Housing Benefit


The ‘bedroom tax’


In England, Wales and Scotland the “bedroom tax” (also known as the size criteria, under-occupation penalty and “removal of the spare room subsidy”) now applies in the social-rented sector (for example, council and housing association properties). It replicates the size criteria that applies to Housing Benefit claimants in the private-rented sector under the Local Housing Allowance rules (see page 78). 


This means that people living in houses larger than “they need” (“under-occupiers”) either have to move to somewhere smaller or make up the difference in rent after their Housing Benefit is reduced as follows:


• a 14% cut in Housing Benefit if there is one “spare” bedroom;


• a 25% cut in Housing Benefit if there are two or more “spare” bedrooms.


The government announced a partial U-turn and exempted foster carers and parents of teenage armed forces personnel from the charge, just three weeks before it was due to come into force. The concessions came after weeks of growing political pressure. 


As a result, around 5,000 approved foster carers are exempted from the bedroom tax. Parents whose children live at home but are away on operations with the armed forces are not charged for their child’s “spare bedroom”, as long as their offspring intend to return home.


However, campaigners pointed out that the concessions exempted only a fraction of the 660,000 people who are estimated to be affected by the bedroom tax and did nothing for almost half a million households that are home to a disabled person.


The Court of Appeal recently ruled that the bedroom tax amounted to unlawful discrimination in two cases, following legal challenges from the grandparents of a severely disabled teenager and a victim of domestic violence who had a “panic room” installed in her home. Shelter described the ruling as a “significant blow for a justly maligned policy” and has urged the government to take note of the shortcomings of its policy and take measures to protect vulnerable groups. Nonetheless, the DWP has appealed the ruling, and the case will now go to the Supreme Court.


The bedroom tax and its impact are examined in more detail in Chapter 6.


Local Housing Allowance rates


In 2012, the coalition government brought in measures to uprate Local Housing Allowance (LHA) rates in line with the Consumer Price Index (CPI) rather than the market rents in each area, severing the connection between LHA and actual rent prices. From April 2016, housing benefit rates will be frozen until 2020, while private sector rents continue to sky-rocket in many parts of the country.