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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  • Alanbrooke

    It’s not a tax.

  • Mick Fealty

    See brackets in the first sentence above?

  • BluesJazz

    ‘Northern reland’?

    Private rents in NI are relatively low compared to the mainland. We have a glut of supply here. Empty apartments are all over Belfast. They’ll never be used for anything other than social housing so this may actually be good for NI

  • tacapall

    Is the Windsors and the crown estate getting subjected to this bedroom tax ?

  • BluesJazz

    ‘Are’ tacapall (unless you is black?)

    It applies only to spongers who don’t work, so what do you think?

    The Daily Mail really milked the Philpott case as if being on benefits and killing your children were just commonplace mutual thinking.
    When the present/next generation of middle class graduates find themselves unemployed I wonder how that groupthink will manifest itself.

  • Reader

    tacapall: Is the Windsors and the crown estate getting subjected to this bedroom tax ?
    It only applies to rental accommodation, so it will only affect the Windsors as landlords. It may cut their income somewhat, unless they have a surplus of one bedroom properties to let.

  • Reader

    BluesJazz: We have a glut of supply here. Empty apartments are all over Belfast. They’ll never be used for anything other than social housing so this may actually be good for NI
    Two bedroom shoe-boxes, mostly. It may be worth while converting them to a one-bedroom layout.

  • DC

    Wasn’t Philpott a former British soldier, the apple never falls far from the tree.

    all his ‘mates’ sound irish.

  • Reader

    tacapall: Reader are you saying the Windsors own the crown estate ? Is the crown estate not public property just like council houses ?
    Not really – start here: http://www.thecrownestate.co.uk/about-us/
    And the blurb: “The Crown Estate is a diverse property business valued at more than £8 billion. The property we manage is owned by the Crown but is not the private property of the monarch.”
    I think what you were getting at is the various Big Houses – and I don’t think they are part of the Crown Estate. If you are genuinely interested in the Crown Estate, they act as landlords. As the Government pumps less money into the rental sector, the income into the Crown Estate will drop.

  • tacapall
  • Zig70

    2 points. It may actually be more expensive to rent a 1bedroom flat than a 3 bedroom house, due to location in a large part. Policy instead of management. The whole scrounger debate is crass. We may well have people who are unemployable on benefits but as a society it is the children we need to support and invest in. I find it sick to subject the kids to poverty because their parent(s) are wasters.

  • babyface finlayson

    tacapall
    Seriously?
    The royal family and the British army? In quick succession. Drag the thread off on a tangent why don’t you.
    I would have thought this whole idea is ideologically driven rather than for the purpose of money making.
    If there was sufficient social housing of 1 or 2 bedroom type you might possibly make a case for such a move.

  • DC

    So it turns out Mairead Philpott is the irish connection in this, but as ever the Brit half will take the blame despite both being banged up for it.

    re the penalty clause could this also have been introduced on suspicion that any spare rooms might actually be rented out on the sneak, in doing so putting more money into the hands of tenants who would be less likely to go out and look for work, if income is coming in elsewhere on top of benefits?

  • jagmaster

    If the bedroom tax is really about ensuring that people’s housing needs are best matched to their circumstances then it will also have to affect people who don’t claim housing benefit.

    A single person or a couple with no children living in a housing executive home who don’t claim housing benefit but happily rent a 3 or 4 bedroom house will be just as guilty of depriving a family of a home according to the current rhetoric. Surely then for the sake of fairness should their rent not increase by 25% to balance it out?

  • Gopher

    Think its only fair that public housing is allocated for needs don’t have a problem with the government introducing means to help.

  • tacapall

    DC, Inner City London, The Vatican, District of Columbia, do you ever wonder ?

  • The Raven

    It’s worth noting that HMRC lumps “fraud and error” into the same statistic. Breaking it down shows that those delivering benefit would solve a greater problem by being more accurate with less overpayments, than fraudsters making false claims by a count of about 3 to 1.

    For comparison, and I took median figures here from a range of sources:

    Tax evasion costs the Treasury £15.2bn in lost revenue each year.
    Benefit fraud – that’s yer actual fraud – costs £1.1bn each year.
    Errors and overpayments cost around £4bn each year
    The UK benefits bill is around £151bn each year.
    The ‘bedroom tax’ is estimated to save around £505m

    I’m going to guess that a private sector rented one-bedroom accommodation will probably cost more than a two bedroom social accommodation; and this policy, if I recall, is not aimed at the private rented sector. Otherwise at least four of my mates would have had to have moved house. By the way, they’re unemployed cos they got laid off – and to the best of my knowledge they haven’t killed any children yet.

    I would suggest that there are many more efficient and indeed easy ways of saving money here, or anywhere else, than this policy leads one to believe. If the effort which has been put into spinning this policy had been put into creating something other than the low-paid Tesco 51-week contract economy which the UK has become, the sky could have been the limit.

    Just by the by, and not taking away from anyone’s outrage on the issue – I think Mrs Windsor and her crew cost around £40m per annum. For those in favour of a Republic, “staffing, housing, flying and entertaining President Obama and his family” in 2012 cost about $1.4bn.

  • DC

    ‘DC, Inner City London, The Vatican, District of Columbia, do you ever wonder ?’

    is this the point you supply another diagram of higher up forces?

  • Mick Fealty

    Tac,

    You’re off on one again… Can we focus on policy, please? [Mail says it was not because he was a soldier, as you do, but because he is Catholic: http://www.catholicherald.co.uk/commentandblogs/2013/04/03/mick-philpotts-crimes-have-nothing-to-do-with-catholicism/. Idiotic and irrelevant comments, both.]

  • Alanbrooke

    I can’t help but think this is bad politics from some Spad prat. Labour leading a campaign to make paying more “tax” unpopular can only make their job harder when they inevitably hve to raise more taxes. Equally odd that Labour portray this as a “tax” rather than a reduction in benefits; is that because they are afraid welfare reform might be popular ?

  • Mick Fealty

    Im not sure Labour got beyond the hey, “that’s a great idea!” moment.

  • OneNI

    The real scandal here is (yet again) with our Housing Associations. For years they built not what was needed but what would benefit themselves most financially. Disgraceful – but no one other than NI Tories even points this out?

  • Mick Fealty

    One NI,

    That may be so. But no one has really been keeping an eye on this area. In London and other affluent areas prices have stayed up by keeping the product in short supply.

    Within that pattern you have fewer first time buyers and more buyers to let (since they are increasingly the only ones able to reach the bottom rung of the ladder).

    The Tories are ignoring the problem just as Labour was never able to crack (or never really tried) a general inertia in the market and the nicely profitable housing shortage.

    It all changed utterly in the south when, suddenly, they discovered theyd developed a massive glut, whilst under the hallucinatory influence of the Celtic Tiger. As Gerard O’Neill wrote a few years back (http://goo.gl/EAaTS):

    “The appetite for ownership is a function of scarcity: when ownership is effectively the only guarantee of access to the benefits of a particular good or service then other arrangements are grossly inferior.

    “But when the supply of something becomes abundant – even excessive relative to underlying demand – then ownership becomes unnecessary.”

    Britain’s adulation of property ownership (as flight from class) is the result of a relatively recent set of policy shifts (selling of council houses, and transformation of hyperlocal mutuals into casino banks).

    It’s a self replicating dynamic, and exacerbates the engorging of London and the SE with people, wealth and resources, leaving the rest of the UK a largely unloved and unwanted appendage.

    Some of IDS’s intentions here were highly progressive. It’s too easy to shoot just because his party has never shown much interest in the likes of social justice.

    But if IDS is trying to do the right thing, he’s getting no help from the Chancellor who’s only response on housing has been to pump more sub prime cash into first time buyers or more likely buy to renters, pushing prices up further and exacerbating the problem even further.

    The cost of benefits is still rising, even as the number of people on them is dropping. And it is set to do so even as unemployment drops and people go back to work. Flip Chart Fairy Tales (http://goo.gl/W24fl)

    “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.”

    So the state has to subsidise high rents for those in low paid employment. most of the problem exists on the supply side.

    NI has less of a problem in this regard. But the mismatch of supply and demand affects both public and private sectors, albeit in different ways.

  • Zig70

    I find the suggestion that we should have been building flats odd. The petition should be for IDS to live on £53 and in council flats without protection. All I can think is that conservatives don’t give a shit about the more disadvantaged. Even though often they are core voters. The English conservatives are just running to the next populists mantra without much thought. The real issue is the cost of pensioners, but they are like horses, too cute to cull. Have they considered how someone in Kilcoo with dialup is going to fill in forms online? Do they care that the reason someone is on benefits is because they struggle to control their life and the percentage of rent arrears will shoot up. Osbourne makes me feel quite violent.

  • BluesJazz

    Zig70
    Welcome to the 21st Century.
    Kilcoo will get there eventually.
    Like the horses.

  • Zig70

    It would look better if a 4g infrastructure was planned for rural areas or a touch of discretion on housing. In private housing associations some of the bedrooms are redesignated and a lot of houses have box rooms you would struggle to call a bedroom. Could be a lot of houses with new studies or big hot presses. It just smells of a policy driven by the daily mail and not thought through outside of SE. Time for Stormont to show their purpose.

  • tacapall

    Apologies if I caused any offense with the apples dont fall far from the tree remark Mick and Bluesjazz or anyone else who felt offended, I was being sarcastic. of course being a former soldier has nothing to do with Philpotts actions. Living off the welfare state is no more a factor in how far or low a person would go in their greed for money than being trained to kill as a soldier in the line of duty would be a factor in the same circumstances.

    Re the bedroom tax I agree with Bluesjazz comment, welcome to the 21st century for unemployed single people as that is ultimately who the new changes will effect if the purpose of the changes is to level the playing field in regard to access to council and private sector housing stock But on the plus side its great news for all those HMO landlords where they can pack them in for maximum profit especially in London, those landlords at the end of the day will be the main financial benefactors of these changes, what other type of accommodation could an unemployed person afford.

  • Rory Carr

    Mick, quite correctly, asks us to focus on policy here. So, let’s do that.

    Is the policy intended, as he suggests, “ intended as a means of redistributing housing within the rented sector so that those with greatest [need] got matching resources. ” or as, his headline suggests a bedroom tax aimed at the poorest in London and the South-East (because that’s about the limit of these guys’ geographical vision) just for the hell of it ?

    Neither, I would suggest, but rather more of a propaganda exercise designed to get up the backs of ordinary decent working Joes and Janes struggling to maintain the monthly outlay on their three-bed semi in Guilford or Colchester while being fed images of “benefits scroungers” lolling around rent free in airy spaciousness on their dollar. That the Raven has already above debunked that canard and that the figures are there to demonstrate that it is the wealthy who are the major scroungers makes no difference. This lie has long gone halfway round the country before ever truth got its boots on. It’s all about creating an image and leaving it hanging in the air.

    Listen to Telegraph columnist, Allison Pearson (courtesy of Mick and Google) as she berates Mick Philpott for (maybe) appropriating the child benefits intended to meet the needs of his children. But it is easy to accept that Philpott benefited in some way from the receipt of such benefit and to imagine that his intention to gain custody of the children by his former partner was motivated by the thought of the extra benefit that would accrue.

    There can be no doubt that additional benefit would have been required had he been successful – more mouths to feed, food and clothing cost money – we all know that. But Pearson decides that since Philpott was more likely to sideline the additional benefit for his own (we must say “deplorable” lest we be accused of cruelty failure)) purposes then Pearson’s solution, lamentably lacking an ability to apply hindsight to Philpott, is to address the “need” to cut benefits which address the plight of poor children generally, so that our conscience can be salved over our failure to address Philpott in time (although how that might have been done, short of the horror of state “care”, she doesn’t say.

    Which is of course just the line that Osborne has been peddling and, since he has yet to find ways of implementing the further 85% of his intended cuts in welfare, he will grab at any straw, say anything, however appalling, however patently nonsense, whatever lie will suffice for the moment to help create a climate that allows him to slash and burn his way through the most vulnerable in the land while the rest of us dim the light behind our shades and trust that this plundering angel will pass us over. He won’t. He’s coming for you next !

    Meanwhile Ian Duncan-Smith, reputed to earn £1m a year in fees from after-dinner speaking but who has failed miserably as a writer of fiction, copper-fastened his security by marrying into great wealth and lives rather comfortably in a rented cottage on his father-in-law’s vast estate, has assured us that he could easily live on £53 a week. Liar ! Liar ! Pants on fire !

    ot to be outdone in the “makey-things-up stakes”, the bold, waxen-faced leader, Cameron attempted to terrify a audience in Glasgow with the news that N Korean nukes “…can reach us too. That is a real concern.”

    Get a bloody grip ! Who does he think we are that we might forget Blair and Campbell ? Fool me twice and all that.

    These huxters, these fiends, have no place in the high offices of state, indeed they are barely fit for human companionship. They are the moral soul-brothers of the Philpotts of this world and are quite prepared that any number of children should suffer and die that they and their kind might profit.

    We are heading into the very darkest of days.

  • Rory Carr

    Apologies for the excessive Bold. (As if the content wasn’t bold enough.)

  • Zig70

    The 21st century in Kilcoo, now that’s funny. Next you’ll be telling folk from S Armagh that you can use a phone anywhere. You can only get a signal if you live above the 7th floor flat.

  • Mick Fealty

    I mentioned Dan Hodges “fence” the other day which is the Blairite device par excellence. Getting caught on the wrong side of a controversialist issue is his fear and no doubt what party managers intended…

    Peter Oborne with the Tory version of “The Fence”:

    “Conservatives want men and women to stand on their own two feet, and therefore support the strong institutions (family, church, school) that enable them to do so. Labour yearns to use the state to mould individual conduct to fit officially sponsored social norms. All of Mr Duncan Smith’s changes, and above all his idea of the Universal Credit, reflect a determination to enable everyone to live free and morally autonomous lives.”

    With regard to welfare, empirically it is mostly nonsense. Welfare payments in the UK were lower in 2009 than they were in 1981. But as Chris notes (http://t.co/S81nrUaLYX):

    “The tendency to stigmatize benefit claimants, and so to regard Philpott as sufficiently representative of them to justify inferences (or dog-whistle “questions”) is not the sort of error that can be corrected by evidence. It arises from biases and beliefs which are hardwired into us.”

  • Zig70

    Not sure I buy atavism. I was surprised how many of my co-workers spouted the scroungers line. I think partly fear they are making poor decisions, working hard just to pay bills and the grass always being greener. The debate should be on how to get the next generation to understand that work involves taking instruction and effort. The amount of people that have a real problem being told what to do.

  • Mick

    You claim he bedroom tax was originally well intention designed to provide homes for people in most need. Without providing a scrap of evidence to back it up. Being the clever clogs you are, you know that is hog wash, and you also know you are defending the indefensible.

    If the Conservative coalition had any intention of prioritising housing need, they have the answer within their own hands, they would simply build more council and Housing Association homes; and in the process provide jobs for unemployed building workers.

    Thatcher started the attack on social housing and Cameron intends to finish it.