Monday, 27 February 2012

The Government’s Bedroom Tax attacks the most vulnerable in society

One of the most unjust and ill-thought-out aspects of the Government’s Welfare Reform Bill is the ‘Housing Benefit Under-Occupation Penalty’ – better known as the Bedroom Tax.

This is a very poor piece of legislation. The proposal would financially penalise households in the social rented sector who have at least one empty bedroom.

Under measures in the Bill, 670,000 households - two thirds containing a disabled family member – are set to be hit by an average £728 bedroom tax every year because they are deemed to have one or more additional bedrooms.

The penalty is £14 deducted from housing benefit which will mean effectively a tax of £728 a year. This is three and a half times the winter fuel payment, to put it into perspective. The impact this tax will have, particularly on vulnerable households in these harsh economic times is devastating.

It fails to recognise the upheaval of someone who has had to move due to under occupancy, the penalty placed on those seeking work and that this punitive change will hinder someones access to work either through upheaval or reducing their income.

The arguments against the penalty are overwhelming. Certainly it is sensible to encourage people who live with space they do not need to downsize and free up their homes for others but the Government’s plans simply do not do this – they just hurt poor households. The Government has not taken into account that there is a national shortage of smaller social homes – meaning that many people who the penalty will hit will not be able to move even if they were able to. I do not believe that people should be penalised for housing conditions over which they have little or no control.

Indeed, the Government itself does not expect the policy to be successful and deal with the problem of over-crowding. Its own impact assessment of the savings made by paying less housing benefit assumes that no one will be able to move to avoid the penalty. The Government is therefore aware that the tax is punitive, largely unavoidable and does nothing to improve incentives to deal with over-crowding.

The Lords – even Conservative and Liberal Democrat peers – recognised the spectacular flaws in the proposal and made a safeguarding compromise amendment which would have lessened the severity of the proposal. When the Bill returned to the Commons however, the Government ensured the Lord's amendment was rejected.

The Lords then attempted a further, even more modest amendment. It is almost impossible to understand why the Government would not accept this amendment, which protected people on Disability Living Allowance, in the ESA Support Group or who are foster carers or war widows. This amendment only asked for the exemption of people who it would be immoral to penalise and at comparatively little cost. Even then, these people would be penalised if they turned down the offer of a smaller home.

I am appalled that the Government refused to listen to the reasonable objections raised by the Labour Party, from cross-party Lords, from the National Housing Federation and other organisations. The amendment was rejected yesterday. The arguments for the amendment were so strong that I can only assume the Government is ideologically determined to squeeze money from the most vulnerable in society.

In more detail...

Currently, social housing tenants are allocated properties upon consideration of their housing requirements and Housing Benefit is assessed according to rent levels rather than property size. The level of Housing Benefit they receive is unchanged if one or more rooms in the property are left unoccupied or if the number of people living in the property changes.

The Government’s proposal is to introduce size criteria for working age Housing Benefit claimants living in the social rented sector so that the Housing Benefit reflects the number of people living in the property. Houses which have empty bedrooms would be subject to a reduction in the Housing Benefit – an ‘under-occupation’ penalty.

Certainly there are issues in the social rented sector which need to be addressed. The Labour Party Front Bench agrees that under-occupation is a problem in the social rented sector and appreciates the need to engage with this and problems of overcrowding.

However, the proposed solution does not effectively do this and is irrationally punitive on tenants who have very little control over the housing choices they make. 670,000 households are set to be hit by the bedroom tax, because they are considered to have one or more extra bedrooms.

The inadequacy of the Government’s proposals was made evident by a report by the National Housing Federation which found that there are 180,000 social tenants in England currently ‘under-occupying’ two-bed homes. These people would have to downsize to avoid the penalty. In 2009/10, however, only 68,230 one-bed social homes became available for letting. It is clear that the lack of mobility in the social rented sector is caused not by tenants refusing to downsize but instead from a shortage of small social homes. Indeed there is a log-jam created by a national deficit of affordable homes. This is exacerbated by the under-supply of homes in the private sector in many areas.

These numbers show that the Government has not considered where the households who will be penalised are supposed to move to if they wish to avoid the penalty. Without even considering that families may be pushed to move away from their communities in search of smaller homes, it appears that these smaller homes simply do not exist in the numbers required.

Considering the lack of sufficient smaller alternative homes, the Government is condemning thousands of households to suffer this cut in their Housing Benefit for a circumstance they are largely unable to avoid.

Furthermore, the Government has produced contradicting predictions as to the savings. An impact assessment estimated a £500 million saving. Lord Freud, however, admitted that without knowing how many households will move as a result of the penalty, the savings cannot be predicted. Indeed the £500 million savings is based on the assumption that everyone who faces the penalty will be unable to move house to avoid it and so will suffer the entire penalty. This should not be the Government’s objective. Creating incentives to combat overcrowding does not entail purposefully creating a largely unavoidable penalty to squeeze money out of 670,000 households. The penalty is essentially, therefore, a cut to the incomes of families on Housing Benefit.

The House of Lords recognised that this penalty has the potential to be very destructive for poor families in the social rented sector and tabled amendments to attempt to mitigate the impact.

Families affected by disability will be hit the hardest

The group that is sure to be hit the hardest through this penalty are households where at least one member suffers from a disability.

Living with and caring for someone with a disability can be extremely difficult, and no one should underestimate how demanding it can be. This is particularly true, for example, for a parent who is trying to limit the negative impact of one child’s disability on other children in the family. This is admirable and is excellent parenting and the Government should in no way make this harder.

This is the case for many families where one child is severely disabled such as with epilepsy, or spina bifida or any other condition which relies on constant care throughout the night. To allow another child to sleep undisturbed requires them to have separate rooms. This is just one reason why it is fair and reasonable for a household to have a ‘spare’ room – others reasons include letting ill partners sleep apart if necessary, or simply because serious disabilities often require medical equipment which takes up a great deal of room.

Currently, to receive housing benefit in the private rented sector, children are expected to share a bedroom even if there are compelling reasons why the children should have separate rooms. Many households therefore turn to the social rented sector where this sharing requirement is not so rigid.

The Government is therefore forcing these households who rely on the social sector’s flexibility to do without the extra room they need or face the tax. We should be reforming the Housing Benefit system in the private sector to protect these vulnerable households, not replicating this unfairness in the social sector.

Why the penalty is unavoidable

Lord Freud has offered four suggestions of what households with spare rooms can do lessen the impact of the penalty. For people suffering from a disability, these suggestions are no solution at all. Let me list them.

First suggestion – get a job. How realistic or understanding is this suggestion to give to the carer of a disabled child, or relative or partner, or to a disabled person? People in the ESA Support group are understood to be unable to work and so for this group of people, this suggestion does not apply. Indeed, to claim that economic hardships faced by the families of people with disabilities are due to unwillingness to work is profoundly callous.

Second suggestion – take in a lodger. Again, this is simply not a solution if the household needs the empty bedroom so a child can sleep undisturbed by other children, or so an older child can study, or so ill partners can sleep apart, or even if the extra space is needed to store medical equipment. If the bedroom is needed then a lodger is no solution. Even if they do not urgently need the spare room, households with vulnerable people should not be forced to bring strangers to live in their homes.

Third suggestion – move into a smaller property in the social rented sector. This also is no solution if the extra room is needed. Moreover, it shows a complete lack of understanding of social housing issues in this country and the severe shortage of small social homes.

Fourth suggestion – move into the private rented sector. Again, the size criteria for housing benefit in the private rented sector are unfair and put unreasonable restrictions on housing benefit for families affected by disability. We should not be seeking to emulate the private sector as it is severely flawed in this respect.

What else might they do? ‘Rely on savings’ has been suggested. To a family affected by disability and living on housing benefits, to assume that in this financial climate they have had the luxury to accumulate savings is optimistic at best and certainly oblivious to financial hardship.

So for a family affected by disability that genuinely needs the spare room, the penalty is unavoidable and is essentially a cut in housing benefit. A cut on some of the most vulnerable people in our society. Even for a family affected by disability who plausibly could manage without the spare room, the alternatives are unreasonable or impractical.

The Lords’ amendment

The Lords’ amendment was to ensure that households suffering from disability and who are not expected to work, foster carers and war widows should be exempted from the penalty unless they are offered a smaller suitable home and refuse it.

The importance of this amendment on families affected by disability would be substantial – the amendment would save 200,000 disabled people and 5,000 carers from being hit.

The exemption for foster carers is an obvious specification because foster children or the expectation of foster children are not included as members of the household for housing benefit purposes. I am sure no one would intentionally create any disincentives to foster children – indeed we should all commend foster carers and support them as much as possible – and so there is no principled objection to protecting foster carers for the penalty. Why not simply specify the exemption in the Bill, rather than rely on applications to a discretionary fund the Government has set aside. This is particularly odd coming from a Party so concerned about red tape.

The estimated cost of the amendment is £100 million less savings made. This is clearly not a small amount, but when compared to the proposed savings in Housing Benefit expenditure of over £2 billion, we can see that comparatively, this is a small loss of savings for a very worthwhile reason.

It is just not the case that the Government cannot afford to make £100 million less savings in this area. It may be that the Government is prepared to squeeze here rather than in other areas. But to say that the Government has no choice but to make this particular £100 million is to be misleading and demonstrates that the Government is ideologically driven to cut back welfare on vulnerable households.