MPs call for Holyrood powers on bedroom tax

THE UK and Scottish governments need to act quickly to transfer new powers to Holyrood that will allow ministers there to fully mitigate the impact of the so-called bedroom tax, a committee of MPs demanded.

The decision to transfer the power to Holyrood shows that devolution works". Picture: Kenny Smith

Westminster’s Scottish Affairs Committee has urged both administrations to expedite the necessary procedures which will enable the Scottish Government to set the cap on Discretionary Housing Payments (DHPs).

The payments have been used to help those facing financial difficulty as a result of controversial changes to housing benefit, where people lose cash if they are deemed to have more rooms than they need.

About £50 million is needed to fully mitigate the loss in housing benefit payments for those council and housing association tenants who have been affected.

The UK Government offered to transfer the power to set the cap on DHPs north of the border to the Scottish Parliament earlier this month, with Scotland Office Minister David Mundell contacting Deputy First Minister Nicola Sturgeon on the issue.

MPs on the Scottish Affairs Committee said they would now “urge both governments to expedite the necessary procedures which will enable the Scottish Government to lift the cap on DHPs in Scotland as quickly as possible”.

Committee chair Ian Davidson said the decision to transfer the power to Holyrood showed that “devolution works”.

The Labour MP added: “We now urge the UK and the Scottish governments to move quickly to enable the Scottish Government to lift the cap on DHPs in Scotland as soon as possible.”

He also called on the Scottish Government to “make a clear commitment to provide sufficient funding to enable every local authority in Scotland to make DHP payments which will cover the full costs of the bedroom tax since it was introduced for all of those who have been affected by it”.

Mr Davidson went on: “That means paying the bedroom tax for every Scottish tenant for the current financial year.

“But it also means giving Scotland’s councils enough money to write off bedroom tax arrears that accrued during the previous financial year and, crucially, to refund all additional rent that has been paid as a result of the bedroom tax.

“To fail to do this would be penalising those who scrimped and saved, and did their best to make extra payments that they never should have had to make.”

In a report, the MPs said that if the Scottish Government was able to mitigate the impact of the bedroom tax in this current financial year, it should also do so for 2012-13.

“Thus it should make additional funding available to ensure that all bedroom tax arrears are written off and, to avoid moral hazard, all bedroom tax payments made last year are refunded. It is essential that these issues are resolved and processes clarified as soon as possible,” the MPs said.

Ms Sturgeon has already said that local councils should ‘’plan on the basis that all losses of housing benefit incurred by social tenants due to the bedroom tax can be fully mitigated’’.

The Department for Work and Pensions will give Scottish councils £15 million this year for DHPs, with the Scottish Government having found the remaining £35 million needed from its budget.