A Commons inquiry has backed warnings from Newcastle City Council that cuts to housing benefit are causing hardship for families with children and disabled people - while failing to free up housing stock.
MPs are warning that cuts in benefits paid to social housing tenants who are considered to have a spare bedroom has caused “severe financial hardship and distress to vulnerable groups”.
The policy, known by critics as the “bedroom tax”, was designed to free up larger properties for families who need them most by encouraging council or housing association tenants with spare rooms to downsize.
But the Commons Work and Pensions Committee - which has Labour, Conservative and Lib Dem members - highlighted warnings from Newcastle City Council that there simply aren’t enough smaller properties for people to move into.
The Committee published its findings after hearing evidence from a range of witnesses including Coun Joyce McCarty, Newcastle Council’s deputy leader.
The Government has published figures showing that the cost of paying housing benefit in the North East had fallen by £25m as a result of the reforms.
Housing benefit rules introduced last year allow tenants to have one bedroom for a single adult or couple, for any two children under 15 of the same gender and for any two children under nine of either gender.
Housing benefit is cut by 14% of the property’s assessed rent if they have one room deemed to be a spare bedroom and 25% if they have two.
In the North East, 50,000 households had their benefit cut, or 440 households for every 10,000 in the region - a higher proportion than any other part of the country.
MPs highlighted evidence from Newcastle, which told the inquiry that 3,233 of its tenants were on the waiting list for a one-bedroom property but only around 800 one-bedroom properties were becoming available each year, including bedsits.
Referring to the policy as the social sector size criteria (SSSC), the MPs said: “Newcastle City Council questioned whether the SSSC policy was likely to succeed in encouraging better use of social housing stock. It pointed out that in Newcastle overcrowding was not a significant issue”
“Coun McCarty made the point that the SSSC had actually led to very few overcrowded families being rehoused.”
They warned: “We understand the Government’s wish to use social housing stock more efficiently and to reduce overcrowding. However, the SSSC so far seems to be a blunt instrument for achieving this. In many areas there is insufficient smaller social housing stock to which affected tenants can move, meaning that they remain in housing deemed to be too large and pay the SSSC.”
But ministers said housing benefit reforms and the welfare cap - which means no household can receive more than £26,000 in benefits - were needed to manage soaring welfare spending, which grew by 50% in Britain in just 10 years and saw the housing benefit bill exceed £1bn in the North East alone.
Secretary of State for Work and Pensions Iain Duncan Smith said: “It was absolutely necessary that we fixed the broken system which just a year ago allowed the taxpayer to cover the £1m daily cost of spare rooms in social housing.
“We have taken action to help the hundreds of thousands of people living in cramped, overcrowded accommodation and to control the spiralling housing benefit bill, as part of the Government’s long-term economic plan.”