The Bedroom Tax: The Tories’ idea of fairness that could yet return to haunt them

Maybe it’s because Nick Clegg was so obviously in command of the Lib Dem conference this week that the only rebuff suffered by the leadership – a comfortable majority voting for an urgent review of the impact of the bedroom tax – received so little attention.

The conference decision won’t change anything of course; but it illustrates that for a party rallying so comprehensively behind its leader, the tax is a nagging, source of unease. That’s why Shirley Williams reportedly described it at a fringe meeting as “a big mistake”; and why the body language of some Lib Dem ministers as they seek to defend it is visibly uncomfortable.

That unease can only be increased by the revelation in The Independent yesterday that at least 50,000 council house tenants – or one in three of those who have already seen their housing benefit cut as a result of the measure – have fallen into rent arrears in just four months.

These figures, based on Freedom of Information requests by the campaign group False Economy, are not all, because separate research from the National Housing Federation shows that another 30.000 – and probably many more – housing association tenants have also fallen behind in their payments . Nobody expects those figures to do anything but rise.

So is the bedroom tax the “new poll tax”? Certainly the vocabulary favours the critics. Just as “Community Charge” – the official name for Margaret Thatcher’s ill-fated switch from property-based to person-based local taxation – never replaced its (accurate) two-syllable alternative , so “ending-the-spare-room subsidy “ is never going to rival “bedroom tax”. But there are differences that go beyond the fact that we have not yet seen riots against the bedroom tax.

Mrs Thatcher used her force of personality to carry it through although a majority of Cabinet ministers were against the poll tax, including the chancellor of the time Nigel Lawson, and it eventually became a factor in the prime minister’s downfall. There has been little sign of similar discord among Tory ministers over the bedroom tax.

On the other hand it does look increasingly look like the moral, and just possibly in time the political Achilles heel of the Government’s welfare reform programme. The hard cases that MPs continually bring to the Commons – the epileptic whose daughter comes to stay the night when she is having a bad spell, and will now be more dependent on social services for help; the divorced dad who can’t have his children to stay; the spouse who is a carer and sometimes needs somewhere separate to sleep – have already obliged ministers to increase by another £35m the discretionary payments for councils to help the most vulnerable. But all the anecdotal evidence is that this is nowhere near enough. And indeed some more of the £480m savings in housing benefit the change was supposed to make could well be offset by rising costs in other ways – from evictions to social services help for those who can’t cope.

In recent weeks the Government has been able to absorb Labour atttacks on the tax by taunting Ed Miliband over whether he will promise to repeal it. There are now some signs – no more than that – that he may do just that at his party conference next week. If so, he should not be short of a case.

To justify its choice of this particular means of cutting the housing benefit bill, the Government uses two principal arguments. One is that it wrong for tenants to have “subsidies” for spare rooms when so many others are in dire need of bigger homes, and that they should therefore be encouraged to downsize instead. And the other, endlessly repeated by David Cameron in the House of Commons, is that the benefit is not paid to private tenants with spare rooms so that to make the system “fair” social housing tenants should not get it either.

The first argument has been severely undermined, however, by persuasive data showing that in most cases, the existence of smaller housing units for affected tenants to move into is a myth. The 38 councils which answered FOI requests on this from the Labour Party in the summer disclosed that while just over 99,000 families would see their benefit cut by the measure, only 3,800 had one or two-bedroom homes available for them to move into. Ninety-six per cent, in other words, have no alternative accommodation to move into.

The second point is that it all depends what you mean by “fair”. Labour is fond of repeating to the point of tedium that the change, bearing down on the poorest householders, came into effect on the same day as the cut in the top rate of income tax from 50 to 45p. But there is another disparity which relates specifically to housing.

An owner-occupier with a spare room, or come to that several spare rooms (and 49 per cent of them have at least one) is unaffected. But more strikingly still, adults living alone – 7.7 million of them – have their council tax reduced by 25 per cent. No doubt the majority of these are pensioners, and pensioners are exempt from the bedroom tax. But a prosperous working adult living alone in his own flat or house with a spare room or rooms qualifies for the same rebate. In other words the single owner-occupier is not only not penalised for living in a bigger place than he or she needs – according to the Government’s criterion – but is actually compensated by public money for doing so. That looks awfully like, dare one say it, a spare room subsidy. Where social tenants with spare rooms are penalised, many owner-occupiers in the same position are cosseted.

At the heart of that disparity – in part an obsolete hangover from the defective old poll tax rationale that the empty-nest widow should not be disadvantaged by paying more local taxes than a large family – is the old divide between owner-occupiers, the bedrock of Tory support, and tenants. While such differential treatment would be hard to justify in good times, it is all the starker when the steady rise in house prices makes home ownership an impossible goal for ever larger swathes of the population.

Nobody doubts that housing benefit has spiralled of control, though most of it is soaked up by private sector landlords. The desperate shortage of affordable housing and the absence of rent controls lie at the heart of the problem. But the Government’s headline policy on housing benefit simply bears down on the poorest in society.

So far the Government’s – and especially the Chancellor’s – judgement seems to be that this is good electoral politics, in which the affected are outnumbered by those whom the polls do suggest want serious cuts in welfare. If Labour is ready to reverse it, it will no doubt have to find ways of paying for whatever savings it forfeits – whether through a mansion tax or other means.

The question is whether there is a tipping point beyond which the manifest unfairness of the policy actually begins to stir the conscience of floating voters who are not directly affected. Maybe this is a tough ask. But it cannot begin to happen if Labour run away from a pledge to repeal it next week.