Under-occupancy penalty

Protesters opposing the under occupancy penalty outside the Scottish Parliament. The 'bedroom tax' is a term used by critics to describe the changes to social housing occupancy rules.

The under-occupancy penalty (also known as the under occupation penalty, under-occupancy charge, under-occupation charge or size criteria)^[1] is a reform contained in the British Welfare Reform Act 2012 whereby social sector tenants with rooms deemed to be "spare" face a reduction in Housing Benefit, resulting in them being obliged to fund this reduction from their incomes or face rent arrears and potential eviction by their landlord (be that the local authority or a housing association). The under-occupancy penalty has been popularly branded the Bedroom Tax, especially by critics of the changes who argue that they amount to a tax because of the lack of social housing (or in some areas, any rented accommodation) for affected tenants to downsize to. The penalties are also criticised as having a disproportionate impact on disabled people.

Supporters of the changes have referred to the unreformed system as a "spare room subsidy"^[2] whereby tax-payers are said to be subsidising social housing tenants living in houses larger than their needs require, with the said intention of the policy being to reduce these costs and ease housing shortages and overcrowding. The reforms were one part of the 2010-2015 Coalition Government's wide-ranging welfare reform agenda which included the introduction of Universal Credit, the introduction of a cap on the total size of the welfare bill (see Welfare Cap), reform of Council Tax and reform of disability benefits (see Personal Independence Payment).

Policy

The under-occupancy rules apply from 1 April 2013 and applies to all those of working age . Having one bedroom more than the calculated allowance means a reduction in housing benefit of 14%, and two "spare" bedrooms means that a tenant will lose 25% of their housing benefit.^[3]

One bedroom is allowed for each of the following:

• An adult couple
• Each other person aged 16 and over
• Two children of the same sex under 16
• Two children who are under 10 regardless of sex
• Any other child (other than a foster child whose main home is elsewhere)
• A non-resident carer (or group of carers) requiring overnight care
• Where a room is required by a disabled child who is unable to share a bedroom
• Adult children who are in the armed forces

Exemptions

A number of types of housing are exempt from the changes. These include those living in temporary accommodation, shared ownership accommodation and non-standard accommodation such as houseboats and mobile homes.

There is a further category of exempt accommodation defined as "accommodation provided by a housing association, a registered charity or voluntary association where that body, or a person acting on its behalf, also provides the claimant with care, support or supervision".^[3]

If a "spare" bedroom is created following a death then a council tenant's housing benefit will not be reduced until a year after the death.^[4]

Rationale

The rationale of the policy is to encourage council tenants living in houses too big for their needs to move to smaller properties so that existing housing stock can be better used. A second rationale made by the Department for Work and Pensions is to reduce the overall housing benefit bill.^[5]

In 2012, speaking in the House of Lords, Lord Freud stated:

I remind noble Lords of the core argumentation. We do not think that taxpayers should be expected to meet the cost of somewhere approaching 1 million spare bedrooms, a cost of around £0.5 billion every year. Clearly this is unfair, or certainly different, to those in the private rented sector who receive benefits based on their household need.^[6]

Public opinion

In a November 2013 opinion poll carried out by Ipsos Mori found that more of the public support than oppose the reduction of housing benefit for under-occupying social housing tenants.^[7] The policy was most popular among owner occupiers and least popular among social renters.^[7] In July 2014 a YouGov poll found that 49% of people opposed the "bedroom tax" and 41% supported it.^[8]

Positions of political parties

Conservatives

The Conservative Party has tended to refer to the under-occupancy penalty as the removal of a "spare room subsidy". Writing in The Telegraph Conservative Minister Iain Duncan Smith has argued:

"...We need to put an end to the unfair situation where the taxpayer is subsidising people to have homes, paid for by the state, with spare rooms they do not need. This is effectively a spare room subsidy. Britain can not afford it and nor can the taxpayer."^[9]

Liberal Democrats

As members of the government, the Liberal Democrats voted for the Welfare Reform Act 2012. At their 2013 Spring Conference, members voted to review the policy that looks at the "money saved, costs incurred and the effect on vulnerable tenants".^[10] In March 2014 Inside Housing reported that the Liberal Democrats plan to scrap the "bedroom tax" for those who refuse a suitable and reasonable offer of accommodation.^[11] This represents a change in position as the party voted against a similar amendment to the 2012 Welfare Reform Act. Liberal Democrat Party Leader Tim Farron (at that time President of the party) has also criticised the distorting effect that the under occupancy changes have on the market.^[12] Following their change in policy, the Liberal Democrats voted with Labour on 5 September 2014, for Lib Dem MP Andrew George's private members bill to restrict the number of cases in which the penalty could be levied.^[13]

Scottish National Party

In their 2015 General Election manifesto the Scottish National Party stated that: "We will vote for the immediate abolition of the unfair bedroom tax".^[14]

Labour

The Labour Party pledged to repeal the act had they been elected in 2015.^[15]

Other parties

The under-occupancy penalty is opposed by the Trade Unionist and Socialist Coalition,^[16] the UK Independence Party,^[17] the British National Party,^[18] the Green Party of England & Wales,^[19] Plaid Cymru,^[20] the Democratic Unionist Party,^[21] the Social Democratic & Labour Party (SDLP),^[22] the Alliance Party of Northern Ireland,^[23] the Ulster Unionist Party^[24] and Sinn Féin.^[24]

Reaction

In August 2013 The Independent newspaper released figures that it argued show that 96% of people that will be affected by the changes are not able to move due to the lack of available social housing.^[25]

The under-occupancy penalty has been criticised for potentially costing more than it saves by forcing individuals into the private rented sector where rents are higher thereby increasing the cost to the taxpayer.^[26] The National Housing Federation has estimated that the housing benefit bill could increase by £143 million if affected tenants downsize into private rented accommodation. However the Government argue that by freeing up social housing there would also be a reduction in the cost of housing people in expensive temporary accommodation.

Criticism

Michael Rosen writing in The Guardian has criticised how, under government proposals, parents living in social housing could become liable for what he calls the bedroom tax after only three months following the death of a child – something that inadvertently causes the creation of a "spare" room.^[27] In March 2015 the Daily Mirror, a British tabloid newspaper, reported that a woman had become liable for the bedroom tax following her son's death from a brain haemorrhage following an assault.^[28]

Effect on disabled people

The changes in housing benefit have been criticised for having a disproportionate effect on disabled families. Two-thirds of individuals affected by the under-occupancy penalty are registered as disabled.^[29]

Legal challenges

In July 2012 the High Court rejected the premise that the policy was a breach of Article 14 of the European Convention on Human Rights due to the effect on disabled people.^[30]

In January 2015 it was announced that the Supreme Court of the United Kingdom would rule in March 2016 on whether the "bedroom tax" was illegal on the basis that it unfairly discriminated against disabled adults.^[31]

In May 2015 a father successfully challenged the penalty at a tribunal. The father had separated from his partner but was able to argue that his "spare" room was occupied by his son who stayed with him three nights a week. However it is believed that the Government will seek to challenge this ruling.^[32]

Caselaw

• Lall v Westminster City Council
• SSWP v David Nelson and Fife Council
• R(Rutherford and Todd) v SSWP
• Bolton Metropolitan Borough Council v BF (HB)

Effect

The Centre for Housing Policy at the University of York have concluded that the under-occupation policy has saved money but that the potential savings forecast by the Department for Work and Pensions have been overestimated.^[33] The use of Discretionary Housing Payment has partly reduced the savings predicted by the bedroom tax.^[34]

In the 12 months since the policy was introduced, the original aim of freeing up underoccupied properties had largely failed; in July 2014, a report was published by the DWP that said only one in 20 claimants affected by the change had downsized their property. The report also showed that there has been great demand for downsizing properties but there has been nowhere near sufficient supply of suitable sized housing.^[35]

In response to this report, the Liberal Democrats signalled a change in their support for the policy, with both Nick Clegg and Danny Alexander stating that they would like to see changes to the way it is implemented.^[36]

See also

• Welfare state in the United Kingdom

References

External links

• House of Commons briefing paper – under occupation of social housing