'Bedroom tax saves £1m a day'

File photo dated 11/01/14 of houses as reforms to cut housing benefit from council tenants with spare rooms - branded a bedroom tax by critics - have saved taxpayers ?1 million a day since they were imposed a year ago, according to the Department for Work and Pensions (DWP). PRESS ASSOCIATION Photo. Issue date: Friday March 28, 2014. On the first anniversary of the controversial cutback, which is described by ministers as the removal of a

%VIRTUAL-SkimlinksPromo%Reforms to cut housing benefit from council tenants with spare rooms - branded a bedroom tax by critics - have saved taxpayers £1 million a day since they were 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."

Employment Minister Esther McVey said around 8% of those affected had so far moved to a smaller property and insisted that meant the policy was "exactly on track".

A BBC survey, based on freedom of information requests to social housing providers, put the figure at 6%.

Asked if she was disappointed by the numbers, Ms McVey told BBC Radio 4"s Today: "Well no, because it wasn't that you had to move house - that was one of the options.

"What we thought would happen is roughly what is happening. There has been 30,000 people-plus move in the last 10 or 11 months.

"It is about 8%. We would say we were looking at 25-30% over four to five years which is exactly on track."

She said that far from increasing arrears "it looks like the number of people in debt is falling" after taking into account the fact that half were already behind in rent before the policy started.

Shadow work and pensions minister Chris Bryant said: "The Tories are so out of touch they just don't get it. This proves beyond any reasonable doubt that the bedroom tax was always designed as a tax on the poorest and most vulnerable.

"Trapped with nowhere else to go, thousands of people have had no choice but to fork out an extra £14 a week. David Cameron's Government have pretended this was all about helping people who are overcrowded, but in truth the bedroom tax is a cruel, unfair and appallingly administered policy.

"The Government should scrap the bedroom tax immediately. If they won't, Labour will."

Claudia Wood, chief executive of the think tank Demos, said: "The Government said the bedroom tax would encourage people to downsize and reduce housing benefit costs.

"In reality, a chronic shortage of smaller properties means many cannot move. Today's figures show over one in four households affected have fallen into arrears for the first time, and if the problems worsen then evictions come at a price. Evicting someone can cost over £5,000.

"Even those who are able to move turn to the private sector - where sky-high rents lead to higher benefit claims.

"The inevitable consequence of this poorly considered policy is it fails its main objective - saving the Government money - and creates a huge amount of hardship in the process."

Five biggest taxpayer stings
See Gallery
'Bedroom tax saves £1m a day'

Most recently HM Revenue & Customs let Vodafone off the hook - for quite a sum. Vodafone paid out just £1.25 billion despite an original tax bill being closer to £8 billion (HMRC has always refused to reveal how much it thought the Vodafone final bill was). The episode was made even more shaming and painful because Vodafone was given several years to come good with the cash owed - even though it was sitting on a substantial cash pile at the time.

The Exchequer is estimated to have lost around £10 million to Goldman Sachs recently through an 'error' made by HMRC. The episode relates to an employee benefit trust run by Goldman allowing employees to take non-repayable loans that had no National Insurance contributions tied to them. HMRC did claw back the full amount from more than 20 businesses - but not Goldman. HMRC remains cagey about the details of the deal. Little HMRC accountability or transparency.

Huge problems with QinetiQ, the former Defence Evaluation and Research Agency, or DERA. A lack of clarity on contractual arrangements at the outset didn't help, allowing private equity company Carlyle to hammer the price down (why would you start negotiations when you didn't know the company's true value?). The Ministry of Defence behaved, it was said, like "an innocent at a table of card-sharps". Estimated cost to the taxpayer - £90 million. Huge sums were later made by QinetiQ management when the company listed.

The TaxPayers' Alliances estimates £2.7bn worth of taxpayer cash was wasted with a super-expensive 'National Programme for IT in the NHS'. The Department of Health, in the end, had very little to show for it as a consequence. Another example of poor management and a seemingly ingrained inability to provide taxpayers' with value for money.

"BT is paid £9 million to implement systems at each NHS site, even though the same systems have been purchased for under £2 million by NHS organisations outside the Programme", the Commons Public Accounts Committee noted.

Contentious. The Office for National Statistics estimated this has declined 3.4% since 1997, "with inputs increasing by 38%." The Centre for Economics and Business Research estimate that this inefficiency costs the taxpayer £58.4 billion a year.

Given the above record, are there any deals that the taxpayer has actually won out on? Not many, but the one successful project was the roll out of new Jobcentre Plus offices. It came in £314 million under budget, claims the Taxpayers' Alliance. A small cheer.

Read Full Story