Bedroom Tax aimed at the poor in London and SE will cost more in Northern reland

So to be fair to Iain Duncan Smith, I don’t think the initial motive for the so-called bedroom tax (the social sector size criteria or under-occupation penalty) was to save money.

Rather it was intended as a means of redistributing housing within the rented sector so that those with greatest got matching resources.

This is a policy which was created for the overcrowded (and house starved) London and South East of England, where house prices are the driver for the private renting sector.

Here in Northern Ireland it is going to cost the exchequer in the short term and may only ever be cost neutral in the longer run.

According to NIFHA/CIH:

…the likely cost of the Bedroom Tax for social landlords by estimating likely additional costs in tenancy management (such as collecting the shortfall in rents caused by this policy, managing an increased turnover in stock and, in the last resort, taking legal action where tenants have fallen seriously behind in their rent payments).

These costs are added to those for communications and engagement with tenants and upgrading systems to get an estimated total cost.

It is expected that the 6,300 housing association tenant households will lose £3.8 million in housing benefit per annum. We estimate housing associations will lose on average at least £5million p.a. in the direct costs of this policy (£6,425,705 in Year 1, £3,986,231 in Year 2, and £4,650,581 Year 3).

So the policy will cost in the region of 21 million and save 17 million. In effect Northern Ireland will be implementing a policy that’s not a fit with the local housing market. There’s the clue as to the real originator of the rising cost in benefit. The housing market.

As the Flip Chart Fairy notes differential in wealth distribution has reached the point where the in work poor are increasingly relying on public subsidy just to keep their heads above the water:

The OBR predicts that the benefits bill will continue to rise even after the economy begins to recover. It’s not benefits for the unemployed that is driving this though. As the DWP/HMRC graph above shows, pensions continue to rise and the cost of tax credits stays stubbornly constant. This suggests that, even with a growing economy, there will still be a need to support the incomes of those in low wage employment from public funds.

So for all the talk of feckless scroungers pushing up the benefits bill, the figures indicate that payments to pensioners and those in work are behind much of the increase. Even if we could round up all the Mick Philpotts and force them to go back to work it would make very little difference. More worryingly, the forecast persistence of in-work benefits for the next five years suggests that, even when the economy does create new jobs for the unemployed, a lot of them will still be claiming benefit.

Given that one or two bedroom house have not been built in NOrthern Ireland for the last 35 to 40 years, this policy may push people into voluntarily reducing the amount they can claim on housing benefits, or end up pushing them out of communities where they may have had deep social ties for most of their lives.

Well intentioned? I suspect it is. But even the NI Tories recognise the nonsense of im porting whole a policy from one local market to another entirely different one.

There’s a slightly desperate tone to the general anti welfare narrative flowing from Fleet Street that smacks of electioneering rather than an honest attempt to fix a real problem.

Chris Dillow has one of the most level headed contributions on the whole debate:

For the right, it’s just plain wrong to think that “scrounging” is a serious macroeconomic issue. You might think it a moral failing. But don’t confuse macroeconomics and morals.

For the left, you don’t need to pretend that all benefit claimants are saintly victims in order to deny that scrounging is a serious economic issue. Even if we concede that there are tens of thousands of such scroungers, we can still maintain that getting them into work is not a top priority. A much bigger priority should be creating jobs for those who do want to work.

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