The Government has partially backtracked on its plans to cut housing benefit for social-housing tenants with spare bedrooms, due to take effect next month.
Work and Pensions Secretary Iain Duncan Smith has announced two more tweaks to his plan to cut housing benefit for tenants of under-occupied council homes, which we first explained in Bedroom tax: why social tenants will soon be taxed on their spare bedrooms. Under his revised proposals, foster carers and young members of HM Armed Forces who live at home will not face cuts to their housing benefit.
The first concession means that around 5,000 registered foster carers will not face a bedroom tax by losing either 14% of their housing benefit for one spare bedroom or 25% for two or more spare bedrooms. This will apply even if foster parents are not caring for a child, so long as they have done so (or been approved as registered carers) in the past 12 months.
In addition, young adults deployed on active service with the military will be considered to be living at home, thus exempting their parents from losing some housing benefit. Unfortunately, this does not extend to reservists on operations (such as Territorial Army members), whose families must still pay this bedroom tax.
A flawed compromise for the disabled
Previously, it was estimated that 660,000 households will be hit by the bedroom tax, with around two-thirds (67%) of these containing at least one disabled person. So around 440,000 households with vulnerable members will have to shoulder these cuts -- a situation which has caused a public outcry.
However, in another concession, the Department for Work and Pensions also confirmed that families with severely disabled children unable to share a room with siblings may also be spared this bedroom tax.
As for households with disabled adults, they can apply for relief support via 'Discretionary Housing Payments' operated by local authorities, but this scheme is sure to become something of a postcode lottery.
Sadly, the limited pot of discretionary payments available would cover only a fraction of the impending cuts. With just £30 million on offer to around 230,000 people claiming Disability Living Allowance, the average payment could be just £130 a year. This works out at a mere £2.50 a week, versus an average weekly loss of £14.
Releasing housing stock and cutting welfare
[SPOTLIGHT]Despite these changes, the forthcoming bedroom tax remains a big worry for 3.8 million households classified as social housing (rented from local authorities or non-profit housing associations). Though these cuts to housing benefit will not hit pensioners, they will apply to working-age households.
Assuming weekly housing benefit of £100 per household, tenants with one spare bedroom would lose around £14 a week (£728 a year). For those with two or more spare bedrooms, this cut rises to £25 a week, or £1,300 a year.
Of course, the idea behind the bedroom tax is twofold: first, to encourage council tenants to downsize to smaller homes, freeing up housing stock for larger families. Also, with the UK's bill for social welfare swelling to an estimated £207 billion in 2012/13, cuts to housing benefits were expected to save £500 million a year.
The big problem with this idea is that there are far too few smaller properties for tenants to move to, due to more than 1.8 million people sitting on waiting lists for social housing. Furthermore, these latest concessions are sure to lower the total saving, thus barely making a dent in the Government bill for housing support.
Expect chaos in three weeks
With just three weeks until these cuts to housing benefit take effect and the rules still being tinkered with, this welfare cutback is sure to be an administrative nightmare.
What's more, we can expect a wave of legal cases and appeals as those affected seek relief via the courts. For example, what about divorced parents who both keep spare bedrooms for shared childcare? Will families with both a son and daughter be forced to make them share bedrooms? What about parents who have lost a child to, say, cancer or a road accident being forced out of now 'under occupied' family homes?