Posted by: Carl Brown06/01/2012
2012 is less than a week old and we have already had a dispute which has illustrated the motives behind a controversial government policy.
The row focuses on the amount of savings the government will lose if its plan for a ‘bedroom tax’ for under occupying social housing tenants is watered down. The amendment passed by the Lords exempts tenants with one spare room if no other suitable homes are available for them to move into.
The Department for Work and Pensions says this, if it is not overturned in the Commons later in the year, will result in around £300 million being lost to the exchequer, a claim dismissed by the National Housing Federation as ‘incorrect’.
The NHF argues that the £300 million figure is based on an earlier version of the amendment which excluded all households with one spare room. But it goes further and says even the claim about the original amendment is questionable because the government is assuming that almost everyone will choose, or be able to, stay put and pay the charge. They say in reality some will move, and some homes will be re-let at higher ‘affordable rents’, thus reducing the money saved.
The row has thrown into sharp focus the key drivers behind the government’s intended policy. The DWP’s focus on the savings lost, Lord David Freud’s strong insistence that ‘the fiscal case driving this measure forward must not be underestimated’, and the admission that the DWP expects few tenants to move, reveals that saving money is the key objective.
The other stated aims of the policy, to reduce overcrowding and encourage mobility in the social housing sector, are completely undermined if the government is hoping for affected tenants to stay where they are.
Peers are correct to call the under occupation penalty a tax, as that is exactly what it is. The DWP is using the charge to raise money to pay down the benefit bill.
It is a tax which most of the people affected, by the DWP’s own admission, will find difficult to avoid.
The government is now considering whether to overturn the amendment, accept it or seek to mitigate the effects of the ‘bedroom tax’ in another way.
If the amendment stands it amounts to a tax cut of up to £300 million, which will need to be paid for elsewhere if the government is to meet its housing benefit bill reduction targets.
From Housing matters
Carl Brown looks at regulation, training, board members, pay and a host of other issues that impact the day to day running of social landlords