‘A good decision is based on knowledge and not on numbers’ Plato
How does the local impact of the bedroom tax measure up to what the architects of the policy in London imagined? Simon Inkson reports from the Upper Afan Valley
When I was thinking about possible titles for this article, which is about the impact of the bedroom tax in the communities of the Upper afan Valley, I felt that this quote from Plato was appropriate for two reasons. first, the article, as you’ll discover, contains a lot of numbers. Second, and possibly of more relevance, is my belief that the coalition government, when developing the bedroom tax as a policy, failed to heed the advice offered by Plato over 2,000 years ago. The reliance on numbers rather than the application of knowledge meant the development of the policy has been flawed from the outset.
The first figure I’m going to mention is 191,000,000. This number relates to the number of references to the bedroom tax found on a Google search undertaken on May 4, 2014, in less than half a second. More about the relevance of this number later.
Much has been written about the bedroom tax or the removal of the spare room subsidy since George Osborne first mentioned its introduction in the Autumn Statement of 2011. The rationale behind the introduction of the measure was to:
- contain growing housing benefit expenditure
- encourage greater mobility in the social housing sector
- make better use of the housing stock
- improve work-incentives for working age claimants1.
The introduction of the bedroom tax was projected to save £480 million a year across the UK, although there is some debate about the extent to which these savings will be realised with the Centre for Housing Policy at the University of York suggesting that savings are more likely to be in the region of £320 million2.
Another stated reason for introducing the measure was to introduce equality
into the rented sector by extending the bedroom entitlement rules that applied to tenants in the private rented sector who claimed local housing allowance (LHA), to tenants in the social housing sector claiming housing benefit. The removal of the spare room subsidy, we were told would level the playing field for hard pressed families living in over-crowded accommodation.
‘…We need to put an end to the unfair situation where the taxpayer is subsidising people to have homes, paid for by the state, with spare rooms they do not need. This is effectively a spare room subsidy. Britain can not afford it and nor can the taxpayer.’ Iain Duncan Smith3
Sector-wide
The bedroom entitlement rules were introduced by the previous Labour administration, upon the introduction of the LHA regime in 2008. However, what differed was the manner in which the measure was introduced. When LHA was introduced it only applied to new claimants, but when the bedroom tax was introduced in April 2013 it was applied across the sector at the same time.
If one considers the measure objectively and dispassionately, there might seem some logic to introducing a pricing incentive in an area where:
- the housing market was overheated and the supply of social housing was limited
- substantial numbers of families lived in overcrowded accommodation
- the area contained an integrated, cheap public transport system
- substantial job vacancies existed in the local area.
The bedroom tax as a policy initiative has been dogged with difficulties from its inception and watching it from development to implementation makes one think that the policy was developed in haste with reference only to a limited set of numbers and one in particular. I imagine that the measure was developed from an idea someone had after reading the English Housing Survey 2010-11, who then crudely applied the proportion of under- occupying social housing tenants to the total housing benefit bill and calculated the headline savings figure for the Exchequer. However, developing a policy with just reference to the numbers and the absence of knowledge about the potential wider impact of the measure has created:
- numerous difficulties for the Government
- significantly increased costs for the sector
- significant financial problems for tenants affected by the measure.
Uncomfortable parallels
In fact the difficulties created for the Government by the introduction of the bedroom tax and the fairly small savings generated brings to mind one particular scene in the classic mockumentary Mike Bassett England manager. When the first squad that Mike Bassett selects in his new role as national team manager is announced, his thoroughness in selecting the squad is revealed when it contains two unexpected names from lower league football ‘Benson’ and ‘Hedges’, suggesting that he drew up his squad on the ‘back of a fag packet’. I think that there are some uncomfortable parallels here for the coalition Government’s development of the policy around the bedroom tax.
The haste with which the regulations were pulled together has had a number of consequences:
challenges to the lawfulness of the regulations, in particular whether they are discriminatory (whilst the challenge initiated by five claimants with disabilities failed, permission has recently been granted to Liberty to bring a judicial review of the policy, based on its impact on separated families with shared custody of children)
• lack of clear guidance for local authorities and landlords on what constitutes a bedroom has led to a substantial number of successful challenges to the regulations at tribunal
• poorly drafted regulations meant that the measure didn’t apply to households who had continuously claimed housing benefit since 1996 (which meant that the DWP had to produce revised regulations which came into effect in March 2014)
• damage to the UK Government’s reputation when the UN special rapporteur on housing criticised the measure and called for it to be suspended
• additional costs for local authorities, in terms of the implementation of the measure
• significant additional costs for social landlords in preparing for, mitigating and addressing the impact of the measure on affected tenants4
• insufficient smaller homes for those affected by the bedroom tax to move to.
So how has the introduction of the bedroom tax affected some of the more marginal communities in Wales? This article focuses on the villages of Abergwynfi, Blaengwynfi, Cymmer, Croeserw,
Duffryn Rhondda and Glyncorrwg, which are located in the Upper Afan Valley approximately 10 miles from Port Talbot. The villages are former mining communities developed in the nineteenth century, but with the decline of the mining industry throughout the 20th century the valley’s heavily wooded and green landscape would suggest their future lies firmly in the tourism sector. The area contains the world famous mountain bike trails that centre on the Afan Argoed Forest centre, but, employment opportunities are limited.
The area’s housing stock was built to accommodate families whose members were either involved directly in the mining industry or in sectors which supported the extraction of coal. The area has an ageing housing stock and has experienced lower levels of demand for a significant period of time.
The area is not well served by public transport and its use is expensive. Buses run hourly to Port Talbot, but there are no buses from Port Talbot up the valley after 7.30pm six days a week and no buses at all on a Sunday. A return journey from any of the villages to Port Talbot costs an adult £6.70.
Addressing the impact
To look at the effect of the bedroom tax on social landlords in the area I spent some time talking with staff from NPT Homes, the stock transfer community mutual established in March 2011. In the previous edition of WHQ, Clare Way described the extent of the impact of the bedroom tax on tenants, the work being done by NPT Homes to address and mitigate its impact and the excellent partnership working arrangements in place with Neath Port Talbot County Borough Council revenues and benefits team, a point re-iterated by the staff I met.
Of the 629 properties owned and managed by NPT Homes in the Upper Afan Valley area, 84 (13.4 per cent) were void in March 2014 and during the previous 12 months there had been 165 new tenancies created in the villages, an annual tenancy turnover rate of 26 per cent. The staff members who I spoke to stated that whilst a few tenants had sought to proactively downsize following the introduction of the bedroom tax (and some people surrendered what were described as insurance tenancies) this appears to no longer be the case. Staff explained that the villages are ‘traditional valley communities’ which, despite them being only a mile
or two apart, are completely separate from one another. Most people want to remain in their communities if they have to move, limiting their choice of alternative accommodation.
Whilst there has not been a significant increase in rent arrears because of the introduction of the bedroom tax, the impact in the Upper Afan Valley has been felt in increased landlord costs in attempting to mitigate it and increased void costs (both repair during reletting and loss of rental income whilst the property is unoccupied).
Staff recounted the work that they have done in partnership with NPT Council revenue and benefits staff to ensure that discretionary housing payments (DHPs) are targeted to tenants affected by the bedroom tax. However, they stated that DHPs have masked the real problems – a lack of smaller accommodation and the difficulties that people face in accessing employment. In addition, many people affected by the bedroom tax have also been affected by other elements of the welfare reform programme and staff reported that it is incredibly difficult to help them to budget to meet their priority debts, when in some cases they have insufficient income coming into the home to meet them. The provision of budgeting advice to tenants has become a key element of the role of frontline staff members and although it is difficult when people have little money, staff suggested that they are making a real difference to many households.
Staff advised me that NPT Homes has adopted a more proactive approach to advertising and letting property, advertising vacant homes on Rightmove and that this had been successful, with a number of families returning to live in the area and people moving out of the private rented sector into NPT Homes properties. However, staff are concerned about how sustainable the tenancies are and stated that NPT Homes is doing much already to make living in the upper reaches of the Afan Valley a more sustainable choice, such as pre-tenancy affordability checks, the provision of furnished lettings, the creation of employment and learning opportunities, digital inclusion initiatives, access to cheaper energy tariffs etc. to help tenants stretch their incomes. The staff members I spoke to stated that the introduction of the bedroom tax has meant that some two and three bedroom properties, which were unpopular and had previously been difficult to let and as a consequence had been let to single people, are now virtually impossible to let.
Wider welfare reform changes
I left NPT Homes impressed by the efforts the organisation is making to mitigate the impact of the bedroom tax on affected tenants and the commitment of its staff to work with and support tenants in the communities of the Upper Afan Valley. But I was also left wondering whether one of the consequences of the bedroom tax and the wider welfare reform changes is to make the long term sustainability of communities such as those in the Upper Afan Valley questionable. Table 1 above shows the proportion of the working age population in receipt of key out of work benefits in the three electoral divisions that cover the upper Afan Valley Will welfare reform accelerate the decline of these communities and other communities like them? If this is the case there’s an awful lot more new build housing required throughout the UK if people are going to be required to move to live in areas close to centres of employment. The acceleration in the decline of these communities is demonstrated by the increase in the number of empty properties in the Glyncorrwg electoral division, which increased from 72 in September 2012 to 137 in January 2014.5
I would suggest that the bedroom tax as a measure was flawed from the outset and was developed without a clear and comprehensive understanding of its likely consequences. I would also suggest that the measure has acted as a good recruiting sergeant for a greater level of devolution across all regions of the UK. The coalition Government has belatedly recognised this by announcing that the Scottish Government will be given reserved powers to enable it to lift the cap on discretionary housing payments. This will allow the Scottish Government to provide DHP to all tenants affected by the bedroom tax, if it chooses to use its powers and resources in this way. If this is appropriate for Scotland, why not for Wales and other English regions such as the North West and North East, whose geography, labour and housing markets are also markedly different to Greater London?
Oh by the way, a similar Google search on ‘spare room subsidy’ gets 93,200 references. This number shows that the coalition has lost the argument about the terminology used to refer to the measure, echoing the scenario in the late 1980s about the term used to refer to the poll tax or community charge. The question now is how long it will be before the bedroom tax as a policy starts to completely unravel, just like the poll tax before it.
Simon Inkson is an independent housing consultant writing in a personal capacity. All of the opinions stated in this piece are his alone. Simon would like to express his gratitude to NPT Homes for its assistance and would like to thank particularly Andrew Osbourne, Nerys Evans and Richard Campbell for their time and expertise, which was invaluable in the production of this article.
- Department for Work and Pensions (2012). Housing Benefit: Size Criteria for People Renting in the Social Housing Sector. Introducing restrictions to housing benefit for working age customers living in the social rented sector who are occupying a larger property than their household size requires. Equality Impact Assessment Updated June 2012
- Tunstall R (2013) Testing DWP’s assessment of the impact of the social rented sector size crierion on housing benefit costs and other factors. Centre for Housing Policy. York
- www.telegraph.co.uk/news/politics/9914373/Britain-cannot-afford- the-spare-room-subsidy.html
- Please see Joe Halewood’s blog piece for an estimate at the cost of implementing the bedroom tax speye.wordpress.com/2013/08/25/hb-bill-will-be-7bn-more-and-the-bedroom-tax-will-cost-150m-more-per-year/
- Figures provided by Neath Port Talbot County Borough Council