New Policy Institute reveals cumulative impact of bedroom tax and changes to council tax benefit as ex-Lib Dem minister urges rethink
Almost 440,000 families will see their income cut by £16.90 a week as they are hit by both the “bedroom tax” and the changes to council tax benefit, according to research by the New Policy Institute.
The cumulative impact of the welfare changes prompted a former Lib Dem minister, Sarah Teather, to urge the coalition to review its reforms. She said: “My concern is that some families are being targeted over and over again.”
The MP for Brent Central added: “Hitting the same people repeatedly means it adds up to a very significant cut in income. I am not sure how they are supposed to manage, where they are supposed to live, or whether the government has looked at the cumulative impact.”
Her warning came as the chief executive of a leading social housingprovider warned some tenants were panicking as the reality of the bedroom tax began to bite.
Research by the New Policy Institute reveals that of the 660,000 families hit by the bedroom tax, or spare room subsidy in ministers’ parlance, 440,000 will have their council tax discount reduced as well. It adds that, on average, this group will be £16.90 worse off a week.
The three main reforms introduced this week are:
• The replacement of council tax benefit by council tax support, estimated to cost 2.4 million families in England an average of £2.60 per week. The coalition says the council tax benefit bill rose by 50% under the last government.
• An under-occupation penalty (commonly known as the bedroom tax) is expected to cost 660,000 families an average of £14 per week. The government says 1.8 million people are on council house waiting lists.
• An overall household benefit cap, set at £500 for a family with children, is expected to affect 56,000 households with an average cut of £93 per week.
In addition there has been a below-inflation rise for those on tax credits and benefits. The NPI estimates a total of 1.3 million families will be affected by the lower-than-inflation benefit uprating, council tax changes and the bedroom tax. It said it had been impossible to calculate precisely which categories of people will also be hit by the absolute cap on housing benefit, due to be introduced later this month in four pilot areas and then phased in nationwide in the autumn.
Teather says the benefit cap is the single reform that worries her most in her north London constituency, adding that larger families are already preparing to move out of the area.
The NPI estimates that around 63% of families affected by one of the cuts are already in poverty. This rises to 67% for those affected by both council tax benefit and the bedroom tax. In total 1.6 million families already in poverty – as officially defined by the government – now have to cope with further reductions in income.
The NPI said: “Three-quarters of those affected are out of work. When their benefits are cut, they do not have other sources of income to fall back on. To someone receiving jobseeker’s allowance of £71.70 a week, even the smallest of these cuts (for council tax) represents a 3.5% drop in disposable income.”
Just under two-thirds of families affected by the bedroom tax include a disabled adult. It has been argued that the bedroom tax is particularly unfair on disabled people who require adapted accommodation. While not all disabled people will require specialised accommodation, the NPI says its figures suggests that the dilemma facing the disabled will not be uncommon.
Meanwhile, the chief executive of social housing provider Riverside – which owns or runs more than 50,000 homes – has also warned of the fear felt by some of its 7,000 tenants affected by the bedroom tax.
In an open letter to David Cameron and Nick Clegg, Carol Matthews warns that “most of those affected are precisely the people government should be helping ‘get on’ rather than ‘get out'”.
Matthews goes on to say that those who will be worst hit are: “Families with teenage children who need their own bedrooms to enable them to study; fathers who have split from their partners and are trying to do the right thing by sharing responsibility for bringing up their children; grandparents who are helping their own children to work by providing low cost childcare for their grandchildren.
“In addition there are the thousands of tenants who are now deemed to be able to share, when the reality is that they need to sleep in separate rooms as a result of disability or illness.
“These are not minor exceptions that can be regulated away, or helped with small amounts of discretionary payments. Rather they illustrate that the line has been drawn in the wrong place.”