Bedroom tax may save less than estimated as tenants move to the private sector


Research into the first five months of the implementation of the Social Rented Sector Size Criterion underoccupation penalty, popularly known as the ‘Bedroom Tax’,  suggested ministers may have significantly overestimated the savings it is likely to generate.

The analysis – which ran real data collected by four housing associations since April through a model used in 2012 by the Department for Work and Pensions (DWP) to assess the likely impact of the policy – found that savings were likely to be £160m less than the official projections of £480m for the first year.

According to the report’s author, Professor Rebecca Tunstall of the University of York: “The savings estimated by DWP assume that of the 660,000 households affected, none of them will move to a smaller home, but we know from our own research that over a fifth want to downsize to avoid the penalty.

“Tenants are already on the move, and with nearly half of those who have chosen to stay already in rent arrears, we can only see that figure going in one direction.”

In particular, the DWP appears to have underestimated the number of tenants who move from social housing into private rented housing in order to avoid the bedroom tax penalty. Rents in the private sector can often be double those in social housing, therefore generating higher housing benefit payments.

The DWP estimated that between 10% and 30% of social housing tenants would move into the private sector. But the research suggests that figure is likely to be nearer 41%.

The study also calls into question the government’s claim that larger vacated properties would be let to families currently experiencing overcrowding. The report says: “In practice, many are likely to be taken by new households, some claiming housing benefit for the first time.”

In response, the DWP said the report was not “credible”, and that its findings were “skewed”. On BBC Radio 4’s World at One programme, McVey said the government stood by its original estimates. Despite the fact that the work was undertaken by a highly reputable academic, the findings, she claimed, reflected the four housing associations’ “vested interests”.

A DWP spokesperson told the Guardian, http://www.theguardian.com/society/2013/oct/14/bedroom-tax-ministers-likely-savings that it was too early in the policy to estimate any behavioural changes brought about by the removal of the spare room subsidy and that it remained confident that the policy would save “around £500m a year”.

The spokesperson added that the DWP did not expect large numbers of people would choose to move as a result of the policy. They would instead make up the shortfall in rent through other means such as moving into work or increasing working hours.  To read the report by the University of York team http://www.york.ac.uk/media/chp/documents/2013/Testing%20DWP%20Assessment%20of%20Impact%20of%20SRS%20Size%20Criterion%20on%20HB%20Costs%20University%20of%20York.pdf

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