Bedroom Tax

Pic with Shadow Secretary of State for
Work & Pensions Rachel Reeves MP

So here we are over six months on from the introduction of the bedroom tax, and we can properly appraise its impact.

Back in April, in a debate in Westminster Hall, I described the Government’s policy as cruel and wicked. As likely to bring misery and hardship as anything else and I have been proved right. Arrears have risen, families have cut back on essentials, and communities have been undermined.

But has it been successful on the Government’s own terms? As a policy it was always more about saving money, pure and simple, than anything else.

In the DWP impact assessments this was projected to amount to £930 million over two years (2013/14 and 2014/15). But this figure has been shown to be wildly optimistic, as the recent report by the Centre for Housing Policy at York University, based on real data from a number of housing organisations, including Wigan & Leigh Housing (WALH) has shown.

In Wigan, according to Government figures, £2.9 million could be saved annually. This would be achieved if nobody moved (and made up the rent shortfall themselves) or if everyone downsized within the social rented sector. It is not clear which of the options the Government prefers, but we are certainly seeing more of the former than the latter.

This is because in Wigan we have a shortage of one and two bedroom properties (and a surplus of three beds).  So there is nowhere to move to. This is the case in much of the North. Does the Government know this? I wonder sometimes if this Government understands anything about the North.

If tenants cannot move to council properties with fewer bedrooms then they must make up the rent difference themselves. In my constituency there are 4200 tenants affected, with reductions in housing benefits ranging from £517 to £1273. That money has to be found. And so often it will be found only by cutting down on essentials, such as heating and food. The York report quotes a number of people facing this dilemma, and reveals also the stress and anxiety that it also causes. In October 2,500 people contacted WALH about rent and debt – an increase of over 50%.

The other alternative is not to pay rent of course and one clear consequence of the bedroom tax is the building up of rent arrears. In Wigan the number of tenants in debt with their rent has risen from 33% to 53%. That’s over half.

This is a headache for tenants but it is also headache for councils. The Government talks of saving money, but it forgets the extra costs to councils and housing associations. The bedroom tax means a loss of rental income for Wigan Council and Wigan and Leigh Housing that has been estimated to be in the region of at least £1m a year. That’s money that could be used to build new homes. The staffing costs of dealing with increased arrears, rehousing and abandonments could perhaps be as much as £300,000 per annum. Has the Government thought of this in their calculations?

The only real option for tenants in Wigan facing a housing benefit shortfall, and unable to find a smaller property in the social housing sector, is to go into the private sector. Yes, really. We estimate that 100 tenants have moved into the private sector in Wigan since April. More will likely follow, as arrears and debt continue to build up.

For Wigan private rents are £700 - £1200 more per annum than Council rents, which could result in an additional housing benefit cost of £229,000 in 2014-15.

Two-bedroom properties in Wigan are readily available at the local housing allowance rate of £80.77 per couple. The Government have made much play about the bedroom tax being fairer, since – we are told – people in the private rented sector aren’t able to afford extra bedrooms. But this is certainly not the case in Wigan, where one-bedroom properties are much scarcer, so people in the private rented sector can have a spare bedroom without paying for the privilege. I suspect that this is the case in the constituencies of many of my colleagues, too. I informed the housing minister of this fact many months ago, but it appears to have fallen on deaf ears.

The Government have also made much of the need to address overcrowding, by freeing up larger properties for bigger families. But that doesn’t hold water either. In Wigan there is a real problem in finding tenants for three bedroom houses and two bedroom flats. There are 10,110 three-bedroom properties, of which 553 became vacant, but only 353 applications were made for those vacancies Demand has fallen, with the result that properties are remaining empty for longer in certain areas. The idea that families are packed like sardines in undersized houses waiting for people with spare rooms to move is simply not true.

This is a Government policy which simply doesn’t work. Certainly not in Wigan and most of the north of England. It doesn’t save money. It doesn’t reduce overcrowding. And it’s not a fairer system. All it does is push people into arrears and reduce the living standards of some of our poorest citizens. And it brings increased stress and misery to thousands. That’s why I described it as cruel.

It’s also vindictive. Because at its essence it is an attack on people in social housing. It’s an attack on a way of life, and an attack on communities. The Government is meant to believe in communities and want to support them.

Not here. Not if people need to move every time their circumstances change. Image the situation. A couple move into a one bedroom flat. They have a child, they move away to a two bedroom flat. They have another child and then move to a three bedroom property. The eldest child turns 18, and then move back to a two bed flat and then a one bed flat. What happens to a sense of community when people are constantly moving, back and forth.

We should be building strong communities and not undermining them. Letting people put down roots and build neighbourhoods. Not moving people around like pieces in a chess game. It’s time for a rethink.