Infamous bedroom tax plan “in chaos” after U-turns are announced‏

13^th March 2013

Joe Turnbull

Joe Turnbull

13 March 2013

Work and Pensions Secretary Iain Duncan Smith announced yesterday that foster carers and parents with children serving on military operations would be exempt from the so-called “bedroom tax” that the government are planning to introduce.

The move comes after concerted pressure from both individual campaigning groups and the Labour Party to modify and clarify matters. Indeed, Shadow Work and Pensions Secretary Liam Byrne has criticised the policy for creating “total chaos”, stating: “they [the government] have said nothing to almost half a million households that are home to a disabled person who are set to lose over £700 at exactly the same time as millionaires receive a massive tax cut”.

Whilst Prime Minister David Cameron had previously said in the House of Commons that “families with disabled children” would be exempt from the “spare room subsidy”, this position appears to have been “clarified” since.  

In reality, it is only families with disabled children who are judged to need a separate room explicitly due to their disability that will be exempt from the subsidy. This confusion has added to the opinion that the policy is seriously lacking in cohesion and clarity.

Due to start in April, the policy will see social housing tenants with what is deemed to be a “spare room” lose 14% of their housing benefit and 25% if they have two spare rooms or more. 

The government claim that this will help alleviate the problems of overcrowding and under-occupancy by creating “market pressures”. 

However, a major flaw in the policy is the lack of one-bedroom social housing properties in some areas, meaning that in some circumstances downsizing will actually cost the taxpayer more.

Duncan Smith stated that he had issued guidance to local authorities about how discretionary housing payments could be used to help families with specialist needs. However, Chief Executive of the National Housing Federation, David Orr, claims that the entire pot of discretionary housing payments would cover less than 18% of all the money lost by recipients of disability housing allowance, due to the policy.

The Secretary’s ministerial statement came a day before the TUC released a report entitled A Bleak Future For Families which claims that as a result of “the cumulative impact of government policies and slower than forecast wage growth…the majority of UK children will be living below the breadline by 2015”. The “bedroom tax” or “subsidy” will no doubt play a part in this.

Joe Turnbull