Disabled families still aren't exempt from the bedroom tax

The "discretionary fund" cited by Duncan Smith will cover just £2.71 of the £14-a-week loss in housing benefit facing disabled claimants.

In a sign that ministers are increasingly losing the argument over the bedroom tax, Iain Duncan Smith has announced that 5,000 foster carers and some armed forces families will be exempt from the measure, which will see housing benefit reduced by 14 per cent for those deemed to have one spare room and by 25 per cent for those with two or more, an average loss of £14 a week or £728 a year. 

Those tenants who have children serving in the military will no longer be charged for the vacant room while they are away. In addition, carers will be allowed extra space as long as they have fostered a child or become a registered carer in the past 12 months. Yesterday it was announced that families with severely disabled children would be exempt. 

It would be churlish not to welcome these concessions, but the overwhelming majority of the 670,000 tenants due to be affected will still lose out, including thousands of disabled families. In his written statement, Duncan Smith emphasised that Discretionary Housing Payments would remain available for "other priority groups" including those "whose homes have had significant disability adaptations and those with longterm medical conditions that create difficulties in sharing a bedroom." 

But research published by the National Housing Federation shows how inadequate this support is. Were the £30m discretionary fund to be distributed equally among every claimant of Disability Living Allowance affected (229,803 in total), they would each receive just £2.51 per week, compared to the average weekly loss in housing benefit of £14.

Having conceded that those families with severely disabled children should be exempt, on what grounds does the government maintain that those with one more or disabled adults should not? In a recent letter to George Osborne calling for all disabled families to be spared from the cut, the heads of seven charities, including Carers UK, Mencap and Macmillan Cancer support, cited one typical case.

Jean and Carl live in a two bedroom house. Carl has suffered from serious health complications for years and is now unable to work as a result of a series of operations and treatment. Jean juggles caring for her husband with a job at a local supermarket. They are unable to share a room because Carl’s condition causes very disrupted sleep and if they share Jean cannot sleep. Her shifts at work mean she frequently has to be up at 4am and she would simply be unable to do this if she could not get a good night’s sleep. They fear they will not be able to make up the shortfall in their Housing Benefit and if forced to downsize Jean is worried about her ability to do her job if she is unable to sleep properly (names changed to preserve anonymity).

With increases in most working-age benefits capped at just 1 per cent and a shortage of one bedroom houses for tenants to downsize to (there are 180,000 English social tenants "under-occupying" two-bedroom houses but fewer than 70,000 one-bedroom social houses available), the bedroom tax is both immoral and unworkable. Labour's Helen Goodman has written movingly on The Staggers of her experience of living on £18 a week, the amount many of her constituents will be left with after the measure is introduced. The only "concession" we should accept is the full abandonment of the policy. But, at the very least, ministers must protect the disabled, who, more than any other group, will suffer the most from this cut. 

Work and Pensions Secretary Iain Duncan Smith arrives to attend the government's weekly cabinet meeting at Number 10 Downing Street. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR