Social Security and Welfare Reform

The Lib Dems are right to want to reform the bedroom tax

  • Published: Jul 17, 2014
  • Category: Social Security and Welfare Reform

By introducing choice into the bedroom tax, the LibDems are proposing a principle that can transform welfare reform.

The LibDems’ about-turn on the bedroom tax  is to be welcomed, both for its content and for the process they have followed to reach their new position. For the time being, it gives them a far superior position on the “tax” to both Labour and the Conservatives. But it is not the end of the story.

Back in April last year, when the officially named “under-occupation penalty” we wrote this.

“The concern that we should make better use of the social rented sector is legitimate: 8% of social rented households are overcrowded while 40% are under-occupied*. But this policy is the missed opportunity to deal with some of these issues in a more effective way. So what might be better?

“Firstly any policy should apply to everyone in the social rented sector rather than only those in receipt of benefit, for example, by increasing rents for all under-occupiers. Secondly, if a penalty is imposed it should only be applied to the tenant if they have refused reasonable alternative accommodation (and this should take disability requirements into account).”

Set against this, two big things can be said in favour of the LibDems’ new policy. First, it continues to acknowledge, as the tax itself does, that there is an issue here, both about the allocation of the social housing stock and parity with the private rented sector. Although it is not straightforward – and certainly no panacea (they never exist) – it needs to be considered and addressed. Labour’s pledge to abolish the tax throws away an opportunity to do that.

Second, it embodies the key principle of “choice”, namely, that the penalty should only be imposed on the tenant if they first have refused reasonable alternative accommodation. It is the absence of choice hitherto that turned the penalty into an unavoidable imposition i.e. a tax.

Labour’s charge of hypocrisy is a mistake. The LibDems base their case for changing their position on the recent DWP report  on the impact of the tax. What better basis is there for a governing party to change its mind? If Labour wins next year, top quality impact assessments of every aspect of the welfare reform will be indispensable in helping decide where to change course on welfare reform and where not.

The challenge for the Conservatives is different. The LibDems new position built on choice is one the Conservatives could have been expected to have adopted in the first place. So instead of attacking it, why don’t they embrace it? Having done so, the policy could then be extended, as we suggested, to everyone in the social sector including pensioners.

The Treasury might retort that while choice is all very well, why should social landlords bother to offer it? If no such alternative is offered, the “penalty”, again as we said in the original blog, “could apply to the social landlord for failing to provide this option and to provide an incentive to build more appropriate sized dwellings.”

Would all this be popular? A bold politician could certainly make the argument. Would it be right? By the original rationale for policy, which reflected a real problem, yes.


*Addnote: “Under-occupation” here refers to households with at least one spare room (according to the bedroom standard) and could be subject to the ‘under-occupation penalty’ as it was originally called by the Government. The historic definition of under-occupation refers to households with at least two spare bedrooms.

Table 9 of the latest (2012-13) English Housing Survey report shows that 38.6% of households in the social rented sector have at least one spare bedroom in while 9.9% have at least two. A recent release based on the 2011 Census showed 39.4% of all socially rented households had at least one spare bedroom.

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