Universal Credit and the Bedroom Tax (officially referred to as the Under Occupancy Penalty or the Removal of the Spare Room Subsidy) are two separate initiatives and so will be addressed separately.
The Bedroom Tax was introduced by the Conservative and Liberal Democrat Coalition Government as a part of the Welfare Reform Act 2012 which sought mainly to reduce costs in the welfare system. Under the act, the Spare Room Subsidy was removed for tenants receiving housing benefit in social housing (both council properties and housing association properties.
The goal of the removal of the Spare Room Subsidy was twofold: to reduce the housing benefit bill and to free up larger social properties to alleviate overcrowding.
In practical terms social tenants of working age receiving housing benefit saw their benefit amount reduced by 14% if they had a spare bedroom or 25% if they had two or more.
Social property tenants can receive housing benefit for 1 bedroom for each: adult couple, member of a couple who can't share a bedroom because of a disability, single person over 16 (including lodgers and friends or relatives who live with you), disabled child under 16 who can't share a bedroom because of their disability, 2 children of the same sex under 16, 2 children of either sex under 10. Furthermore, following campaigning by a number of charities such as Shelter, allowance was made for tenants who needed overnight carers.
The bedroom tax did not affect tenants receiving Pension Credit or tenants in supported or temporary accommodation.
The affect of the policy was poor in terms of its aims. An evaluation by the Department for Work and Pensions found that not more than 8% of tenants affected had downsized to smaller properties. Furthermore, evidence suggests the Government did not nearly meet their target of a £480 reduction to the housing benefit bill.
However, the policy had a devestating impact upon social housing tenants. The income reduction experienced by those affected by the bedroom tax saw a reduction in their purchasing power for essentials, particularly food and utilities. This led to an increased need for foodbanks, use of payday lenders and issues with debt. A study conducted by the Journal of Public health found that the policy had negative impacts on people's mental health, relationships and had put an increased strain on local services.
The study concluded that:
'The bedroom tax has increased poverty and had broad-ranging adverse effects on health, wellbeing and social relationships within this community.'
This had a considerable impact upon Housing Associations, particularly on the types of services and support that they could provide. Firstly, social landlords saw a similatianious decrease in income with an increase in costs. Rent debts increased as did the number of evictions due to rent debts. The ability for social housing providers to build new properties decreased which has led to homeless individuals and familes having a longer wait on social housing lists. Furthermore social Landlords had to increase funding on debt advice and support such as foodbanks and advice workers.
Universal Credit is a means-tested benefit for people of working age and on a low income. It replaces six existing means-tested benefits: Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Housing Benefit, Child Tax Credit, and Working Tax Credit. It is being rolled out across the United Kingdom on a stage by stage basis since 2017.
It was the brain child of Ian Duncan Smith MP (formally the Secretary of State at the Department of Work and Pensions) and was intended to be simpler than the current system of benefits and tax credits. Further to this, inbuilt into the new benefit was a wealth of benefit cuts amounting to around £3Bil by 2020.
The impact of the transition to Universal Credit is mixed. The Resolution Foundation thinktank estimates that it will result in increased income for 2.2 million working families, whilst 3.2 million working families are expected to see a decrease in their income.
Due to several problems with the benefit, it has signicantly increased debt of the claiment and impeded the ability of social landlords to collect rents. One issue is that of the six week waiting time from the point of application. Though there is the option to apply for an advanced payment, the delay often leaves applicants in arrears in their rent.
There has also been significant problems as a result of the implementation of Universal Credit. The benefit has undergone a significant number of changes since it was first introduced and has faced a number of challenges from charities and advocacy groups. This significantly impacted upon housing association's ability to appropraitely advise their tenants and led to increased costs and constant confusion.
Further Reading:
https://academic.oup.com/jpubhealth/article/38/2/197/1752995
https://england.shelter.org.uk/housing_advice/housing_benefit/bedroom_tax_are_you_affected
https://www.theguardian.com/society/2016/jan/27/the-bedroom-tax-explained
https://www.jrf.org.uk/report/impact-welfare-reform-social-landlords-and-tenants
https://www.moneyadviceservice.org.uk/en/articles/universal-credit-an-introduction
https://www.turn2us.org.uk/Benefit-guides/Universal-Credit/What-is-Universal-Credit#guide-content
https://www.theguardian.com/society/2018/apr/07/universal-credit-backlash-millions-lose-out
These are two separate initiatives implemented by the Conservative government, but they have had similar detrimental effects upon social housing tenants and housing association landlords, with the introduction of universal credit simply adding to the problems created by the "bedroom tax."
The idea behind the bedroom tax, or the under-occupancy charge, is that the amount of rent subsidy received by social housing tenants to help them pay rent now requires a property to be "fully occupied," or else the tenants will receive less subsidy income. If there is a "spare room," this means the tenants receive less income. A couple with two children under sixteen of the same gender, or two children under ten of different genders, would be expected to have both children in the same room; if they lived in a property with more than two bedrooms, the third would be a "spare room" and therefore lead to benefit deductions.
These criteria for what constitutes a "spare room" differ significantly from what housing associations had provided before. As a result, there were thousands of families of two children living in three bedroom homes when this policy was implemented, and these people suffered a sudden loss of income. This has had an effect on both tenants and housing associations in several ways.
First, the families affected have been disrupted in that they have had to cut back on essential spending. Studies have shown that families have had to cut back on food in order to pay the extra rent. This has led to a rise in the need for food banks. Some families have also been disrupted in having to move to smaller homes, in which they are overcrowded, because of an inability to survive on the diminished income.
The change in relationship between tenants and social housing associations has changed in accordance with this, because housing associations now find themselves having to offer additional support to their tenants along the lines of "community support." This has meant spending money on financing workshops and even mental health support for those affected by the strain of the changes to income. Housing associations have also helped set up and run food banks. This spending means that they are less able to focus on providing much needed additional housing, and that they are often unable to provide housing for the poorest, most needy families.
Universal Credit is a more recent change to benefits, coming on top of previous changes. It aims to "simplify" the benefits system by replacing all existing benefits, previously allocated to different areas, with a single payment. Landlords have said that the impact of Universal Credit has increased their spending significantly. Universal Credit tenants, unused to budgeting in this way, are 25% more likely to face eviction from their homes, and housing officers have to spend time explaining the changes in the system to tenants and pursuing those who are behind on their payments. Particularly during the period of overlap between the previous system and Universal Credit, many claimants found themselves without money for up to five weeks, a period during which their debt to the housing association built up. Housing associations have attempted to support people in this situation, but have been required to employ more advisers. They have not received sufficient help and support from the government in the implementation of this system, nor has the government explained the changes sufficiently to either landlords or tenants.
https://www.jrf.org.uk/report/impact-welfare-reform-social-landlords-and-tenants
https://www.theguardian.com/housing-network/2016/mar/01/social-housing-universal-credit-welfare-reform-tenants-debt
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