More on the rotten maths and misinformation used to justify the bedroom tax…
In this instalment from his excellent series on the bedroom tax, Joe Halewood takes apart more of the false information being peddled by government on this topic. Keep an eye on Joe Halewood's blog for regular posts and informed updates:
Welcome to my bedroom tax Part 9 - in which I attempt to inform the reader just what the hell the bedroom tax is! Or at least make a start on it...
Facts – Always a good place to start!
There is so much false information and lies about the bedroom tax. The coalition spin is that council and housing association tenants – the social tenant – live the life of Reilly - that they have spare bedrooms which the state should no longer pay for and if the government makes this "feckless" social tenant move to a smaller property by reducing their housing benefit, then the government saves money. This is what the public has been told.
It’s a crock of horses**t. The bedroom tax will cost MORE in housing benefit if tenants downsize.
(a) Who does the bedroom tax affect?
1) The government estimates that the bedroom tax will affect 670,000 social tenant households with an average £14pw cut in housing benefit. Government claims (wrongly - see below) that this will save £480m per year.
2) The average household is 2.4 people so thats 1.6 million adults and children
Pensioners (in receipt of pension and or pension credit) are not affected and the bedroom tax does not aply to them as they have been exempted.
3) Therefore - the bedroom tax only affects social tenant households of working-age who get housing benefit
4) The government's own official data on who gets housing benefit reveals 3.4m social tenant households get housing benefit - yet about 1.6m to 1.8m of those are pensioners and exempt
5) Hence the bedroom tax can apply to between 1.6 and 1.8m working age tenants
6) 670,000 social tenants will have their housing benefit cut. This means it affects between 37% and 42% of all social tenants claiming housing benefit.
In summary, at least one in three social tenants who receive housing benefit (in full or part housing benefit and working or not working) will be affected by the bedroom tax. It could be as high as 2 in every 5.
Last week, Channel 4 News ran a piece on the bedroom tax and made a false statement (inadvertently) - they said 660,000 people affected out of 3.6m meant 20% or 1 in 5. As I have explained above, it's 1 in 3 or even 2 in 5 – something that public interest lawyers may want to note for the inevitable legal challenges to the bedroom tax.
(b) Why the bedroom tax will cost more in housing benefit
Last year, the National housing Federation (NHF) - the lobbying umbrella group for housing associations - released some data which nobody on any side of the argument disputes.
Of the 670,000 affected, 180,000 are single people living in 2 bedroom social housing properties. Last year, only 68,000 1 bedroom social housing properties were let.
What does that mean?
It means that if all 180,000 single people in 2 bedroom flats wanted to downsize to a 1 bedroom property - which is what the government says is fair - then 68,000 could move to a 1 bedroom social property, but the other 112,000 would have to move to a 1 bedroom private property.
Some numbers: a 1 bedroom social housing property is about £10pw cheaper than a 2 bedroom social housing property. So, the housing benefit saving is £10pw for 68,000 properties or £680,000 saving per week. This is a saving of £35.5m per year!
However, a 1 bedroom private property is about £35pw more expensive than a 2 bedroom social property. This means the housing benefit bill increases by £35pw for 112,000 claimants - an increase of £3.92m per week. This is an increase of £204.5m per year.
So - if just single persons in 2 bedroom social properties were to downsize, the housing benefit bill would increase by £169 million per year.
That is why the housing benefit Bill will INCREASE if social tenants moved to smaller properties.
Note that the DWP - the government department responsible - estimates that 81% of those affected by the bedroom tax ‘under-occupy’ by just one bedroom. This is about 543,000. Take away the 180,000 single people who occupy 2 bedroom properties and this means the other 363,000 are either living in a 3 bedroom property when they need a 2 or in a 4 bedroom property when they need a 3 bedroom, etc.
Just as in the example I gave above - moving from a 3 bedroom social property to a 2 bedroom social property reduces housing benefit by about £10pw, but a 2 bedroom private property costs about £35pw more than a social 2 bedroom property, so the housing benefit bill would also rise there. The same logic applies to the 124,000 underoccupying by 2 bedrooms. A 1 bedroom private flat costs more in housing benefit than a 3 bedroom council one and a 2 bedroom private flat more than a 4 bedroom council one. In fact - a 1 bedroom private flat in London gets £250pw in housing benefit. I doubt any sized social property has a rent of £250pw.
In summary - the £169m per year increased housing benefit cost is a major underestimate of how much MORE the bedroom tax will cost the public purse.
It also means the government’s argument that this will save money is false - or they have lied!
The Channel 4 News piece last Wednesday was mostly very good and alerted many to the bedroom tax farce. It also said there are 600,000 looking for 1 bedroom properties, yet there are only 300,000 1 bedroom social housing properties in total. I don’t know where C4 got that 300,000 1 bedroom properties figure from, though it sounds realistic. It also means that those with 1 bedroom properties are not going to give them up, doesn’t it, which must means more and more people who do downsize will have to downsize to private 1 bedroom properties. This must mean the housing benefit bill will increase and not decrease.
That would mean 300,000 reductions of £10 per week and 300,000 increases of £35 per week, meaning an increase of £7.5m per week - a trifling £391m per year increase, not a £480m per year saving!
The same C4 News programme had an interview with Steve Webb, a junior minister at DWP. He was asked about bedroom tax (remember a £480m pa cut to tenants) and he avoided answering all questions. He only responded with - we have put £30m into discretionary housing payments (DHP) for this.
(a) Government has put in £30m to help tenants with a £480m loss - hence 1 in 16 at most will get help
(b) The national lottery says a punter has a 1 in 14 chance of winning – which shows just what a lottery DHPs will be and puts that into context.
(c) The £30m DHP budget is there also for private tenants who have a shortfall in their benefit received and their rents – which is very common in the private rented sector. Last year, housing benefit rate to tenants was frozen altogether while private rents went up by more than 3%, so many more private tenants will want a share of this £30m pot. This year, housing benefit to private tenants is increasing by 0.59% and private rents will likely rise again by 3% - meaning more and more private tenants will want some of that £30m pot.
In summary - at best the DHP pot will help 1 in 16 of those affected by the bedroom tax. If that happens, 15 out of 16 - or 94% of those with a bedroom tax cut - won't get any DHP money!
- Posted by: Joe Halewood at 10:00am on 3 February 2013
- Filed under: Housing, Inequality, Local government
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