British bedroom tax 'bad policy'

By Toby Helm, Tracy McVeigh

Cuts to council housing and other benefits is wrong in every respect, says National Housing Federation head.

Prime Minister David Cameron calls the "spare room subsidy", will encourage people to move to smaller properties. Photo / File
Prime Minister David Cameron calls the "spare room subsidy", will encourage people to move to smaller properties. Photo / File

British ministers came under fire over benefit cuts as the independent body representing 1200 English housing associations described the controversial bedroom tax as bad policy and bad economics that risks pushing up the £23 billion ($41.7 billion) annual housing benefit bill.

David Orr, chief executive of the National Housing Federation, said the tax - which will cut the amount of benefit people can get if they have a spare bedroom in their home - would harm the lives of hundreds of thousands of people.

It comes into force this week alongside a range of other tax and benefit changes.

"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."

His intervention came as opponents launched nationwide protests against the tax which will hit 660,000 households with each losing an estimated average of £14 a week.

Crowds gathered in Trafalgar Square yesterday to protest against the measure and simultaneous protests were being held in towns and cities across the UK.

Protester Sue Carter, 58, said: "I'm a working single parent with a tiny boxroom and now I'm faced with the choice between food, heat or paying the bedroom tax. People have looked after their homes, improved them, why should they be turfed out?"

Under the scheme, which is introduced tomorrow, people in social housing with one spare bedroom will have their housing benefit cut by 14 per cent, while those with two or more unoccupied rooms will see it slashed by 25 per cent.

Ministers say the tax, which Prime Minister David Cameron calls the "spare room subsidy", will encourage people to move to smaller properties and save £480 million a year from the spiralling housing benefit bill.

But critics such as the National Housing Federation argue that as well as causing social disruption, the move risks increasing costs to taxpayers, because a shortage of smaller social housing properties may force many people to downsize into the more expensive private rented sector.

The federation's warnings came as charities said the combination of benefit cuts and tax rises coming in from this week will amount to a £2.3 billion hit on family finances.

The Labour Party said analysis of official figures showed average families would be £891 worse off in the new tax year as the changes - including those to tax credits and housing benefits - begin to bite.

Research by the federation says that while there are 180,000 households "under-occupying two-bedroom homes" there are far fewer smaller properties in the social housing sector available to move into. In 2012 only 85,000 one-bedroom homes became available.

The federation has calculated that if all those available places were taken up by people moving as a result of the "bedroom tax", the remaining 95,000 households would have to stay put and taking a cut in income, or rent a home in the private sector.

If all 95,000 moved into the private sector, it says the cost of housing benefit would increase by £143 million, and by millions more if others among the remaining 480,000 affected chose to rent privately.

Council tax benefit will also be replaced from this week by a new system run by local authorities but on 10 per cent less funding. Pensioners will be protected under the changes but, as a result, it is feared there will be a bigger burden on poor working age adults. Restrictions on the uprating of some welfare payments will also hit millions of households, homelessness charity Crisis has warned.

-Observer

Case study

"I don't know what I'd do without my neighbours. I'm really worried."
- Ruth Baker, 46, from Newcastle.

"I've been dreading April. I've lived in this house since 1996 and now I'm going to be taxed on the two extra bedrooms because my grown-up sons have left, which means another £25 ($45) a week. My council tax is also changing, so that will be another £8.97 initially and then my Disability Living Allowance will be reassessed under the new system.

"I worked for the council in a nursery but had a breakdown and was in a psychiatric hospital for 11 weeks. I was diagnosed with severe depression and a personality disorder and I can't go back to work yet. I struggle already from month to month. Sometimes I have no money at all. On those weeks I'll eat whatever is in the freezer and skip lunch.

"I can't afford to stay in this house now but I don't know what I'd do without my neighbours. The one-bedroom places available are in really isolated areas or tower blocks and I'm really worried."

-Independent

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