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Looking ahead – a bedroom tax in 2020? Matthew Warburton - 08/03/2013

BedroomTaxWordle300In the early 1980s, councils faced heavy cuts in government borrowing approvals for housing. Noting the government's unpopularity at the time, some councils decided to gamble on the outcome of the next general election and signed up to a variety of "spend now, pay later" arrangements that would, so they thought,  secure continued investment in their housing until the election came along to rescue them. 

 

What happened, of course, is that, following the Falklands War, the government's popularity soared and in 1983, Margaret Thatcher won a convincing victory which was followed by two further Conservative governments. Those councils caught a nasty cold financially which in some cases took many years to shake off.

 

Just now, some councils may be hoping that the outcome of the next general election will rescue them from the bedroom tax. Or that the government will wake up to the sheer unworkability of  its proposals and have the sense to amend or remove them. 

 

History suggests that hopes and wishes are not the best basis for long-term planning, but does this mean that councils should work on the assumption that the bedroom tax will be with us indefinitely in its present form? For the short term, yes; but looking further ahead the better assumption is probably that underoccupation penalties will be revisited - for better or worse - in a second round of welfare reform.

 

It is of course possible that the tax will be scrapped.  But also that it may remain, perhaps in an amended form. In a speech this week, Christian Guy, managing director of the Centre for Social Justice, the think-tank established by Ian Duncan Smith, flagged up what may be the two most likely tweaks. People should not have to pay the penalty, he argued, unless they had turned down a suitable offer of smaller accommodation. And he remarked that it was "odd" that the penalty did not apply to pensioners. And odd it is, if the justification for the policy is that people should not be subsidised to occupy homes that are larger than they need, particularly while there are others in need of housing. On that basis, what is the rationale for excluding pensioners - the group among which underoccupation is most prevalent?

 

Cynics might argue that it is harder to portray pensioners as work-shy scroungers and their votes are too important to put in jeopardy, but there is also a widespread feeling that it is unreasonable to uproot elderly tenants from homes, and probably neighbourhoods and social connections, they have lived in for many years and which carry memories and associations which they have a right to continue to enjoy - and which may also be important to their continued health and well-being.  

 

But if this argument has any force, it also applies to many people who will feel the full force of the bedroom tax in three weeks time. Councils rarely let properties to underoccupying households - underoccupation almost always comes about because, after a number of years, members of the household leave, or in some cases, die. If the argument that established tenants should be able to enjoy their house as a home carries weight it applies more widely and an arbitrary cut-off at pensionable age is inappropriate.

 

Guy's other point highlights the most blatant weak point of the current policy.  It is patently unfair to limit the benefit of tenants who are willing to move to smaller accommodation but cannot because there is none available. And if the declared purpose of the policy is to incentivise better use of the available stock of social housing in an area, it fails to promote this objective in areas where there is a shortage of smaller flats and houses. 

 

While it is rational for councils to work on the assumption that the bedroom tax will go ahead as planned, it is not so obviously wise to set out to build a host of smaller units on the assumption that it will be around in its present form in five years time. Councils face a genuine dilemma in deciding how things will stand at the end of the next Parliament.

 

What is needed is a set of responses that are resilient enough to handle all the most plausible scenarios for the state of welfare in 2020. Suggestions urgently needed.   

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