MPs express concern that bedroom tax could cost more than it saves

  • The Public Accounts Committee (PAC) says the cut to benefits could cost more as people are made homeless or forced to move into the more expensive private sector.

     They have also warned that direct payments could result in a sharp rise in evictions when introduced as part of Universal Credit later this year, and overall could combine to have a severe impact on low income households.

    The PAC have expressed concern that the amount of people who will be negatively affected by up coming benefit caps and bedroom tax has not be calculated accurately, and could result in more money being spent on services to compensate this, such as an increase in homelessness.

    This could end up costing more money, instead of saving it as intended, and the government will need to react quickly if the benefit cut for social housing tenants results in rises in rent arrears and homelessness.

    The report says:

    Social housing providers are concerned these changes will increase arrears and bad debts because tenants will no longer be able to afford rents or take responsibility for making payments themselves.

    Committee chair, Labour MP Margaret Hodge, said that the government needs to have a plan for what actions they will take as a response to problems caused by the changes.

    She said:

    The Department of Work and Pensions says it can't accurately predict the effects of its housing benefit changes either on individuals or on the housing supply.

    Instead it will rely on a 'wait and see' approach and monitor changes in homelessness, rent levels and arrears so that, where there is a need, it can intervene and respond.

    But even small reductions in housing benefit can have a severe impact on the finances of the poorest people.

    Experience from the past suggests that stopping direct payments to social landlords will simply lead to an increase in arrears and evictions.

    At the same time some tenants will face higher rents under the Affordable Homes programme, which will also increase the housing benefit bill, offsetting some of the savings intended by housing benefit changes.

    The government says although the change should reduce the housing bill, it is to correct an imbalance with the private sector, as it brings housing benefit for social housing tenants in line with its provision in the private sector, where this cut is already in place.

    It is also intended to reduce the social housing waiting list and move those out of social housing with spare rooms, so those who are overcrowded would have more options of larger housing.

    A DWP spokesman said:

    We expect people to respond in different ways to the changes to the Spare Room Subsidy - some will move and some will make up the difference in their rent by moving into work, or increasing their hours.

    But when in England alone there are nearly two million households on the social housing waiting list and over a quarter of a million tenants are living in overcrowded homes, this measure is needed to make better use of our housing stock.

    We are closely monitoring the reforms to ensure councils are informing people about the changes, and spending the extra £390million we have provided to support their residents.

     

     

     


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