The short-sighted policy of the government to reduce housing benefit depending on the number of ‘spare rooms’ in a property has a very real financial and human cost which will far outweigh the £550 million the government estimates it will save from the welfare budget.
Financially, the policy doesn’t make sense. The introduction of the bedroom tax is already resulting in housing providers (especially housing associations) facing increasing difficulties.
In addition to losing the rental income because people are unable to pay their rent, housing providers are having to fund expensive legal actions for the recovery of debts – an additional expense which prevents the associations from planned home development and maintenance.
Leeds City Council has attempted to ease the strain on their finances by reclassifying rooms in some of its housing stock, but 7,000 households remain affected by the housing benefit changes, with 2,800 already in arrears. This has cost the council £138,000 so far, and it estimates it will cost at least £1 million by the end of the year. This is money that will not be available for building maintenance, or the development of new housing stock to meet the ever increasing demand.
Providers are being left with housing stock they are unable to rent. Larger properties become empty as people are forced to move into smaller properties, which means that rental income is severely reduced for the provider.
It may mean that perfectly good housing will have to be demolished. Chief executive of North-East based Country Housing Association, Ian Sim told the Daily Mirror “We will do everything we can to let the properties but there’s a limit on what we can do. Given time, demolition is certainly feasible.”
The bedroom tax will have a devastating effect on social housing.
There is already a national shortage of one-bedroom accommodation, which means that families will either have to stay where they are and find the additional cash from their income, or move into the much more expensive private sector – which will result in a higher housing benefit bill for the taxpayer.
Housing associations and (especially) councils will not have the resources to spend on developing new social housing, with the increased burden of dealing with rent arrears having a significant impact on their cash flow.
Local councils have been financially hit on several fronts. The bedroom tax, reductions in funding, and through council tax arrears as people on benefits are required to pay up to 20% of their annual council tax bill.
Properties that have been adapted at great expense for people with disabilities are at risk of becoming empty as people move to more affordable accommodation – accommodation which will also require adaptation to their needs.
The financial implications for this ill thought out policy are severe, and will affect everyone in the UK in the long term as the cost of providing housing (most likely through the private sector) will spiral out of control.
As we highlighted in our article ‘UK Disgrace: Disabled people forced to move out of their homes by the government’, the personal cost to people being forced to move from the security of their homes, some of whom have lived in the same house for generations, is incalculable.
At no time was the bedroom tax policy a good idea. Even at the planning stage, surely the overall detrimental implications to people and the economy of the UK must have been realised. The absolute ridiculousness of introducing the bedroom tax is beyond belief.
David Orr, chief executive of the National Housing Federation said in an interview with the Guardian “The bedroom tax is one of these once-in-a-generation decisions that is wrong in every respect,” he said. “It’s bad policy, it’s bad economics, it’s bad for hundreds of thousands of ordinary people whose lives will be made difficult for no benefit – and I think it’s about to become profoundly bad politics.”
We think he sums it up appropriately.