The ‘spare room subsidy’ or ‘bedroom tax’ has left tenants struggling to cope and has failed to free up homes in many areas, according to new research from LSE and University of York for the Joseph Rowntree Foundation (JRF). It also discovered that savings to the Department for Work and Pensions (DWP) will fall short in the policy’s first year.
The findings come in two separate studies published by JRF. The first is on the Housing Benefit size criteria (often referred to as the ‘spare room subsidy’ or ‘bedroom tax’). The second looks at the impact wider welfare changes have had on social landlords and tenants.
The findings use the latest available data to provide an early snapshot of how the policies have affected tenants, landlords and the government, one year on from a raft of changes to the benefits system.
The first report, Housing Benefit size criteria: impacts for social sector tenants and options for reform, found: 1. DWP is likely to save £330 million in the policy’s first year, £115 million below its initial target and a figure which will decline in future years. This is net of £55 million Discretionary Housing Payments (DHPs) spent to mitigate the policy’s effect on vulnerable people, a figure which will increase next year due to higher expected demand.
2. Fewer people are paying the charge: 498,000 have been affected by the policy – lower than the 660,000 estimate by DWP. Half are in arrears in the first six months of the policy due to the average £14 per week cut.
3. Over 100,000 people are trapped in larger homes and are subject to the cut despite wanting to move, while six per cent have moved to avoid paying. The report proposes a range of reforms to lessen the financial hardship caused to some households by the policy. These include making allowances for an additional bedroom for households where someone claims a higher rate Disability Living Allowance; flexibility for households with carers and those with responsibilities for children; reforming the DHP regime so that it is possible to make longer-term awards for households whose circumstances do not change; and taking into account bedrooms that are too small to share.
The second report, The impact of welfare reform on social landlords and tenants, show the impact of multiple changes to the benefits system on tenant’s everyday lives. In particular: 1.People are choosing between heating and eating. Three quarters have cut back on food bills and others have been referred to food banks. Tenants told the researchers anxiety and insecurity are on the increase and they increasingly reliant on emergency support, rather than less. 2.People are becoming more vulnerable to debt. Over half are borrowing cash from family and friends to pay for essentials. Tenants have sold family possessions to help cover costs.
3.Tenants – with help from their landlords - are putting a renewed focus on finding work, apprenticeships, training and skills in response to the changes. However those in jobs - which tended to be in low-paid service roles with short hours - were worried about falling incomes and job security. The report also highlights the impact of welfare reform on social landlords:
1.Housing providers are having to check more rigorously whether new applicants can afford the rent, thus increasing the difficulty of getting the poorest into social housing in the most places.
2.The reforms have transferred costs to landlords: associations are providing information, advice on jobs and benefits, tackling fuel poverty and meeting crises through hardship funds and support for food banks. They increasingly advise tenants about juggling rent, Council Tax payments, and food and energy bills.
3.All associations are clear that rising fuel costs are a cause of increasing poverty, but its impact has intensified since welfare reform began. Energy-saving advice and investment are growing priorities for social landlords.
Kathleen Kelly, Policy and Research Manager at JRF, said: “The families affected by welfare reform are already living on low incomes and are being put in a risky position by further cuts in their support. Early indications suggest the worst effects have yet to materialise, but the reforms have transferred housing costs to poor families, who can ill afford the extra costs. A particular concern is the stark choice landlords face as to whether they can afford to house the poorest. The time is right to take stock of the policies and alleviate their worst effects.”
Report author, Anne Power, from LSE, said: “Welfare reform may end up making tenants more, not less, dependent, and certainly more vulnerable. Cutbacks in support make people on low incomes, in work and out, more vulnerable to debt, at risk of eviction and short of essentials, so they rely on food banks and other emergency support. Tenants often now see their landlords as a lifeline. Landlords have responded by working more closely with their tenants, but these services have costs, which could leave less money for building new homes.”
Steve Wilcox, report author from University of York, said: “The policy is still in its early days, but downsizing and savings have been lower than expected. There are options to alleviate the worst effects of the policy – particularly in the provisions for people with disabilities, bedrooms too small to share, and those unable to move. The savings from the size criteria are modest, and will decline over time, but they have been achieved at disproportionate costs for tenants and landlords.
Notes to editors
For more information please contact: Danny Wright, media relations officer at JRF on 01904 615958.