Bedroom tax saves £1 million a day, says DWP

Bedroom Tax protest at the Town Hall, Halifax.
Bedroom Tax protest at the Town Hall, Halifax.

The controversial Bedroom tax - which sparked protests in Calderdale - has saved taxpayers £1 million a day since it was imposed a year ago, according to the Department for Work and Pensions (DWP).

On the first anniversary of the controversial cutback, which is described by ministers as the removal of a “spare room subsidy”, Iain Duncan Smith’s department released figures showing that almost half a million households were having cash deducted from their benefits.

Under the new rules, social housing tenants deemed to have one more bedroom than they need lose 14% of their eligible rent and those with two or more lose 25%.

DWP figures showed that in November 2013, some 498,000 social housing tenants in England, Scotland and Wales were having their benefits reduced under the policy.

This figure was 50,000 down on numbers affected in the first month of the policy’s operation, suggesting that tens of thousands of tenants have moved to smaller accommodation.

Changes to housing benefit in the social rented sector are expected to save £490 million in 2013/14 and a total of around £1 billion by the end of 2014/15, equating to more than £1.3 million per day, the DWP said.

Critics said the tax was forcing disadvantaged tenants into rent arrears, putting them at risk of losing their homes.

A recent survey for the National Housing Federation found that 66% of housing association residents hit by the bedroom tax were in arrears and more than one in seven (15%) had received a letter warning them they were at risk of eviction.

NHF director of policy and external affairs Gill Payne said: “One year on there is no disputing the devastating impact the bedroom tax is having across the country.

“It is heaping misery and hardship on already struggling families, pushing them into debt, hunger and fear of eviction, with two-thirds struggling to find the money to pay their rent.

“From day one we said the bedroom tax is unfair and warned the Government that it would not work.

“We’ve been told time and time again that the bedroom tax is necessary to cut the housing benefit bill but this policy is still in danger of costing the taxpayer more in the long-term.”

Ms Payne added: “Housing associations are doing all they can, helping residents get back into work, downsize or manage their money better, yet they have reported significant increases in indicators of poverty.

“This ill-conceived policy should be repealed and efforts re-doubled to build more homes which would bring down the cost of housing and reduce benefit bills rather than hurting the most vulnerable.”

But Mr Duncan Smith said that the reform had ensured that working-age social tenants received taxpayer support only for the number of rooms their household actually needed, in line with the system already in place for tenants renting privately, and had freed up much-needed space for tenants stuck on waiting lists or living in over-crowded accommodation.

“It was absolutely necessary that we fixed the broken system which just a year ago allowed the taxpayer to cover the £1 million daily cost of spare rooms in social housing,” the Work and Pensions Secretary said.

“We have taken action to help the hundreds of thousands of people living in cramped, over-crowded accommodation and to control the spiralling Housing Benefit bill, as part of the Government’s long-term economic plan.

“Our reforms ensure we can sustain a strong welfare safety net, and we are providing an extra £165 million next year to support the most vulnerable claimants.”