Bedroom tax, spare room subsidy and rent arrears

Call it what you will, the Government’s ‘under-occupation penalty’ for those receiving Housing Benefit is divisive. I can understand the policy objective, of trying to use scare resources more efficiently (be it cash paid as Housing Benefit, or the stock of Local Authority housing), but as I am not affected by it, I don’t think I’m in a position to comment on whether it is fair, or properly administered. However, I notice that LBTH had recently received an FOI request on the impact of the policy on rent arrears.

The penalty started in April 2013.

Findings:

  • Arrears have dropped for all tenants since the introduction of the penalty
  • The drop in arrears occurred in the first month after the penalty but has been creeping up since
  • People under-occupying properties were statistically more likely to have arrears before the introduction of the penalty than those not under occupying, and their arrears were larger
  • The penalty has only reduced the number of under-occupied tenancies by 2 per cent
  • There has been a much larger increase in the proportion of under-occupiers finding themselves in arrears than non-under occupiers
  • The proportion of under-occupiers in arrears is falling, whilst the proportion of non-under occupiers in arrears is rising.

So, 50 per cent of people hit by the penalty are in arrears, compared to 41 per cent of non-under occupiers, which suggests the penalty has hit hard. However, under occupiers were already more likely to be in arrears, so people in a precarious situation have been drawn further into debt to the council, but since April, the proportion of under-occupiers in arrears has been decreasing suggesting some resilience. However, for those still in arrears, the value of those arrears is going up.

Very few people are leaving under-occupied homes, but are increasing in arrears – why is this? Is it that the council just haven’t managed the system to ensure the availability of attractive smaller properties to tempt under-occupiers to move into, or is it just that people are attached to their homes and the penalty isn’t sufficient to tempt them away?

Techie appendix

The data the council have released is summarised below (click on the table to see it bigger).

 There are some interesting observations:
  • The number of ‘under occupying’ tenants has reduced by only 13, or 1.8 per cent, a very modest decrease. This to me suggests there has been little immediate impact on under-occupation (though there could be a churn in the households included in the data)
  • In June 2013 the number and proportion of under occupying tenants in arrears (358/ 50.1%) was greater than before the scheme started (298/40.9%), but that the number had fallen in May (-9 / -1.2 percentage points) and June (-18/ -2 percentage points ) from a peak in April (385 / 53.3%).
  • However, the proportion of non under occupying tenants in arrears increased each month and increased by 423 over the period March to June.
  • The average value of arrears has gone down for all tenants since the introduction of the penalty, but through a large initial drop and then a subsequent increase.

Were under occupiers more likely to be in arrears before the penalty?

Proportion of tenants in under-occupied properties in
arrears before April 2013: pp =0.409

Proportion of tenants in non under-occupied properties in
arrears before April 2013: pn =0.375

Proportion of all tenants in arrears before April 2013: p=0.377

Number of tenants in under-occupied properties: np
=728
Number of tenants in non under-occupied properties: nn
=11383
H0 pn= pp
H1: pp>pn      pp>0.375
At the 95% confidence level z=1.65

 

1.866>1.65, so the null hypothesis is rejected – under-occupiers are statistically more likely to be in arrears.

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