THE “bedroom tax” is costing millions of pounds more to implement in Scotland than it will save, the country’s council leaders have revealed.
Local government body Cosla claims the policy will cost about £58-60 million this year, which outweighs the estimated savings of £50m on the benefits bill.
The measure, whereby housing benefit is cut for those with an unoccupied bedroom, was introduced by the UK government in April. Since then, about a third of tenants have fallen into rent arrears, and appeals for extra support have soared.
Ahead of a meeting of council leaders in Edinburgh today, Harry McGuigan, Cosla’s community wellbeing spokesman, branded the coalition’s handling of the policy “incompetent”.
“We always said that this policy was ill-conceived, unfair and unworkable, and should be abolished,” he said. “We are now seeing clear evidence that it costs more than it saves – a classic own goal by the coalition government.
“Not only are they shown to be uncaring and out of touch with ordinary people, they are also revealed to be incompetent. They have managed to come up with a benefit cut that costs more than it saves.”
A Cosla analysis suggests discretionary housing payments – awarded to tenants struggling to pay their rent – are costing the Department for Work and Pensions (DWP), local authorities and the Scottish Government at least £35m in Scotland.
In addition, the estimated additional costs of rent arrears, implementation, advice and support comes to at least £25m to £27m for councils, housing associations and advice agencies.
A sample of six councils revealed an additional 31 per cent of tenants affected were in rent arrears after the first six months of the bedroom tax, taking the total in arrears to 68 per cent.
SNP MSP Kevin Stewart, who sits on Holyrood’s welfare reform committee, said: “The bedroom tax is a deeply unfair and damaging policy that is causing misery to thousands. It should never have made it off the drawing board of the Westminster government.
“This should be the final nail in the coffin of the bedroom tax, which should be scrapped before it can do any more damage.”
Under the tax – or spare room subsidy as the UK government calls it – council tenants with a spare bedroom face cuts to their housing benefit if they do not move to a smaller home.
But Cosla claims there are “very limited” opportunities to do so. It said most of the 82,000 people estimated to be hit by this measure in Scotland are likely to have to move to a one-bedroom house to avoid the penalty. Yet only about 21,000 such properties become available in social housing in Scotland each year.
A DWP spokesman said: “Our reforms to the spare room subsidy are restoring fairness to the welfare system and we are confident this will save £500m a year.
“We have provided Scotland with £13.5m this year to support claimants affected by our welfare reforms and we are monitoring this spending carefully.”
Labour MSP Jackie Baillie plans to bring forward legislation as part of a member’s bill that would effectively make evictions on the grounds of bedroom tax arrears illegal.
She said the Cosla research reinforced the “insanity” of the measure. “The additional costs arising from the bedroom tax mean that will cost more than it will save,” she said. “It should be scrapped. But until then, the SNP government needs to back my bill.”
SNP-led councils have already pledged not to evict any council tenants who fall into arrears as a result of the bedroom tax.
MSPs heard this week that some councils have seen increases of up to 900 per cent in applications for discretionary housing payments in recent months.
And a report by the University of York suggested the DWP may have overestimated the savings resulting from the tax by as much as 40 per cent.
The bedroom tax is at the heart of a widespread reform of the welfare system and will lead to the eventual introduction of one universal benefit.