Bedroom Tax savings ‘optimistic’

YORKSHIRE academics have concluded the Government’s so-called “Bedroom Tax” will save far less money than predicted because Ministers were too “optimistic” in their assumptions and failed to predict how those affected would respond.

A report from the University of York’s Centre for Housing Policy has concluded the controversial cut in housing benefit, introduced in April, will save only two-thirds of the revenue expected by the Department for Work and Pensions (DWP) – leaving a £160m black hole in the Government’s welfare savings plan.

“Estimates of savings were too optimistic,” the report states. “The projected £480m savings are unlikely to be achieved.”

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The policy is designed to save nearly £500m from the UK’s annual welfare bill while encouraging people in oversized social housing to downsize into more appropriate homes. Under the measure, anyone who lives in social housing and has a spare bedroom loses 14 per cent of their housing benefit.

But the study by York University describes the Government’s assumptions about how people would react to the cut in benefits as “odd”. It suggests the £480m projected savings could only have been achieved had not a single household downsized as a result of the policy.

In fact, the academics found that around 20 per cent of the people affected have already downsized into smaller housing – far more than the eight per cent “implied” by the DWP’s modelling.

Furthermore, many have moved into more expensive privately-rented homes, meaning the policy is on course to save £160m a year less than anticipated.

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The Government insisted the report was “not credible”, however, owing to its relatively small sample size and the fact it was produced in conjunction with four housing associations.

The Government’s new Employment Minister, Esther McVey, said: “It’s very limited in the number of people who’ve taken part. And let’s be honest – the housing associations have a vested interest in this report. So (it’s) not credible.”

The issue was the subject of heated debate in the Commons yesterday, with Labour MPs attacking the policy as unfair, citing the shortage of smaller homes for people to move into.

Labour’s Huw Irranca-Davies said that in his constituency three-bed houses were lying empty, while smaller homes were hugely oversubscribed. But Ms McVey suggested housing associations and councils could start remodelling three-bedroom homes into one and two-bed properties to help limit the impact of the so-called tax.

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“You’re quite right – we have to get the stock right,” she said. “The fact there are three-bedroom houses, why in the last three years they haven’t actually been modified into the one and two-bedroom houses.”

Tory MPs also expressed anger at the criticism of the policy last month by the United Nations’s housing expert Raquel Rolnik, during a visit to the UK.

Elmet and Rothwell MP Alec Shelbrooke said he was “concerned” that Ms Rolnick had “made no reference to the 250,000 households living in overcrowded accommodation”, nor to “the efforts the Government are making to bring fairness and respect to the welfare system”.

Work and Pensions Secretary Iain Duncan Smith dismissed her visit to the UK as a “gimmick”, and even suggested Labour was responsible.

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“I was interested in the notes that came back from the UN after she left,” he said. “Some of the officials said – ‘who is that strange woman; why is she talking about bedrooms, and why on earth do we have a UN Housing Rapporteur?’ My thoughts entirely!”