Net call

The end game on the bedroom tax is going to be about more than just whether the House of Commons continues the parliamentary ping-pong.

The Lords smashed the ball back over the net last night. They voted 236-226 for an amendment moved by crossbench peer Lord Best that will exempt groups including disabled people, war widows and foster carers from the under-occupation penalty where there is no suitable alternative accommodation available.

Reflecting the fact that the government had claimed financial privilege in the Lords, that was a much smaller majority than the 258-190 vote before Christmas for an amendment that would have exempted everyone with no more than one spare bedroom if there is no suitable alternative. Only six Lib Dem peers rebelled against the government this time around but that was enough.

Three cheers for that. The DWP says it will lob the ball back over to the Lords when the Commons returns next week although campaigners are still hopeful it will offer more concessions rather than risk going through the same thing again.

However, regardless of what happens, 670,000 tenants still face an average cut of £14 a week or £728 a year from April 2013 and social landlords still face a series of uncomfortable dilemmas over arrears and evictions.

Moving the amendment, Lord Best said he was hoping to ‘salvage something’ but ‘I deeply regret abandoning hundreds of thousands of households who, even if the amendment is approved, will still be caught by the penalty charge from 1 April next year’.

And even a government concession had a sting in the tail: ‘I confess to having been thankful for this small mercy—until I learnt that the £30 million for these discretionary housing payments is to be paid for not by the Treasury accepting any reduction in the gains achieved through the bedroom tax but by increasing the tax for the other tenants by another £50 per annum from the previous £13 per week to the new £14 per week.’

Backing him up, Baroness Hollis said the penalty had ‘fundamental dishonesty’ at its core because it said that people must downsize while the government acknowledged that the ‘smaller flats and houses to which people should move do not exist’.

And as chair of Broadland Housing Association she outlined the dilemmas facing landlords. ‘Either I evict a family with a disabled child into temporary accommodation or bed and breakfast—how I can do this to them?—or they stay put and arrears mount. I have already trebled the amount in my accounts for increased arrears… that money is not available to pay the debt charges of new building which alone will solve the problems of getting our stock right in the longer term.’

There was an interesting intervention from former Conservative social security minister Lord (Tony) Newton, who warned that ‘the government are playing a very dangerous political game, without quite knowing that will hit them when this comes into force’ and recalled a previous Treasury-inspired cut to housing benefit in the 1980s that Margaret Thatcher had to order to be reversed within a month once the impact became clear. He still voted with the government later but it was not exactly a vote of confidence.

It was a measure of the position welfare minister Lord Freud found himself in, stuck between losing the argument in the Lords and Treasury insistence on the cut, that he told Lord Best he had over-estimated the cost of his own amendment (it was up to £100 million not £150 million) and that he left no stone unturned in trying to find a non-financial way out.

The idea of taking in a lodger – first raised in a throwaway line by Steve Webb in the Commons – now seems to be a major part of the government’s toolkit. Any tenant who did take in a lodger see the first £20 a week in income disregarded from their own housing benefit, he said, and ‘we will expect social landlords to take a pretty liberal line on this’.

As Lord Best pointed out, it would not be appropriate for the disabled and vulnerable tenants covered in his amendment to take in a lodger. At the very least, any tenant will need some good benefits advice first.

However, Lord Freud had another idea too. ‘One aspect that has not been explored in our debates is the response from social landlords,’ he said. ‘The rent they receive reflects the size of their property. If there were, for example, a very small room such as a box room that the landlord called a bedroom, they might reconsider, if they have not done so already, whether to count that room when deciding on the number of bedrooms that should be written into the tenancy, as well as on the rent associated with it. The designation of property size is another area where there may be flexibility. We are exploring this with social landlords as part of our implementation work.’

Leaving aside the question of how many social rented homes really have a box room bedroom, is he really suggesting a way out for landlords and a way to evade his own bedroom tax?

A mass downsizing by landlords seems unlikely given the potential effect on rental incomes, property valuations and loan agreements, but is there scope for some creative thinking? If a three-bed flat is hard to let now, it could become even harder to let under the bedroom tax, so why not call it a two-bed in the tenancy? Is the bedroom with a computer in it proof of under-occupation or an office that is proof the tenant is doing what the government wants and preparing to launch a business from home? Is that smaller room used by your disabled tenant really a spare bedroom or a wheelchair storage area?

• There was no such excitement on the bedroom cap, where a Labour amendment was easily defeated, but there were a few more concessions. In addition to the original exemptions, the government had already pledged a nine-month grace period for anyone who has been in work for the previous 12 months, plus more discretionary payments plus an evaluation of the impact after a year. In the Commons it added an exemption for households with someone who get the support component of ESA who is not in receipt of DLA.

Last night Freud confirmed that the grace period will apply to couples where just one of them meets the criteria and added that he saw no reason why it should not apply to people whose hours are reduced as well as those who lose their jobs.