…)

Few dispute that there are not enough properties in the UK to meet housing demand – Our Castle’s Strength has previously examined how this lack of supply is regarded as a crisis – and with the crippling effect that overcrowding can have on not just affected households but the wider community, we cannot afford to sideline overcrowding as an issue…and if new properties are not forthcoming (at least in the numbers required) we must give serious thought as to how we distribute our existing stock to tackle the problem.

The bedroom tax is essentially financial blackmail, and in its current state is not fit to address overcrowding. But overcrowding does need to be addressed, as does the proper allocation of extremely limited housing – this should not be lost in our (understandably) emotional discussions about the bedroom tax.

Conclusion

“The results of our latest survey are depressing. As we feared and warned, the bedroom tax is having a disastrous impact. The only solution is to abolish this policy which fails on every level.” – David Orr, Chief Executive, National Housing Federation

Let’s be clear: the bedroom tax isn’t working. It has failed at achieving its stated aims and has actively made things worse for many landlords and tenants alike.

But despite its many flaws, questionable legality, and ham-fisted implementation, I believe there is an important principle buried beneath all the failure that we should not overlook: when there is not enough housing supply to accommodate demand, we do need to take the question of sensible allocation – and reallocation – of scarce housing resources seriously.

The bathwater that is the bedroom tax is not just dirty – it’s toxic – and I’m all for tipping the bath over…but let’s not throw out the infant intentions of the policy when we do.

References

Crowded Houses:Overcrowding in London’s Social Rented Housing, London Assembly, March 2011

Here & There: One Year On – The Bedroom Tax Hits Home, Grand Union Housing Group, May 2014

Inside Housing Magazine, 23 May 2014, Page 20, Section: Comments (JH, commenting on www.insidehousing.co.uk)

One Year On: The impact of welfare reforms on housing association tenants – tenant case studies, IPSOS MORI: Social Research Institute, May 2014

Bedroom tax: as many rooms as you like – if you’ve got the money, The Guardian, Online: http://www.theguardian.com/society/patrick-butler-cuts-blog/2014/may/23/bedroom-tax-if-you-have-money-as-many-rooms-as-you-need?CMP=twt_gu, Available: May 2014

‘Bedroom Tax’ challenges to continue following Court of Appeal judgment, Leigh Day, Online: http://www.leighday.co.uk/News/2014/February-2014/Bedroom-Tax-challenges-to-continue-following-Cou, Available: May 2014

Bedroom Tax, National Housing Federation, Online: http://www.housing.org.uk/policy/welfare-reform/bedroom-tax, Available: May 2014

Bedroom tax pushes households into debt and fear of eviction, National Housing Federatin, Online: http://www.housing.org.uk/media/press-releases/bedroom-tax-pushes-households-into-debt-and-fear-of-eviction, Available: May 2014

Housing crisis? No, just a very British sickness, Simon Jenkins, The Guardian, Online: http://www.theguardian.com/commentisfree/2014/may/21/no-housing-crisis-just-very-british-sickness?utm_source=twitterfeed&utm_medium=twitter, Available: May 2014

Iain Duncan Smith blames Camden Council for ‘failure’ of bedroom tax in the borough, Ham & High, Online: http://www.hamhigh.co.uk/news/iain_duncan_smith_blames_camden_council_for_failure_of_bedroom_tax_in_the_borough_1_3608256, Available: May 2014

Leeds council tackles bedroom tax with semantic solution, The Guardian, Online: http://www.theguardian.com/uk/2013/may/29/leeds-council-bedroom-tax-solution, Available: May 2014

Social housing size criteria and statutory overcrowding, National Housing Federation, Online: http://www.housing.org.uk/policy/policy-news/social-housing-size-criteria-and-statutory-overcrowding, Available: May 2014

The Bedroom Tax, Disability Rights UK, Online: http://www.disabilityrightsuk.org/bedroom-tax, Available: May 2014

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