Under-occupancy benefit cuts: a few spare thoughts

Published by Julien Tremblin for 24dash.com in Housing and also in Central Government, Featured, Local Government

You’d have a job to pick the most concerning welfare reform announced by the Coalition so far. Together, however, they represent a tsunami of upheaval.

One of the meanest, however, has to be plans to cut the housing benefit of those tenants who have spare rooms from April 2013, not least because the Government knows there aren’t the homes for those tenants to move into.

By cutting the housing benefit of tenants ‘underoccupying’ their homes the Government hopes those affected will move to 'suitably sized' accommodation and free up homes for overcrowded households and those on waiting lists.

Tenants facing a rent shortfall, the Government says, can be considered for extra help from the Discretionary Housing Payment scheme – but there in lies a 'fish and loaves' exercise, even with an additional £190m being invested over the next four years.

Here, 24housing deputy editor, Ross Macmillan outlines some of the main issues:

One spare room or two?

There appears to be, on the face of it, some confusion over what constitutes an underoccupying household. Asked in the House of Commons in October about how many households in social housing are living in underoccupied properties, the housing minister Grant Shapps said: “Under-occupying households are those with at least two bedrooms more than they need according to the Bedroom Standard”. The Department for Work and Pensions (DWP) defines it, however, as tenants who have one spare room or more. It wants to shave £11 off this group’s weekly housing benefit. Tenants with one spare bedroom, however, make up nearly 80% of the 670,000 households affected by the underoccupation cuts. Exempting those with one spare bed, therefore, would make a serious dent in the Government’s cash savings target.

What’s a bedroom?

This glorious question was put to Lord Freud by Lord Foulkes of Cumnock (Labour/Co-operative) during the committe stage of the Welfare Reform Bill in the House of Lords. Lord Freud said: “box rooms without opening windows normally would not count as bedrooms”. His response led Lord Foulkes to warn that it would tempt tenants to board up their windows, as some owners used to do when there were window taxes."

Excluding the main culprits

The cuts to housing benefit for tenants deemed to be living in homes too big for their needs will only apply to working age claimants, yet the group who are most likely to be underoccupying are pensioners. It led one sceptical housing chief to quip, “they’re exempting pensioners because they're the ones that will vote them back in”.

Stock "mismatch"

Labour peer Baroness Hollis of Heigham said she was "horrified" when she learned that the Government’s estimated savings from this policy are based not on people moving – as this might cost them more – but staying put and having their benefit cut.

According to the NHF, while some 180,000 families are underoccupying two-bed homes, just 68,000 one-bed homes became available last year. The Government has pointed to the direction of the private rented sector – but they don’t want any one on benefits and they don’t have the room.

In fact, if a tenant did move into the private rented sector, their benefit dependence would be greater as it would be more expensive, adding to the “soaring benefit bill” we keep hearing about. The Government knows there isn’t the stock out there. Its own impact assessment for the policy says: “If all existing social sector tenants wished to move to accommodation of an appropriate size, there would be a mismatch between available accommodation and the needs of tenants.” Comforting.

Stigmatising

Underoccupancy cuts risk further stigmatising social housing tenants. It sends out the message, “If you’re on benefit, you’re going to be treated differently in terms of how many bedrooms you should or shouldn’t have for your family”. It’s also unfair to apply the policy retrospectively as in many parts of the country tenants are deliberately placed into homes that are too large for their needs because of local ‘surpluses’ of particular property types.

Utilising stock

The Government’s own impact assessment shows that 450,000 disabled people – twice that of non-disabled people affected by the policy – face losing £13 a week through the cuts, which could force some to leave homes they have had adapted, sometimes by as much as £30,000 depending on their circumstances.

The Government says “a small number” of households containing a disabled adult and a non-resident carer will be assessed as having a reasonable requirement for an additional room. But is that really maximising the best use of stock - which is what the policy is meant to be all about?

Claustrophobic

The Government’s plans could see a couple with two 15-year-old girls “shoehorned” into a two-bed flat. This is because the policy allows one bedroom per person or couple, with children under the age of 15 expected to share with another child if they are the same sex; and children under nine expected to share regardless of gender.

There are, however, concerns that the size criteria of rooms is just as important as the number of rooms – especially given that council stock can be varied. The point was argued by Labour peer Baroness Hollis of Heigham who has warned: “Two teenage girls might be expected to share a second bedroom that is 10 feet by 8 feet. Let us visualise two single beds put against the 8-foot wall, with 2 feet between them. Fifteen year-olds are not going to sleep in bunk beds as though they are five years-old.”

Legal threat

An amendment to exempt tenants from cuts if the landlord can’t come up with alternative property was withdrawn in the Lords following assurances given by Lord Freud. However, could the policy stand up if a tenant declared a legal challenge against any cuts in benefit if they were willing to move, but there wasn’t the appropriate accommodation available for them to move into?

Getting better jobs

Nobody argues against the philosophy of making work pay. The Government says that for those tenants faced with cuts to their benefits, they may need to meet the shortfall through other means such as employment. Taking one example in Barnsley – identified as the 43rd most deprived local authority with its legacy of coalmining and intergeneration unemployment – it’s got 19,000 working age people with no qualifications and 40,000 people who only have NVQ to Level 2. If we could all just step out of our jobs into better-paid ones, wouldn’t we already be doing it?

Cost to landlords

Despite the Government thinking that the policy will see some tenants “float off" benefits (their words) and make up the shortfall themselves - thereby lowering administration costs for councils – the costs of the cuts could be significant for landlords.

Costs to run downsizing schemes and bulk up debt collection teams, as well as the impact of increased void periods could be significant.

In Rochdale, the council's ALMO estimates that by halting allocations of one-bed flats to all other people, it can transfer underoccupying tenants in just over two years at a local direct cost of around £3 million.