Bedroom Tax – After gaining power along with the Liberal Democrats, the Conservative party implemented a number of welfare reforms. They claimed that these reforms would make the benefit system fairer as before some individuals were claiming more in benefits than the average worker received in pay. One way they hoped to achieve this was by introducing the spare room subsidy (also known as the bedroom tax) where those living in social housing that were considered to have ‘spare’ rooms would have their housing benefits cut. Since its inception the reform has been extremely controversial, and now that the General Election is coming up MPs are becoming even more vocal:
The Bedroom Tax Explained
The current housing crisis has not just adversely affected the private housing market but also the social one, as more and more individuals are now relying on the government to help them find a home. However, the government claims that there are currently not enough homes to help everyone, with one of the reasons behind this being that some families are placed in properties much larger than they need. Therefore, the government has suggested that those living in properties that are too large for them should move to smaller ones, thus freeing up space for those that truly need it. In order to encourage homeowners to downsize, the government also put into place a plan where those that are asked to move and fail to do so will have their housing benefits cut by 14% for one spare room and 25% for two or more spare bedrooms.
Has it worked?
One of the biggest issues concerning the bedroom tax is that many people claim that it hasn’t actually worked. Many individuals who have been asked to move to smaller accommodations have refused to do so and instead are taking the hit to their housing benefits. To make matters worse, because their housing benefits have been cut a large percentage of these tenants are now in rent arrears, meaning that less money is entering the social housing sector. According to a report by the Department of Work and Pensions, 18% of tenants affected by the bedroom tax are trying to find ways to earn more money in order to keep their homes. The report added: “Landlords reported that, five months into the RSRS, 41% of tenants have paid the full RSRS shortfall, 39% have paid some and 20% have paid none. There was widespread concern that those who were paying were making cuts to other household essentials or incurring other debts in order to pay the rent.”
Nick Clegg Controversy
With the General Election coming up the coalition government is starting to break apart as the Liberal Democrats and the Conservatives are beginning to distance themselves from each other. This week, Deputy Prime Minister and leader of the Liberal Democrats, Nick Clegg, announced that he believes the spare room subsidy should be changed, which caused a notable amount of controversy. The Labour government firstly accused Clegg of “unbelievable hypocrisy” as he previously supported the tax, while the Conservatives called it a “cynical PR stunt”. However, Liberal Democrat Danny Alexander wrote in the Daily Mirror that the party decided to change their stance as they believe the reform isn’t working, and even went so far to say: “If we cannot convince our Conservative coalition partners, we will commit to these reforms in the our 2015 Liberal Democrat manifesto.”
Housing Reforms after the General Election
It’s clear to see that in the run-up to the General Election the welfare reforms will feature prominently across all parties’ manifestos. Even though what happens in the social housing market doesn’t directly affect landlords, in the long-term it can have negative effects on the private rental sector. For example, it will put more pressure on landlords to let to DSS tenants, however at the same time these landlords will be less inclined to do so as there will be a higher risk of their tenants falling into rent arrears. Another way to solve this issue which the government is currently focussing on is to create more housing across the UK, however it is unlikely that supply will be able to meet demand before the General Election in May 2015.