Why we shouldn’t get worked up about the ‘bedroom tax’

A furious email arrived on Sunday evening from MoneyWeek regular James Ferguson of MacroStrategy. James had been reading the Observer and its coverage of the so-called ‘bedroom tax’ had pushed him over the edge. Why?

First, it isn’t a tax. David Cameron calls it “the removal of the spare room subsidy” – which, while it maddens some people, is a rather more accurate description than ‘bedroom tax’. A tax is when the government takes from you what you have earned. A reduced benefit is when it gives you less of what you have not. This is the latter.

No one pays anything – some people just get less in benefits if they have a spare room that is not exempt (just like private sector tenants in receipt of housing benefits). On the Observer’s numbers, some 660,000 people will now receive a reduced payment of around £14 – so £2 a week (unless they move or take in a lodger in which case they will lose nothing).

However, almost all vulnerable people are also exempt from this cut in benefits. It doesn’t affect anyone not of working age (so no pensioners are being turfed out of their homes), anyone in the forces, or anyone operating as a foster carer.

It doesn’t affect disabled tenants if they use a bedroom for a live-in or overnight carer. Disabled tenants can also apply for a discretionary payment if they have a disability that means their partner has to sleep in another room. Families with disabled children are also exempt from the room sharing rules.

 

Secondly, while some people will do badly from it (their disposable income will fall, they might want to move…), there has been almost no mention in the press of the ones that will win from it.

The idea coming from the government is that the taxpayer shouldn’t be stumping up for single people, couples or small families in council housing to have spare rooms when other families – housed in bed and breakfasts and the like – have no rooms to call their own.

It is a policy that, as James puts it, says nothing more cruel than that if you have a taxpayer funded spare room you need to either free it up or forgo a small amount of benefit payment to keep its utility for yourself. It “only affects people sitting on unused bedrooms to the detriment of those who have to share bedrooms.”

All this might be horrible for the former (living on benefits isn’t fun and moving house isn’t fun) but why is there an assumption that we only care about them? Shouldn’t housing associations (and the rest of us) care about the latter too?

Housing waiting lists are at record lengths in the UK – at the same time as our debt is at a record high (and so our ability to build more council houses is low). Yet the security of tenure (once you have a council house its pretty hard for you to be evicted) and low rents in the council sector make it all but impossible to move those not in need on to make space for those who are in need. Surely this – a system that leaves homeless families languishing on waiting lists for years – is the thing that is really inhumane?