Research questions bedroom tax's ability to make savings
Published by Max Salsbury for 24dash.com in Housing and also in Central Government
50,000 North East families hit by ‘bedroom tax’
The government may have significantly over-estimated the savings likely to be generated by the bedroom tax, according to new research commissioned by a group of social landlords.
Though the Department for Work and Pensions estimated that the policy would reduce the housing benefit bill by £930 million over the first two years of its life, the new study suggests that using the DWP’s own model the real savings may be little more than 60% of what was projected.
Riverside, Wigan and Leigh Housing, Affinity Sutton and Gentoo teamed up with the University of York to apply figures based on actual experience to a model used by the DWP to estimate the savings reported to parliament in impact assessments in 2011 and 2012.
Real data based on the experiences of the landlords involved during the first five months of the under-occupancy policy suggests that the DWP have under-estimated the proportion of tenants under-occupying by one bedroom who will downsize, and of those, the proportion who will be displaced into the more expensive private rented sector.
In addition the report, written by Prof Rebecca Tunstall, director of the Centre for Housing Policy at the University of York, highlights major weaknesses in the DWP’s model, which only considers the impact of a limited number of possible options for those moving, and does not consider the full impact of long chains of moves which could be triggered.
According to the research, the flaws could further overstate the level of savings claimed.
Prof Tunstall said: “The savings estimated by the DWP assume that of the 660,000 households affected, none of them will move to a smaller home but we know from our own research that over a fifth want to downsize to avoid the penalty. Tenants are already on the move, and with nearly half of those who have chosen to stay already in rent arrears, we can only see that figure going in one direction."
Hugh Owen, director of policy and communication at Riverside, added: “We’re not suggesting our figures provide a definitive alternative savings estimate, however, they are so different, that surely the DWP must go back to its own numbers. After all, this whole policy is based on the assumption that it will save money.”
Related work being undertaken by the National Housing Federation also argues that other costs should be taken into account when assessing the impact of the bedroom tax, including the £65m increase in discretionary housing payment and related budgets already set aside for 2013/14, additional costs of fitting aids and adaptations for disabled tenants who chose to move, and the significant additional costs to housing associations facing rising rent arrears, re-let times, rent collection and tenant support costs.
NHF chief executive David Orr said: “We’ve been told time and time again that the bedroom tax is necessary in order to cut the housing benefit bill, but this research suggests that it could save much less money than the government claims.
“Now that the savings have been called into question, the government must ask itself why it is pushing ahead with this controversial, unfair policy. We know that it is causing hardship for thousands, with research showing that half of families hit are now struggling to pay their rents, while nearly six in 10 people around Britain think the policy should be scrapped.”
In the wake of the study, West Cornwall MP Andrew George is urging ministers to review the impact of the bedroom tax
George said: "Even a saving of £320m (rather than the predicted £480m predicted) would not have discouraged DWP Ministers from going ahead; lower predicted savings would not in itself have been a show stopper. But the research appears to undermine confidence in and justification for the policy.
"It's the consequences of the "spare room subsidy" on people (therefore difficult to put a value on) and the consequent costs (hard to establish) that I'm most interested in - i.e. as set out in Section 7 of the report.
"A primary reason why I'm opposed to this policy is that it presupposes that all tenants can seamlessly move on within their community without any unwelcome disruption to their work, school, social, family and medical ties. This is not the experience in rural locations like mine."