Savings estimate only applies if tenants can’t find alternative homes
NHF: ‘government inflated cost of benefit defeat’
The government’s claim that its ‘bedroom tax’ defeat will cost taxpayers around £300 million in lost savings has been disputed by the National Housing Federation.
Peers won a major victory against the government last month in a crucial House of Lords vote on proposed benefit cuts for social housing tenants of working age who under-occupy their homes.
The government had hoped to save £490 million from the £23 billion annual housing benefit bill by reducing housing benefit for households with one or more spare rooms. A number of peers have said the cut is effectively a tax because the government based its figures on the assumption that most affected tenants will stay in their home and pay the charge.
However, the amendment passed by the Lords, which was tabled by crossbench peer Lord Richard Best, exempts households with one spare room if there is no other suitable alternative accommodation available.
The Department for Work and Pensions claimed Lord Best’s amendment would cost the state ‘around £300 million’ of the estimated £490 million savings.
However, the NHF said the £300 million figure only applies to an earlier version of the amendment which would have exempted all households with one spare bedroom and the DWP is ‘incorrect’.
Andy Tate, policy officer at the NHF, said: ‘The amendment is clear that only those tenants with one ‘spare’ bedroom, who have nowhere else to downsize to, would be exempt from this bedroom tax.’
Mr Tate said the savings estimate would only be accurate if most tenants affected are unable to find alternative accommodation.
A DWP spokesperson admitted estimates also don’t take into account the affordable homes programme, which allows higher rents to be charged at up to 80 per cent of market levels.
Mr Tate added savings will be reduced if a home becomes available as a result of an under-occupying family vacating it and it is re-let at a higher ‘affordable’ rent covered by housing benefit. The NHF has not calculated a likely figure for savings. Mr Tate said this is because ‘suitable alternative accommodation’ has yet to be defined and it is unclear how many tenants will be able to move.
A DWP spokesperson said the department is sticking by its claim that ‘around £300 million of estimated savings’ will be lost but stressed it is a rough estimate. This is despite welfare reform minister Lord David Freud admitting ‘it is not possible to predict the loss in savings’ in the Lords debate.
A DWP spokesperson also said the department had yet to decide whether to seek to overturn the amendment when the bill returns to the House of Commons later in the new year.
Inside Housing is calling for fairer welfare reform in its What’s the Benefit? campaign.
Empty rooms: the government’s predicted savings