Penalty points

Bill McKenzie

Bill McKenzie on a callous piece of public policy making

For many people out of work, disabled or on low incomes, housing benefit is a crucial safety net and a vital support to help pay the bills at the end of the month. But changes being introduced by the Coalition to tackle so-called under-occupancy will mean that thousands will lose an average of £700 a year.

The Welfare Reform Act 2012, passed earlier this year, includes a provision to introduce size criteria restrictions to the calculation of Housing Benefit for working age claimants living in the social rented sector. Ministers are now bringing forward the regulations to put this into effect, and which Labour is opposing because of the lack of vital safeguards.

Under the changes, all housing benefit claimants considered to have a ‘spare’ bedroom in their council or housing association home will see their benefits cut; by 14% for one extra bedroom and 25% for two or more extra bedrooms. The government’s own calculations suggest that those affected will lose £14 a week on average, and we are concerned that this will result in cuts to the incomes of some of the poorest and most vulnerable in our society, as well as risk costing more than will be saved.

Around 660,000 households will be affected and estimates suggest that among them some 420,000, ie two-thirds, will be households with disabilities. That is a staggering number. No safeguards have been put in place to protect such people and Ministers expect local authorities to pick up the tab.

The government has suggested alternatives for those affected, including moving home, using savings and other sources of incomes, working longer hours or taking in a lodger. But for many people, such suggestions are wildly impractical. How will people increase their hours when many cannot even find work? Where will people find the savings to make up the shortfall when most households do not have more than a few hundred pounds in savings? For many people, taking in a lodger will seem like an unworkable and unreasonable option, putting the safety and privacy of their family at risk.

Of course, a large part of the problem is the lack of housing. Housebuilding has collapsed under the Coalition government, with a disastrous 97% fall in new social housing starts and a 68% reduction in affordable housing in the past financial year alone. The reality therefore, is that most people under-occupying their home will not have a smaller alternative property to move to.   

We agree with the aim of tackling under-occupancy, but the government’s measures will not address the problem; nor are they likely to lead to the predicted savings. They will simply hurt those who have done nothing wrong. During the passage of the Bill, Labour suggested a better scheme – one where the penalty should not apply unless someone had been offered and declined a smaller and more appropriate alternative home. This was rejected by the government. 

These, in some cases, swingeing cuts will affect people who can do nothing to protect themselves, creating tremendous hardships for thousands of our fellow citizens. Ministers know this, yet they continue to preside over what is a callous piece of public policy making.

Lord Bill McKenzie of Luton is Labour’s Shadow Minister for Work & Pensions in the Lords 

Published 6th November 2012

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