Esther McVey: Why we had to reform system of social housing subsidy

IT has been seven months since the Government reduced subsidies to those living in social housing who had more space than they needed. It is now a good time to reflect on this important decision.

From figures published this month, we know that 51,000 people on housing benefit in Yorkshire and the Humber are seeing a deduction as a result of this measure.

These people, who were all of working age and receiving housing benefit to pay towards the cost of their rent, were all found to have room to spare in their homes.

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Yet, at the same time, there were 243,000 households waiting to be housed across the area.

We believed this was unfair and the system had to be changed to help those families who were crammed into accommodation that was too small.

It is important to remember that our changes ensure housing benefit now covers households for the number of bedrooms they actually need – whether they live in the private rented sector or the social sector.

We remain confident that these measures will lead to a saving to the taxpayer of about £500m a year.

Without this much-needed reform, the cost of funding housing benefit would have continued to spiral out of control.

We have already seen a 50 per cent increase in real terms over the past decade and if we had not taken action projections showed that we would have been spending a staggering £26bn on housing benefit by the end of this Parliament.

This was clearly unsustainable and had to be reined in. But more importantly, census figures published by the Office for National Statistics show that 375,000 families in England and Wales are living in cramped, overcrowded conditions.

Overcrowding on this scale is clearly unacceptable, particularly for those households that include children whose life chances may be detrimentally affected as a result of living in inadequate conditions.

It cannot be right that these families have been squeezed into social houses that are too small for their needs, when Housing Benefit is paying householders in the social rented sector for approaching one million spare rooms.

It was a problem that had to be tackled. And an independent poll conducted by Ipsos MORI and published last week revealed 78 per cent of respondents agreed that we were right to address the issues of overcrowding and under-occupation.

A further 54 per cent also said they believed it was fair that people of working age, who live in social housing, should receive less housing benefit if they have more bedrooms than they need.

And that is why we remain convinced that by reducing housing benefit we will encourage the behavioural change that is required to ensure the right sized properties go to the families who need them most.

The average weekly deduction has been £14.50 and even after this reform, we still pay the majority of most claimants’ rent.

We understood some people would need extra support, which is why we made a fund of £190m available to local authorities to help vulnerable tenants, ensuring there was a safety net to catch the most vulnerable people in society.

This includes £25m specifically for disabled people living in adapted properties who are unable to move.

We have also considered the needs of remote communities by targeting £5m of the funding to help those living in the most remote regions of the country, where the options for those affected can be more limited than in other areas.

While the removal of the spare room subsidy has resulted in an immediate saving to the housing benefit bill, we expect the wider aims of the policy to continue to take effect as we move into 2014.

Namely, those who live in properties with more room than they need will look to downsize to accommodation that is more appropriate for their personal circumstances, or let out spare rooms to lodgers, while those who can will consider moving into work.

This will help local authorities and providers of social housing to make better use of the country’s housing stock, saving taxpayers money and ensure every single room is put to full use.

• Esther McVey is a Tory MP and the Minister for Employment.