The Welfare Reform Bill, currently in Committee Stage in the House of Commons (follow the debates here), contains many provisions which will have a profound effect on the housing opportunities of people on low incomes in the years to come.
One of the changes that has attracted little attention is designed to tackle under-occupation in the social rented sector. From 2013 housing benefit will be reduced if the household is of working age (the limit is rising from 60 to 65) and is deemed to be living in accommodation which is too big for their needs. An ‘underoccupying’ claimant will lose a proportion of their HB, which will no longer meet their current housing costs, with an average loss of £13 per week.
The government’s own impact assessment estimates that 670,000 social tenants will be affected, around one-third of all HB claimants in the sector. In the north, between 40-50% of tenants will be affected, in London around 20%. This is an extraordinary number of people.
Affected tenants will face a ‘choice’: make up the shortfall from their other income, take in a lodger, or move to smaller accommodation in either the social or the private rented sector. Even if only half of those affected decide to move, pity the poor landlord in the north when 1 in 5 of all tenants knock on the door asking for an urgent move to smaller accommodation. In London, additional transfer requests from 10% of tenants would swamp the housing allocations system.
Nearly 4 in 5 of those affected currently ‘underoccupy’ their homes by just one bedroom. They are hardly evil – most people with one spare bedroom do not recognise themselves as underoccupiers, and often the last bedroom is small anyway – but they will lose £11 per week on average. Over recent years policy had moved strongly towards recognising that the real challenge in underoccupation is to tackle cases where there are 2 or more spare bedrooms, where there is most to gain. Under the new rules, a family of 6 with 2 sons and 2 daughters living in a 4 bedroom property would be deemed to be underoccupiers, and would receive the arbitrary HB ‘fine’.
The loss of an average of £13 per week might not be noticed by the Cabinet of millionaires, but this is a huge sum of money to anyone on a very low income. The policy’s only chance of success will be if there is a supply of smaller homes to transfer into. Yet the government’s impact assessment admits that there are simply not enough smaller housing association and council properties available.
The policy is the opposite of the ‘moral hazard’ – where people are insulated from the consequences of their own actions. In this case people will face the consequences of the government’s actions with no reasonable course of action open to them to avoid or pre-empt or respond to the change in policy. It is coercive and in a nasty way: if they cannot move, they will face deliberate impoverishment with no way out.
Will the policy achieve its stated aim and save any money? Labour shadow welfare reform minister Karen Buck thinks not. Tenants who are unable or unwilling to move will fall into rent arrears, with the risk of eviction (and loss to the landlord) triggering the costs associated with a rise in homelessness. The government thinks that some will move into the private rented sector, where rents are higher even for smaller properties, so the cost will go up not down.
And in a final irony, the policy will not even address, indeed will avoid, the biggest single issue in the underoccupation debate – which is what to do with underoccupiers of retirement age whose family has moved on.
For our previous post on the Tories’ market solution to underoccupation, click here.