Housing benefit changes - a guide

The government are changing housing benefits from April 2013. When ever a government changes benefits or taxes there is bound to be some anxiety from those who receive them.

Whilst I acknowledge that such changes are an opportunity for opposition parties to hit the government, there is a fine line between highlighting and scrutinising the actions of government and scaring people in their own homes needlessly. 

As we have seen when changes were introduced to tax credits and freezing tax thresholds of retired people (granny tax) Labour will happily cross the line. Personally I think all politicians of all colours have every right to criticise governments but with it a responsibility to keep things factual, so that is what I will do, leaving my opinion to the end.

Why the changes?

As we know the government inherited a huge debt and record deficit and all the main parties have accepted that a combination of spending cuts and tax increases are needed to reduce that deficit. 

We should not forget that the interest on the UK's debts is now one of the biggest areas of spend. Welfare is a huge area of spending, again it is agreed by all parties that savings must be found. Within welfare, Housing benefit costs the tax payer over £20bn a year and it has been growing fast in the last 15 years. To prove how widely accepted reforms are, last year Iain Duncan Smith suggested the costs would pass £25bn if Labour were in power, Douglas Alexander (the Labour spokesman at the time) said it wouldn't as they would reform housing benefit (he didn't say how). Nationally at least there is a consensus - Tax payers can't afford the housing benefit bill, it needs reforms.

What are the changes?

Housing benefits have previously been capped in terms of cost, so the new changes only deal with those in socially rented accommodation. I should make it clear that those who have reached retirement age are exempt from the new rules. For those aged 16-61 you may be effected if you have a spare bedroom.

The governments plan is that the tax payer should only have to meet the cost of renting the space you need, rather than the space you have. If you're a couple with one child in a three bedroom house, the government consider you to have a spare room and will reduce the housing benefit they pay you by 14%. If you are a couple with no children in a 3 bed house, your housing benefits will be reduced by 25%.

You may only get some of your rent paid by housing benefit. The reduction will still apply in the same way. So if your rent is £90pw and you get £20 Housing benefit, but have a spare room, your benefit will cover £12.60.

It does get a little more complex when you get to the detail of what is a spare room. A couple are entitled to a room as is each individual over 16. Two children of the same sex under 16 would be entitled to one room as would 2 children under 10 regardless of there gender. You may also be entitled to a further bedroom if you have a carer who provides overnight care.

Is is fair?

The first thing to remember is the government have no money, this is not new, they never had money. All Governments do is decide how much tax payers should give and how it is spent. We know there is a big housing shortage in the Country especially here is Basingstoke. At present there are families who live in cramped conditions but simply can't afford to buy or rent the 3 bedroom home they need. These are often working people who pay taxes to cover the rent of those who are not working and living in luxury by comparison. Why should people with a shortage of bedrooms, subsidise those with a spare one?

Against that people will argue that they have lived in their home for many years, maintained it throughout there tenancy, developed links with the community. Why should they be penalised because their children have left home?

In an ideal world we'd have sufficient housing for everyone (and a big argument about where that housing should be). We'll all have our own idea of fair and which of the above arguments is strongest.

What should you do?

Don't panic. There are a number of options if you don't think you can afford the extra

If you think the changes will apply to you, speak to you housing association as soon as possible to confirm it. Remember if you are a pensioner, live in a one bed flat or bed-sit or don't get housing benefit, the changes will not apply to you.

If you have a disability or receive care you should contact the Council. You can't cover every circumstance in a blog or leaflet and there may be discretionary payments available.

Talk to the benefits Agency. The benefits system became so complex over recent years that some people have found themselves in a situation where they would like to work but would be worse of if they did. This policy is one of many that are trying to prevent that happening and you could find you're better off being in employment. Equally there may be other benefits you are entitled to and it is worth checking this out.

Check with your housing provider about the rules of renting out your spare room. There are also professionals who work here Monday - Friday who are looking for a room to rent to reduce there commuting costs. It may not be the right thing for you but could be an option in some cases.

Check with your housing provider about transfer. If your housing needs have got smaller, you may want to look at exchanging with a family who need more space. In many ways this housing benefit policy may not be just about reducing the cost of housing benefit to the tax payer, but to make better use of the housing stock.

Getting off the fence!

The above is a summary intended to be informative and unbiased. In my view, the Government has made steps to increase the fairness in the system for tax payers. Tax payers in cramped conditions should not be expected to pay rent for others to have spare rooms. In addition, anything that gets people out of the benefit trap has to be good. 

It would be difficult for anyone who has for many years campaigned against the Council tax subsidy for empty homes to then not support ending the subsidy on empty rooms.

However not for the first time it is implementation rather than the policy where the problems exist.

Did it have to happen all in one go?
Could they not freeze Housing benefit for those with a spare room(s) phasing in the reforms over a few years, giving people more time to decide/plan or get used to funding the extra rent?

And how is someone on a limited income supposed to move? Unless they are lucky enough to move a few doors away and have the support of their family how will they meet the removal costs?  Where was the one off removal fund?

It is not unique to any government, a case of a good idea not well delivered.

If you do spot an error in the summary please let me know, I want it to be right. And feel free to comment below.