Under-Occupancy Penalty

David Simpson Excerpts

Tuesday 5th November 2013 Westminster Hall

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Riordan. I am pleased to have secured the debate, and I look forward to contributions from my hon. Friends, as well as some answers from the Minister, whom I congratulate on his new position.

The bedroom tax was introduced on 1 April this year. The policy was designed to make more efficient use of our country’s social housing stock by identifying people who were under-occupying their homes. Social sector tenants with one spare room face a deduction of 14% in their housing benefit. Those who are under-occupying by two rooms face a 25% deduction.

The Government told us that this measure would tackle overcrowding, encourage efficient use of social housing and save the taxpayer, by 2015, £930 million, but the reality is that this tax penalises some of the poorest and most vulnerable groups in our society, while failing to achieve any of its aims. Instead, we are seeing rising poverty, soaring rent arrears, streets filled with vacant properties, rising homelessness and worrying trends in our housing supply.

Local authorities face ever-increasing numbers of tenants who are unable to keep up with their rent payments, with that number set to rise even further in the future. That is the money that local authorities rely on to be able to build new homes and maintain their housing stock. The irony, of course, is that new homes are exactly what is needed to tackle overcrowding and create a working housing market; but under this Government, we have seen the lowest number of housing completions since the 1920s. That situation will not change as long as the bedroom tax is in place, rent arrears continue to pile up and local authorities are constrained in building new homes.

The scale of the injustice resulting from the bedroom tax is appalling. The tax affects an estimated 600,000 people, 96% of whom have no smaller home to go to, and as a result the average family is losing £720 a year. In my constituency of South Shields, 1,440 households are affected, with only 387 properties becoming available for them to move into between April and September this year. Some of those properties are only for people qualifying for sheltered accommodation, so the reality is that many households have fewer homes to bid for. The average amount that will be charged is just under £9 a week for a household deemed to be under-occupying by one bedroom and just under £15 a week for those under-occupying by two, yet South Tyneside Homes estimates that the true value of a spare room is just under £5, as reflected in the differences in the rents that tenants would pay. The bedroom tax, then, grossly overvalues the price of a spare room and is overcharging tenants. This is at the same time as we have a cost-of-living crisis, with food, energy and water prices surging.

The chief executive of Citizens Advice said:

“As long as this dire lack of housing options exists then the Government can’t reasonably tell people they have a choice about downsizing to a smaller home.”

But they do keep saying that, and she is correct: the numbers simply do not add up. Some 180,000 households were deemed to be under-occupying two-bedroom homes, yet only 85,000 one-bedroom homes became available during the whole of 2012.

What makes matters worse is that the constituents I have spoken to do not actually have a spare room. What they have is a room for their carers, their elderly or disabled relatives, their children, foster children or potential adopted children. Others find it difficult to downsize their home when their circumstances change—for example, following a bereavement or when their children leave home.

[David Simpson (Upper Bann) (DUP)]

I appreciate that housing per se is a devolved matter for Northern Ireland and the Executive have yet to agree the Welfare Reform Bill, but there is an issue, which the hon. Lady has mentioned, as regards downsizing. I am sure that the situation is the same across all regions. There is a massive shortage of one-bedroom houses. In Northern Ireland, it would take at least a 10-year building programme to achieve the one-bedroom housing that is required. That puts the Executive in Northern Ireland in a great dilemma, and I am sure that the situation is much the same in all regions.

[Mrs Lewell-Buck]

The hon. Gentleman is correct. I will come on to the point that he raises.

I have never met anyone who is selfishly holding on to an extra bedroom just because they want to. It is no wonder that the local authority covering my constituency has seen a rise of more than 50% in homelessness under this Government and, between April and July of this year, has seen more than 500 tenants hand back their keys. The total financial impact of that handback is £600,000. That money could have been spent on bringing 60 of the homes in our area up to a decent standard or on building eight new homes. My local authority is not alone. Many other local authorities are having to use their housing revenue account moneys to pay for the tax. Those are moneys that they would have otherwise used to build and improve their homes.

Not only local authorities are struggling because of the tax; 26 leading housing associations have seen their credit ratings downgraded as investors become anxious about the impact of the bedroom tax. That leaves housing associations unable to plan for the future or for current housing demand and to build homes to meet that demand. That compounds what is already a dire situation for house building under this Government, who slashed the affordable homes budget in their first year in office and are planning a further round of cuts for 2015-16. Meanwhile, property developers sit on land that could be used for new builds.

The bedroom tax not only stifles construction; it also wastes many of the homes that we already have. Larger properties are now lying empty across the country, ignored by tenants who fear that they will not be able to afford them if their circumstances change. We are already seeing streets with scores of empty properties. The number of such properties is likely to rise and rise, while the former residents are becoming homeless or moving to the expensive private sector—moves that will increase the housing benefit bill further, and further stretch public finances.