Birmingham City Council Adds £2m To The Bedroom Tax Discretionary Housing Payment Fund

Bedroom Tax Demo April 20th (6)The bedroom tax is leading to a huge increase in arrears – expected to cost the council £1.4m in 2013/14, houses being left empty and a massive increase in cost for councils. Birmingham City Council, like every other council, has far too few smaller properties for people to move to, and in addition to that worries about increased homelessness. This week a cabinet report revealed that they have decided to add £2million to the Discretionary Housing Payment fund (DHP) for 2013/14, earmarked for people affected by the bedroom tax.

This extra money makes the DHP a total of £5.77 million, but not all of this is intended for people affected by the bedroom tax. In fact the DWP expect just £716,000 of the original £3.77million to go to people affected by the bedroom tax:

Social Sector Size Restriction [bedroom tax] £716k
Benefit Cap (from July 2013) £1.58m
Local Housing Allowance Reforms £980k
Baseline funding (general hardship) £490K
Total £3.77m

In the first three months of the financial year, more than £400,000 has been paid out of the DHP to people affected by the bedroom tax (and many, many more have been turned down). It was always clear that the DHP wasn’t going to cover the bedroom tax, but now we are really seeing just how short it is, so much so that the council are reallocating £2m towards it.

Not only is the bedroom tax causing huge hardships to people, it is going to end up costing taxpayers more money – not just because of the moves people have to make into the highly expensive private sector, but because of the empty houses, the costs of chasing arrears and making evictions, the cost of rehousing those evicted and others made homeless. The report says

the new reforms are likely to lead to further adverse financial impacts on the HRA and other General Fund budgets of the City Council. With regard to the HRA, it is probable that additional costs will be incurred in the management of current tenants arrears (due to increased recovery action and debt advisory/prevention services) and repairs to empty properties due to potential relocation by tenants to smaller properties to mitigate the effects of Size Restrictions. On the General Fund, there may also be an impact on temporary accommodation costs as a result of increasing homelessness. All these additional costs will need to be funded by redirecting existing resources

The £2m will come from the Housing Revenue Account (HRA). The cabinet report says that this money will be found

by redirecting existing resources in the approved HRA Revenue/Capital Budget for 2013/14. This will include vacancy controls, savings in operational costs but avoiding any adverse impact on the key capital investment programmes.

This is a fundamental problem with accepting cuts – any money moved to vital things like the DHP results in a loss somewhere else, and savings in operational costs usually means job losses and a worse service. Aside from the economic logic of an alternative economic strategy, it is a key reason why we oppose all cuts.

The council are making some of the right moves against the bedroom tax. As well as increasing the DHP, they are looking at reclassifying houses to have fewer bedrooms, and some councillors have pledged to support tenants faced with eviction. The truth is that none of this will be enough. The only way that the bedroom tax will be stopped is to make it unworkable, so when evictions start coming, communities come out and physically stop the bailiffs from entering properties, protecting the family living there. This addition to the DHP adds some vital breathing space for us to build further resistance to the bedroom tax.

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Filed under Birmingham City Council

2 responses to “Birmingham City Council Adds £2m To The Bedroom Tax Discretionary Housing Payment Fund

  1. Pingback: Birmingham Trades Council » Birmingham City Council Adds £2m To The Bedroom Tax Discretionary Housing Payment Fund

  2. Pingback: Bedroom Tax – Unfair, Unworkable and Counterproductive | Birmingham Against The Cuts

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