COUNCILS found to have helped families dodge the Government’s so-called bedroom tax will face a financial penalty, a Minister has warned.
Welfare Reform Minister Lord Freud has told councils he is ready to order independent investigations into authorities where he suspects they have changed the way council houses are classified without a good reason.
Leeds City Council is among authorities and housing associations that have reviewed their housing stock following Government changes to housing benefit which means families receive less money if they are in a house with one or more unoccupied bedrooms.
Last month, Leeds reclassified 837 homes as having fewer bedrooms than previously designated.
Peter Gruen, council executive board member for neighbourhoods, planning and support services, said the changes had affected a tiny proportion of the 850,000 council homes in Leeds.
He said: “I am amazed that such a small change has led to a letter from a Minister to every local authority in the country to say ‘if we don’t believe you, we will come back and take some money off you.’
“If they spent as much time as they do chasing people out of social housing because they have an extra bedroom on stopping companies avoiding taxes then the country would be much better off.
“I don’t accept this is simply political but I do accept we are wholly opposed to the bedroom tax and don’t agree with mums and kids being dragged before the courts for eviction because they can’t afford to pay.”
Coun Gruen said the council was confident it had followed the relevant rules in redesignating homes.
St Leger Homes, which manages Doncaster Council’s housing stock, said yesterday it was not ruling out any options including redesignating homes.
Hull City Council’s cabinet will consider whether to carry out reclassification of properties at a meeting on Monday.
Councils in Nottingham and North Lanarkshire in Scotland have already redesignated properties as well as the Knowsley Housing Trust on Merseyside, one of the largest housing associations in the country.
The changes to the housing benefit system have proved to be among the most contentious of the wide-ranging reforms of welfare introduced by the coalition.
Families with one unoccupied bedroom now lose up to 14 per cent of their housing benefit while those with two empty bedrooms have their payment cut by up to a quarter.
The Government argues the move is necessary to reduce the welfare bill by £500m each year and encourage people to downsize to smaller homes and free up larger properties for bigger families.
Critics argue that the measure hits some of the poorest in society, punishes separated parents who have spare rooms for visiting children and is unfair because there are often not enough smaller properties for people to move into.
Councils are responsible for paying out housing benefit which they then claim back from the Government.
In his letter, to council chief executives, Welfare Reform Minister Lord Freud tells councils that where they reclassify homes as having fewer bedrooms that should mean they also charge the tenants a lower rent. It says: “Blanket redesignations without a clear and justifiable reason, and without reductions in rent, are inappropriate and do not fall within the spirit of the policy.”
The letter goes on: “I would like to stress that if it is shown properties are being re-designated inappropriately this will be viewed very seriously.”
Lord Freud has said the Government will commission auditors to assess why councils have reclassified some of their housing stock.
Councils judged by the Government to have changed classifications without good reason will have the amount they are paid in housing benefit reduced or stopped altogether.