The bedroom tax might be the clearest example of the coalition punishing the poor for the financial crisis.
The bedroom tax might be the clearest example of the coalition punishing the poor for the financial crisis
It was claimed by the government that the bedroom tax had two aims – to reduce spending on benefits and to help the 300,000 people living in overcrowded accommodation by incentivising those tenants ‘over occupying’ to move to smaller homes.
But the maths didn’t add up.
When the policy was first proposed, critics pointed out that there were not enough homes for the so-called ‘over occupiers’ to move to. There were only 85,000 one bedroom social properties available in England, and 180,000 social tenants “under-occupying” two-bedroom houses. That’s quite a large gap.
Hardly surprising then, that research carried out by the BBC a year after the tax was implemented showed that only 6 per cent of people affected by it have moved home. There are simply not the homes for them to move to.
Despite this, the Conservatives gleefully claimed a victory for the tax, saying that it saved the government the conveniently round figure of a million pounds per day.
As professor Rebecca Tunstall, director of the centre for housing policy at the University of York, told the New Statesman:
“There were two major aims to this policy – one was to encourage people to move, and the other was to save money for the government in housing benefit payments. But those two aims are mutually exclusive.”
The government saves money from the people who have no choice but to stay where they are.
And what happens when people with a low income have that income cut? They go into arrears on their rent.
According to the BBC, this is what’s happened to a third of tenants affected by the tax. The debt has been successfully shifted from the government to benefit claimants.
Could this have been the main aim all along?
Supporters of the bedroom tax certainly focused on the under-occupancy issue. Ian Duncan Smith, for example, pointed out how unfair it was on those who did not have a spare bedroom:
“It is unfair on taxpayers, it is unfair on those in over-crowded accommodation and it is unfair that one group of housing benefit tenants cannot have spare bedrooms and another group are subsidised.”
Yet it’s unlikely that the government did their housing sums wrong and genuinely believed the main outcome of the tax would be people moving home. It seems more likely that focusing on the ‘unfair’ behaviour of benefit claimants suited their rhetoric of vilifying a certain section of the general public.
Without discussing the possibility that an increase in homelessness caused by the tax could result in it saving the government no money at all, how ethical is it for a government to shift debt on to the general public?
There is a faint silver lining to this deplorable tax, however, and that is the creativity it has brought out in campaigners.
In North London, for example, one group of artists are protesting by putting on an exhibition inspired by the bedroom tax, hosted in a bedroom subject to the tax. The 27-year occupier is moving out for a week and will be exhibiting art along with other artists, all inspired by the tax. The exhibition will be free and also show short films on the housing shortage so that local people can visit and learn more about it.
It seems the bedroom tax might be the clearest example of the coalition government punishing the poor for the financial crisis, but there are always ways to fight back.
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72 Responses to “Was the aim of the bedroom tax always to shift debt from the government to benefit claimants?”
blarg1987
Well lets see, private sector pensions are also facing liabilities so yes we are in effect paying more for our goods to underwrite this shortfall.
You still have not answered my questions though which I will repeat in case you missed them:
Are you saying that in your system are you saying there would be zero guarantors and zero increases in contributions if the stock market had a problem like it does now?
LB
No, it wouldn’t have a problem.
First you don’t have to fund with the stock market. Most pension schemes use what is call liability matching. They buy bonds to match the expected cash flows on the liability side, plus coverage for the defaults on the bonds.
End result, you have a very high probability of meeting the cash flows. Even if defaults exceed expectation, you are still paying out a very high percentage. You can mitigate this by insisting on holding an excess of assets of liabilities.
In other words it comes down to cost. You can trade cost against risk. Lower risk higher cost.
So I’ve answered your question.
Now back to the state pensions and civil service pension and the question I keep asking you. You aren’t answering it.
How much does the state owe?
Then we can move on to asking your question about risk about the state pensions.
John
That’s only auto-enrolment as it is now; where the employer pays some in, the empoyee pays some in and the government subsidises the employer contribution through the NI tax break.
First the tax break goes, then the government reduces their contribution because people already have a pension (so everyone has a minimum amount but now it’s the employee who bears part of the burden of funding their own pension) then it’s eliminated completely so the government isn’t involved with pensions at all.
At least that way they can’t steal it directly (though I’m sure they’ll get money through taxes still)
I’m also sure, given conservate initiatives in the past, they’d be perfectly happy stealing pensions too. They’ve done worse for this country.
Sure the poor depend on them. But they can’t get them. Thats why I proposed an alternatve; subsidised care homes. I’m sure there are other alternatives we’ll be seeing in the future.
Selling debt is simple; the government just did it for student loans. So do that in reverse. Someone offers the government money to take pension provision of their hands. G4S and Atos would probably leap at the chance. Then they have the problem of delivering pensions. Which they will, poorly, inefficiently and as expensively as possible as they will have bought a monopoly industry and can AFFORD to treat us like the docile sheep we sometimes show ourselves to be.
With the pension debt gone, benefits DO become affordable. You agreed that one.
LB
With the pension debt gone, benefits DO become affordable. You agreed that one.
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No. The reason is that you’ve made an assumption. You’re assumption is that after saying no state pensions, no civil service pensions to be paid, that those now made destitute won’t increase the welfare bill.
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Selling debt is simple; the government just did it for student loans
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Ah, you’re wrong. If someone owes you money, you can sell it.
If you are the one owing the money, you can’t sell it.
What makes you think you can do the latter? Who is going to pay you 100 pounds to take on the obligation to pay 100 pounds of your debts?
Flabergasted you could even think that makes sense.
westerby1
I know the question was not directed at me but just wanted to say I should not have to pay any of it – neither should the vast majority of people, because we did not cause it!
Imagine the people who caused this as parents, we are their children. We do not know how much money mum and dad have, so if they buy us a nice house,car, clothes, holidays etc we assume they can afford it, whatever they do we assume they have enough money. What has happened is akin to those parents now telling their children “WE have overspent and been careless with the money, YOU will have to do without for the next 10 years until we can pay the debt off, mummy and daddy will just carry on as normal, that’s ok, isn’t it?” When the children complain the parents take one child aside and tell them it is the other child’s fault, they do exactly the same with the other child. Result? Children are so busy fighting with each other they do not notice that mum and dad have got their gladrags on and have gone out partying.