Peers back exemptions to ‘bedroom tax’ reform

The UK government has suffered a fresh setback over its controversial welfare reforms as peers voted to limit the impact of the “bedroom tax” on social housing tenants with spare rooms.

Peers last night voted by 236 votes to 226 to exempt the disabled, war widows and foster carers from the proposed £14 cut in housing benefit if no alternative accommodation is available.

The exemptions, proposed by crossbench peer Lord Best, will cost about £100 million and set up a showdown between the two Houses of Parliament over the plans.

MPs previously threw out a series of changes made by peers, but the decision to back Lord Best’s amendment means the Welfare Reform Bill will have to go back to the Commons.

The bill introduces a £26,000 cap on benefits and a simplified Universal Credit system, replacing a range of payments for working-age claimants.

Lord Best insisted his amendment would not remove the pressure on “scroungers” who were able to work and was targeted at those who needed help.

He said: “These are households for whom pressures to take a job, a key policy driver for the government … are not relevant. For these people the penalty simply represents a substantial loss of income with no escape.”

He warned that families on low incomes hit by the bedroom tax, which would see a 14 per cent reduction in housing benefits for having a spare room or a 25 per cent reduction for having more than one extra bedroom, could be forced to use loan sharks to make up the shortfall.

Welfare reform minister Lord Freud said the £100m extra cost of Lord Best’s amendment was “regrettably in the present climate, a lot of money” and opposed the change.

When MPs rejected earlier attempts by peers to amend thebill, the extra spending was given as the reason for their decision – restricting the Lords’ ability to insist on their changes.