The controversial bedroom tax was effectively brought to an end in Scotland yesterday after the SNP and Labour struck a historic deal at Holyrood last night.
The Scottish Government’s annual Budget was passed with £35 million set aside to fully mitigate against the impact of the welfare reform which affects almost 80,000 Scottish households. It means no Scot can now face eviction from their home over the “tax”, which sees cuts in housing benefits for those considered to have a spare bedroom.
Holyrood’s two biggest parties have previously been at loggerheads over the best way to deal with the bedroom tax, but came together to neutralise its impact last night as finance secretary John Swinney agreed to a proposal by Labour for a last-minute change to the Budget.
“By voting for this Budget today, we will effectively bring an end to the bedroom tax in Scotland,” said Labour’s Jackie Baillie.
The breakout of goodwill was praised by civic Scotland, including Jackie Brock, chief executive of Children in Scotland.
“We are particularly pleased that joint working between Scottish Labour and the Scottish Government appears to have resulted in extra provisions to off-set the under-occupancy charge, or bedroom tax, in Scotland,” she said.
About £50m is needed to fully offset the impact of the most controversial of the current welfare reforms in Scotland.
Emergency funding for hard-up tenants has already reached the £38m limit allowed under Westminster rules, a mixture of Scottish (£23m) and UK (£15m) cash.
But the SNP wants this cap lifted by the UK Department of Work and Pensions (DWP). If this is agreed, Mr Swinney announced yesterday he will provide the additional £12m needed to meet the £50m required, bringing the Scottish total to £35m.
The only previous occasion Labour has backed an SNP Budget was in 2009 – only after the then minority Nationalist administration had seen its spending plans rejected at the key final stage and Holyrood was facing the prospect of an election to break the impasse.
Mr Swinney, to applause from Labour and SNP benches, said yesterday: “I give parliament the assurance today that if the DWP says no, the Scottish Government will put in place a scheme to make this additional £12m available to social landlords so that we need not see any evictions in Scotland this year as a result solely of the bedroom tax.”
He added: “The bedroom tax is an iniquitous and damaging policy.”
The UK government decision to withdraw the spare room subsidy for council tenants has been the most controversial of the coalition’s welfare reforms. It means working-age people renting from councils or housing associations lose up to a quarter of their housing benefit if officials decide they have more bedrooms than they need.
About £15.4m was claimed by struggling tenants in emergency housing benefits between April and November last year – a fourfold increase on all of 2012.
The extra cash announced yesterday was secured through £10m in leftover cash for Network Rail, as well as £3m in additional Scottish cash from Westminster and other budget exchange flexibilities. The Scottish Government will spend more than £244m alleviating the impact between 2013-14 and 2015-16, at the expense of spending in other areas.
Labour finance spokesman Iain Gray was behind the proposal which will effectively see councils and housing associations “write-off” the extra cash owed by tenants as a result of the bedroom tax.
He told MSPs: “If we pass my amendment we will have turned it into a ‘sink the bedroom tax boat to the bottom of the sea’ Budget.”
Mr Swinney’s Budget was passed by 108 votes to 15 with only the Tories voting against. It also confirms another year of the council tax freeze, support for free university tuition, free prescriptions and free personal care.
From next January, the SNP administration will fund free school meals for all school-children in the first three years of primary school.
The SNP government wants to offset the impact of the bedroom tax – and is offering two alternatives.
The first is through discretionary housing payments (DHP) to those affected, with about
£50 million needed to fully offset its impact on 77,000 households affected. But the level of emergency funding has already reached the £38m limit allowed under Westminster rules, through a mixture of Scottish (£23m) and UK (£15m) cash.
The SNP wants this cap lifted by the UK Department of Work and Pensions. If this is agreed, Mr Swinney announced yesterday he will provide the additional £12m needed.
If this is refused, the Scottish Government will fund an alternative Labour-backed scheme which effectively allows councils and housing associations to “write off” the cost of bedroom tax to tenants facing eviction.
This is already in operation in East Lothian and Renfrewshire and Labour say it is a “workable alternative” to DHPs.