New report reveals impact of bedroom tax - 100 days on

5 July 2013

The bedroom tax is having a devastating impact in one of the poorest areas of the country and is failing to achieve the Government’s ambition of freeing up extra social housing, a new report has revealed.
Less than 100 days into the policy’s implementation, thousands of families in Merseyside are spiralling into debt for the first time and are facing an impossible dilemma – to pay the bedroom tax and face financial hardship, or to try to downsize despite there being a huge local shortfall in smaller homes.
 
Based on new figures collected by the National Housing Federation from 18 housing associations across Merseyside that collectively own more than 130,000 properties (1) in the area, The Bedroom Tax in Merseyside: 100 days on has revealed that:
  • During the first four weeks (2) of the bedroom tax coming into force more than 14,000 Merseyside households fell into arrears with their rent. For nearly 6,000 it was the first time they had ever spiralled into rental debt.
  • Nearly 26,500 households in Merseyside are being impacted by the bedroom tax yet due to a shortage of smaller homes only 155 managed to downsize into housing association properties in April 2013.
  • More than £22 million (3) which could be used to build desperately needed new homes across Merseyside will be lost this financial year as a result of the financial impact on housing associations of the bedroom tax.
Disabled people are bearing the brunt of the changes, with an estimated 19,055 disabled people in Merseyside losing over £13 million a year due to the bedroom tax (4). Many of these residents live in homes that have been adapted to meet their needs, a time consuming and costly process, and may now have to move. Meanwhile, Government support to help vulnerable people affected by the bedroom tax through Discretionary Housing Payments is proving a short-term fix, with some Merseyside residents receiving grants for just three months.
 
The Government hopes the cut to people’s housing benefit will encourage under-occupying families to look for smaller homes. The idea is that they swap homes with those needing more space – and so reduce overcrowding. 
 
Yet across the North West the number of households who will be hit by the bedroom tax outnumbers families living in over-crowded accommodation by more than four to one (5). This raises the prospect of tens of thousands of families being forced to try and find a smaller property to avoid the bedroom tax despite there being no local reason for them to do so. 
 
Research by the Merseyside housing associations shows that families want to stay near their local support networks and relatives. But due to a shortage of smaller homes they would be forced to move potentially hundreds of miles away. This would separate families and move people further away from their places of work. If just 10% of households affected by the bedroom tax requested a smaller home, social housing waiting list figures in Merseyside would rise by 5.6%. One in 13 households would be stranded on the housing waiting list (6).
 
Housing associations across Merseyside are doing all they can to lessen the blow. They are visiting residents, helping them get back into work and look for ways to downsize or finding better ways with which they can manage their money. Yet despite this support they have reported significant increases in indicators of poverty, such as foodbanks, across Merseyside. 
 
David Orr, Chief Executive of the National Housing Federation, said: “Housing associations warned the Government from the start that the bedroom tax would not work and that families would face financial hardship and struggle to make ends meet.
 
“The fact is there aren’t enough smaller social homes in Merseyside for people to avoid the bedroom tax even if they wanted to move. If they rented in the private sector, where costs are higher, this would more than likely increase the benefit bill – which raises questions on why they have been asked to move in the first place. The reality is that many people will stay in their homes and will be forced to live on less money in a country where living costs and utility bills are rising.
 
“The bedroom tax is hurting the most vulnerable people in Merseyside. It is time to face the facts and repeal this unfair policy now.”

Notes to editors

  1. This represents 91% of all housing association homes in Merseyside.
  2. April to May 2013
  3. Sixteen Merseyside housing associations estimated the financial impact of the bedroom tax on their organisations. The National Housing Federation has extrapolated these estimates to cover all 18 associations, based on impact per property.
  4. Figures calculated by the National Housing Federation using DWP impact assessment (2011)
  5. Figures calculated by the National Housing Federation using DWP impact assessment and English Housing Survey (2012) data
  6. Figures calculated by the National Housing Federation using CLG Housing Statistics Live Tables (2011)