Housing experts predict Bedroom tax will cost more than it will save

The bedroom tax will cost Northern Ireland more to implement than it will save in housing benefit, new figures have revealed.

According to a joint study by the Northern Ireland Federation of Housing Associations (NIFHA) and the Chartered Institute of Housing (CIH), though the bedroom tax aims to cut the benefits bill by £17m, it will cost £21m to implement.

NIFHA and CIH are now calling for the policy to be dropped in Northern Ireland.

The government's under-occupancy policy will affect 32,000 households in the country.

Economic modelling by NIFHA and CIH estimates that in its first year, the bedroom tax will see housing association tenants lose £3.8m in housing benefit.

This will affect housing associations by costing them £6.4m, including the increased costs for collecting rent, managing tenancies and adapting current systems.

Direct costs to the largest social landlord in Northern Ireland, the Housing Executive, are expected to be at least £10m a year with a further £0.5m needed to reassess housing benefit claims across the social housing sector.

The government has allocated an extra £3.8m in funding for Discretionary Housing Payments (DHPs) to mitigate the effects of the bedroom tax.

Cameron Watt, chief executive of NIFHA said: “Most people agree that welfare should be reformed to create a simpler system that makes work pay and reduces the benefits bill.

“However the bedroom tax is an ill-conceived policy that will achieve none of these things. Rather it will hurt vulnerable people in Northern Ireland, causing financial hardship for tens of thousands of families.

“Government has yet to calculate the true cost of implementing the bedroom tax. However these new figures from NIFHA and CIH show that the direct costs of £21million for the Housing Executive and housing associations will exceed the projected benefit savings of £17million.

“It’s clear that the numbers don’t add up on bedroom tax. Northern Ireland can’t afford the human or economic damage this policy would inflict.

“We share the Social Development Minister’s desire that no tenant should lose their home as a result of the various welfare reforms.

“However as our members are social businesses, they will have to continue to collect the full rent from customers to remain viable, providing good services to tenants and building much-needed social and affordable homes.

“A delay of even three years is not the solution for a policy that it is so unsuited to Northern Ireland. And even a ten-fold increase in the number of smaller social homes being built would still leave the vast majority of affected tenants without a suitable social home to downsize to.

“Therefore the only sure way for Minister McCausland and his NI Executive colleagues to protect social tenants, is not to introduce the Bedroom Tax.

“That’s why we’ll be campaigning hard for MLAs to bin the Bedroom Tax when the Welfare Reform Bill returns to the Assembly on 16th April. When even the Chairman of the NI Conservatives admits the policy is ‘unfair’ here, it’s definitely time for Northern Ireland to bin the Bedroom Tax.”

CIH NI director Cecilia Keaveney said: “These figures confirm what housing professionals have long suspected – introducing the bedroom tax in Northern Ireland just doesn’t add up. It will cause real hardship for some of the most vulnerable members of our society as well as posing huge challenges for social landlords, particularly given the unique profile of social housing here.

"We’ve always known that there would be a significant human cost to the bedroom tax, but these figures show that there is also considerable financial cost to the sector.
I would strongly urge our MLAs to take these figures into account when they consider the Welfare Reform Bill again later this month.”