The UK government is set to block SNP moves to pump in an extra £15 million of emergency funding to effectively neutralise the impact of the so-called bedroom tax in Scotland.
Nicola Sturgeon yesterday demanded the green light from Westminster to scrap the current limit on assistance and allow the extra cash to provide full cover for the estimated 76,000 families affected by the controversial welfare reform.
But UK ministers insisted councils are not using up millions of pounds in discretionary housing payments (DHPs) which have already been made available to mitigate the impact of the bedroom tax.
Labour in Scotland is now calling for a different approach which allows councils to “write off” any cash owed by tenants because of bedroom tax.
The £15m has been allocated ahead of the Scottish Budget and comes after the SNP and Labour pledged to work to find a “legal way” to effectively neutralise the impact of the measure.
The Scottish Government has already allocated £20m of emergency housing payments, but coupled with the funds allocated to councils by Westminster, it means the 2014-15 limit has been reached for this assistance under Department of Work and Pension (DWP) rules.
Ms Sturgeon yesterday wrote to the UK welfare minister, Lord Freud, asking him to lift this cap to allow the Scottish Government to help more of those who are losing out.
“The Scottish Government is currently spending up to the legal limit in order to mitigate the effects of the bedroom tax on thousands of people across Scotland,” Ms Sturgeon said.
“If Westminster lifts the legal cap – which they can easily do – we will be able to help the 76,000 people in Scotland who are suffering from this cut.
“In order to make this legally possible Westminster needs to lift the cap for Scotland and UK ministers should act now.”
Scotland has seen a four-fold increase, to almost £16m, in emergency housing payments in the first nine months of 2013-14. But this still meant more than half the cash – about £18.3 million – set aside to mitigate the impact of the bedroom tax had not been spent.
A spokeswoman for the Department of Work and Pensions said: “The Scottish Government’s call for the current 150 per cent cap on discretionary housing payment top-ups to be increased doesn’t fit with our experience of how DHPs are currently working in Scotland.
“The UK government set aside £20m of additional DHP funding support which local authorities could apply for through a bidding scheme.
“After operating for four months the scheme closes today and so far only 11 [around a third] Scottish authorities have made a bid for additional funding.”
The DWP will consider the SNP’s request, but a spokesman said last night: “We don’t see a need for that at the moment.”
The bedroom tax is a cut in housing benefit for tenants who have one or more spare bedrooms. The Scottish Government is against the measure and has promised to abolish it if there is a Yes vote in the independence referendum.
Labour has said it would scrap the bedroom tax if elected as the next UK government in 2015.
In Scotland, Labour says even if the DWP rejects the Scottish Government request, other ways can be found to neutralise the impact of the bedroom tax north of the Border.
Finance spokesman Iain Gray says a system already operating in Renfrewshire could be replicated across the country which sees councils simply “write off” cash owed by tenants as a result of the welfare reform.