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19 September 2013updated 12 Oct 2023 11:09am

Why Labour can’t wait any longer to pledge to scrap the bedroom tax

After surfing a new wave of outrage against the measure, the party can't turn back this time.

By George Eaton

Today provides further evidence that the bedroom tax is proving one of the coalition’s most pernicious policies. A survey by the National Housing Federation of 51 housing associations has found that more than half of those residents affected by the measure (32,432 people), fell into rent arrears between April (when the policy was introduced) and June, a quarter of those for the first time ever. 

Ministers have defended the policy, which reduces housing benefit by 14% for those deemed to have one ‘spare room” and by 25% for those with two or more, on the basis that it will encourage families to downsize to more “appropriately sized” accommodation. But they have ignored (or at least pretended to ignore) the lack of one bedroom houses available. In England, there are 180,000 social tenants “under-occupying” two bedroom houses but just 85,000 one bedroom properties available to move to. Rather than reducing overcrowding, the policy has largely become another welfare cut, further squeezing families already hit by the benefit cap, the 1% limit on benefit and tax credit increases (a real-terms cut) and the 10% reduction in council tax benefit. 

David Orr, the chief executive of the National Housing Federation, said at its annual conference today:

“This is the most damning evidence yet to show that the bedroom tax is pushing thousands of families into a spiralling cycle of debt.

“If these figures are replicated nationwide, over 330,000 households could already be struggling to pay their rent and facing a frightening and uncertain future.

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“What’s more, people can’t even move to smaller homes to avoid the bedroom tax because there aren’t enough smaller properties out there. Housing associations are working flat-out to help their tenants cope with the changes, but they can’t magic one-bedroom houses out of thin air. People are trapped.

“What more proof do politicians need that the bedroom tax is an unfair, ill-planned disaster that is hurting our poorest families? There is no other option but to repeal.”

In response, Labour has issued its fiercest condemnation yet of the policy, with Liam Byrne declaring: 
These appalling figures prove once and for all that while this government stands up for a privileged few, a debt bombshell is exploding for a generation of people. While the nation’s millionaires get a huge tax cut, thousands more now confront arrears and eviction from which they’ll never recover. This is final proof as if we needed it, that the hated tax must be dropped and dropped now.
To date, Labour’s criticism of the measure has been blunted by its refusal to pledge to repeal it if elected. At a recent session of PMQs, fixing his glare at the party’s frontbench, David Cameron scornfully remarked: “You have ranted and raved about the spare room subsidy. Are you going to reverse it? Just nod. Are you going to reverse it? Yes or no? Absolutely nothing to say, and weak with it.” 
 
But Byrne’s words (“the hated tax must be dropped and dropped now”) come as close as possible to committing Labour to abolishing the measure without actually doing so. Next week’s conference is an opportunity to go one step further. While achieving economic credibility, Labour also needs policies that convince voters that it represents a genuine alternative to the coalition. A pledge to repeal the bedroom tax (which the public opposes by 48 to 40%) is a perfect example of the latter. And as Raf reveals in his column this week, Miliband will use his speech to outline policies that Labour “will definitely do if elected”, signalling an end to the refrain “if we were in government now”.
 
The main obstacle to promising to scrap the bedroom tax now is its cost. While the measure may well end up costing more than it saves, by forcing social housing tenants into the private sector (putting further strain on the housing benefit budget) and by increasing rent arrears, it’s too early to prove that’s the case. That means the repeal of the policy, which the DWP states will save £505m this year and £540m the next, will need to be funded through cuts or tax rises elsewhere. For Ed Balls, the man charged with preventing a 1992-style assault on Labour’s “black hole”, that is good reason for caution. 
 
But that challenge must be weighed against the danger of Labour raging against a policy while dithering on whether or not to keep it. Miliband’s mantra is “credibility and radicalism” but while there’s been plenty of the former in recent months, with Balls’s decision to accept Osborne’s current spending limits, many in the party feel there’s been too little of the latter. At this year’s conference, that will begin to change. And having surfed a new wave of outrage against the bedroom tax, Labour can’t turn back this time. 

 

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