Some bedrooms are too small to be penalised

The decision of a tribunal in Fife is being reported as a major challenge to the bedroom tax:  see, e.g., the Scotsman or the Express.  The tribunal decided both that a dining room should not be treated as a bedroom, and, as I argued last March, that a room of 66 square foot should be disregarded as being too small for an adult.

The tribunal’s decision is welcome, but it’s not unequivocally supportive of the position I’ve been taking.  I suggested that, as a matter of general principle, if a room was too small to be used by two children or one adult, it should not be counted as a bedroom for the purposes of an under-occupancy penalty (or ‘bedrooom tax’) which says that that’s what a bedroom is for.  The tribunal actually says that every decision has to be made on a case by case basis, which sounds administratively unworkable.

The problem behind the benefit cap

Much of the argument about the benefits cap is based on an exaggerated emphasis on a very small number of people, intended to give people the impression that the system is far more generous than it really is; but there are some people affected (I met someone who was being capped last month). Iain Duncan Smith defended the cap on the Today programme this morning. Part of his defence was the claim that people on benefit were receiving support to pay for housing that people in work could not possibly afford. That has to be wrong. Housing Benefit is payable to people in work, at a slightly superior rate to people not in work – it is more generous partly because of earnings disregards, and partly because people in work don’t suffer the same penalties, like the bedroom tax. The taper – the rate at which the benefit is withdrawn – is 65%. This is the same figure as the taper being introduced for Universal Credit.

There is a more fundamental problem in the design of Housing Benefit; it is that the benefit depends on the level of the rent, and rents can be very high. If we accept that government is going to meet a large part of the cost that independent and private providers charge, then over time, those charges will come to reflect the benefits available to pay them. This is the trouble with Housing Benefit, and the same problem can be seen with some other benefits, including child care costs from tax credits, legal aid and residential care fees. In the short term, the way to deal with the issues is to cap the costs, rather than the benefits. In the longer term, however, the issues will not be resolved without direct provision of essential services.

The rise in Housing Benefit costs

David Webster writes:

“The DWP’s ad hoc analysis of the growth of Housing Benefit expenditure seems to me to have been presented in a misleading way. In 2000/01 HB for private rental was £2.7bn, in 2012/13 £10.9bn. (real terms) – a total increase of £8.17bn and in fact a quadrupling.

All that the note mentions is the real increase in rents, as increasing the bill by £3bn. But if the caseload had stayed the same, this would only have been £2.3bn.

The major part of the increase is due to increased caseload (i.e rundown in social renting) – £3.2bn if rents had stayed the same, and £5.9bn when the rent increase is included.”

The figures for private renting are indeed four times the size they were – double the rent, double the caseload – but they don’t account for all of the increase in HB costs.  Another part is down to the increasing levels of social rents, imposed on local authorities and successor landlords over the last ten years.  That process is not yet complete, because the level of increases needed to meet the government’s targets is greater than landlords have been permitted to charge, so further increases are in the pipeline.

If it’s not 70 sq ft, it’s not a bedroom

Special note, 12th December, 2014.  The argument I made here in the last paragraph has been considered by the Upper Tribunal and rejected.  See this link for an explanation.  However, the decision of the Upper Tribunal also says two other things:  that it is not up to the landlord to decide and there must be an inspection of the room, without which no imposition of the bedroom tax is lawful.

Further note, 3rd April 2016:  The Upper Tribunal has now decided that to be a bedroom, a room “…should be capable of accommodating a single adult bed, a bedside table and somewhere to store clothes … , as well as providing space for dressing and undressing.”  Joe Haldeman has calculated this to imply an absolute minimum of 65.81 sq ft, and more depending on the layout of the room.

The new under-occupancy rules will mean that people will have their benefits cut when they are deemed to be occupying property that is too large for their family size. This will affect benefits for hundreds of thousands of people – the estimates for Scotland alone run between 80,000 and 105,000 tenants of social housing.

The standard that is being applied is the 1960 bedroom standard, introduced in 1960 for the Social Survey (the first use was in P Gray, R Russell, 1960, The housing situation in 1960, Central Office of Information.) This was intended. more than fifty years ago, to be used in place of the restrictive standard in the Public Health Acts (1936 and 1957).

It’s been reported that Knowsley Housing Trust are in the process of reclassifying the size and type of their bedrooms. This is not as radical as it sounds; they are only reclassifying 566 properties in a stock of 14,000. When I was letting council housing in the 1970s, I had to reclassify properties to help house larger families. Most local authorities had only two- and three-bedroomed properties; very few properties had four bedrooms or more. So where a three bedroom property had a dining room or a ‘front kitchen’ area, reclassifying a downstairs room as a bedroom made sense. Later, a housing association committee I was on routinely arranged for permitted storage space with walk-in cupboards to be pooled, to make something that could be used as a boxroom or small bedroom. If revisiting those classifications means that people can afford the rent, it’s worth doing.

Beyond that, there’s another standard to take into account. For the purposes of the 1936 Public Health Act, there was a minimum size of bedroom. No room less than 50 sq ft (4.65 sq metres) was allowable as a bedroom; any room between 50 and 70 sq ft was classified as a half-person bedroom (only suitable for one child under 10); any part of a room less than 5 feet in height should be disregarded. The 1936 space standard is now contained in England in the Housing Act 1985, s.326 and in Scotland in the Housing (Scotland) Act 1987, s 137. This is still the law. It can’t be claimed that a standard designed for one purpose is conclusive in a different context, but there is at least a reasonable case to make that we know what should be counted as a bedroom, and what should not. If a room is not at least 110 sq ft (10.2 square metres), it’s not big enough for two people over ten, and if it’s not at least 70 sq ft (6.5 square metres), it should not be counted as a bedroom at all.

Additional note, 10th September:  A recent tribunal case in Fife permitted a challenge to the definition of a bedroom, discounting a room that was 67 sq ft with a combed ceiling.   This is not authoritative but does indicate that the definition of a room is open to challenge.

Housing Benefit cuts

One of the problems of working out what’s happening with the cuts is that there are so many overlapping changes that it’s difficult to be sure what the implications might be. Gareth Morgan has just posted a lengthy report (be warned – it’s a big file) identifying the combined effects of limits in Local Housing Allowances and the benefits cap for different rental areas throughout England, Scotland and Wales. In most places the cuts really bite for couples with three or more children.

Housing Benefit: the under-occupancy rules

The idea of limiting the size of accommodation that tenants of social housing could occupy was first proposed two years ago. It was resisted in the House of Lords earlier this year, and a critical judgment in the Court of Appeal (Burnip, Annex C of the linked document) has challenged its application to people with disabilities, but new draft regulations are set to bring it into force for many tenants, beginning next April. It is based on the ‘bedroom standard’ introduced in 1960 to measure overcrowding. It allows a couple or person over 16 to have one bedroom; any two children under the age of 10, and any two children under 16 of the same sex. By this standard, most households in the UK have at least one ‘spare’ bedroom. Housing Benefit claimants of working age in social housing will lose 14% of their entitlement if they are under-occupying by one bedroom, 25% if they are under-occupying by two or more. It is difficult, given the number of overlapping cuts taking place in Housing Benefit, to know which is going to have the largest effect, but this is a contender.

The general reduction in support for rented housing is a serious cut in benefits in its own right, but it also presents a major challenge for the allocation of social housing. (I haven’t written about allocations for a time, but it was how I started my career, and I’ve done several reports about it in the past.) Most properties in social housing have two or three bedrooms. Many applicants for social housing are single people, who under the new rules can only occupy one bedroom. Most families with children – and 80% of those on benefits – have one or two children. The distribution of properties generally requires landlords, then, to offer one or two bedrooms to single people, and three bedrooms to families with two or more children. Social landlords have to ensure that their property is occupied and rent is paid; if they routinely allocated only two bedrooms to families with two young children or children of the same sex, there would not then be enough qualifying families to let their three-bedroom properties to. Many of those people will consequently be ‘underoccupying’, and subject to the penalty. The Scottish Government has estimated that about 45% of social tenants overall are underoccupying, and possibly 95,000 tenants currently receiving Housing Benefit – about 35% of tenants, rather higher than the DWP’s initial estimate – will be hit by the benefit cuts.

There may be some ways round the problem, for some housing agencies at least. One is to redefine what makes a bedroom – many modern properties combined storage space to carve out a small room from the finance, and it could be classified as storage space again. A second option is to let more three bedroom properties to single sharers as joint tenants, but that will involve a major shift of practice, and a commitment of housing managers to make it work.

Weekly rents and monthly benefits

In Housing Scotland magazine recently, I wrote that when Universal Credit is introduced, “RSLs (social landlords) who continue to use weekly rents will not be helping their tenants”. I’ve been asked if I could explain what I meant, so here is the point at greater length.

Under Universal Credit, people aren’t going to be paid benefit every week; they’re going to be paid by the calendar month. If their circumstances stay the same, they’re going to get the same benefit every calendar month. If the landlord charges rent weekly, there’ll be no connection between the benefit cheque and when the rent falls due. A weekly rent means that tenants pay four times a month in some months, and five times a month in others; but a tenant who has to pay rent five times in one month will have to pay it from the same benefit which is used for four times a month. In the same way, with fortnightly rents, there’ll normally be two fortnights a year which have to be paid as an extra out of one month’s benefit.

Because there won’t normally be direct payments, these are bills that people will have to pay themselves out of their monthly benefit. I think this is going to make budgeting really tough for tenants, but fortunately the problem is easily avoided. All an RSL has to do is to charge by the calendar month, which is what most private landlords do, and the problems disappear.

The age of Housing Benefit claimants

The PM has suggested that benefits will be cut for Housing Benefit claimants under the age of 25, so it may be helpful to view the figures. This table is drawn from the August release on Housing Benefit and Council Tax Benefit, Table 9a.

Age Group Total Family
  Single Single with
Couple no
Couple with
All ages 5,031,740 2,779,170 1,183,860 498,850 569,870
Under 25 383,650 164,810 171,690 14,550 32,610
25 – 34 894,200 268,820 427,020 23,870 174,490
35 – 44 964,350 349,180 385,230 23,000 206,940
45 – 49 470,420 251,080 121,250 23,590 74,500
50 – 54 383,770 250,670 52,150 37,400 43,560
55 – 59 312,690 229,400 16,540 46,930 19,820
60 – 64 333,700 250,030 5,680 68,290 9,710
65 + 1,288,810 1,015,080 4,260 261,230 8,250

The under-25s represent 8 per cent of claimants. Single people under the age of 35 have already had their entitlement limited to a single room rate, so the entitlement of those under 25 is less than the average claimant. It follows that government cannot achieve the level of savings it is hoping for by focusing on this group alone.

George Osborne's questions

George Osborne asks:

For how can we justify the incomes of those out of work rising faster than the incomes of those in work?

How can we justify giving flats to young people who have never worked, when working people twice their age are still living with their parents because they can’t afford their first home?

How can we justify a system where people in work have to consider the full financial costs of having another child, whilst those who are out of work don’t?

The answer to the first question is that benefits are not linked to earnings. If they were, they would be much higher than they are currently. We have linked them to a very low income standard which is increased in line with inflation. That also means that a fall in wages does not lead to a fall in benefit rates.

We don’t actually ‘give’ flats to anyone; we do help some people to rent. The second question seems to mean to ask: ‘should we pay anything towards the rents of young people who have never worked?’ and the obvious answer to that question is, ‘yes’. The young person leaving care, the divorced or separated mother, or the young person seeking work all need somewhere to live. I do not personally think that Housing Benefit is a good system – I think it made far more sense to provide public housing, than to provide a complex, variable and unpredictable benefit which may or may not achieve its purpose – but if we have Housing Benefit, neither work record nor age is obviously the most relevant criterion for working out who should be supported and who should not be.

The third question seems to be: should people on benefits be insulated from the costs of having a child? I am puzzled by that question. Which part of the benefits system has that effect?

Housing Benefit – who claims?

I’ve twice this week heard the slightly confused claim that only one in eight people on Housing Benefit is unemployed. It’s true that Housing Benefit is not an “out of work” benefit; it works much more like Tax Credits (which were designed on similar principles). It’s also true that fairly few people in the system are formally unemployed. However, that doesn’t give us a good description of what actually happens

There are 5,005,000 claimants. The figures for February 2012 identify

1,175,000 claimants on Income Support – mainly people with disabilities and lone parents
659,000 on income-related JSA
371,000 on ESA
1,067,000 on Pension Credit, and
878,000 in employment.

From other figures (including the budget statistics) we know that there are 3,366,000 claimants of working age. If we take away those who are working, we are left with 2,488,000 people on the so-called “out of work” benefits. That includes, of course, far more people who are disabled or incapacitated than those who are jobless.

It helps to round out the figures, because the dates of the figures and the ways they are counted are not quite the same, but it comes to this. Five million people claim Housing Benefit. Half of them are people of working age who are not in the labour market; the other half are either pensioners or workers.