Bedroom tax savings likely to be less than expected

  • The Department of Work and Pensions have found that savings from bedroom tax could be £160m less than official projections.

    Research into the first five months of the bedroom tax scheme suggests that ministers could have significantly overestimated the savings it is likely to generate. Tax

    An analysis using real data collected by four housing associations since April through a model used in 2012 by the DWP to assess the impact the policy is likely to have, found that savings were likely to be £160m less than the official projection of £480m for the first year. However employment minister Ester McVey has said the finding reflect the housing associations' "vested Interests".

    Despite heavy criticism minister argue that it is essential to push ahead with the policy, officially known as the spare room subsidy, to bring the UK's rising housing benefit bill under control, reports the Guardian.

    Professor Rebecca Tunstall, the reports author, says that flaws in the DWP model could mean that it is likely to have overstated the likely savings. Tunstall said: "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."

    It is believed 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. This is due to rents in the private sector often being double of those in social housing meaning higher housing benefit payments are needed. Whilst the DWP estimated the between 10% and 30% of social housing tenants would move into the private sector the research suggests that the figure is likely to be nearer 41%.

    The study also questions 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."

    The DWP, in response to the report, said that it was not "credible" and that the findings were "skewed".

    The National Housing Federation chief executive, David Orr, said: "We've been told time and time again that the bedroom tax is necessary in order to cut the housing benefit bill, but this research suggests that it could save much less money than the government claims.

    "Now that the savings have been called into question, the government must ask itself why it is pushing ahead with this controversial, unfair policy. We know that it is causing hardship for thousands, with research showing that half of families hit are now struggling to pay their rents, while nearly six in 10 people around Britain think the policy should be scrapped."

    Image source: http://www.sxc.hu/photo/169849

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