Briefing – Impact of Bedroom Tax in Scotland
o COSLA is firmly opposed to the Bedroom Tax which is ill conceived, unfair and
unworkable and should be abolished
o We believe that the Bedroom Tax will do little to increase the supply of housing in
Scotland and that the UK Government has not done effective impact analysis on
how it will impact - particularly in Scotland.
o Any saving to the UK Government is, as COSLA predicted, being passed on in
increased rent arrears to councils and RSLs and increased distress to tenants. All
councillors are aware of this from their own areas. COSLA members feel very
strongly on this.
o Councils have been placed in a very difficult position by the bedroom tax. They
have to operate the administration of Housing benefit in line with regulations and
guidance, while at the same time this measure is increasing rent arrears.
o Councils are doing what they can through Discretionary Housing Benefits and other
supports to assist people. However, while DHPs can help, there were never
designed to be used in the way that is now necessary. There were only ever meant
to provide short term help and are not the appropriate mechanism to allow for ongoing needs.
o Analysis of housing stock availability in Scotland and COSLA’s sampling shows that
many tenants have no option to move. There are simply not enough 1 bedroom
properties available – councils COSLA have checked with have confirmed this.
o There are many ways in which the Bedroom tax is unfair. Hitting people in council
owned temporary accommodation (57% Scottish provision) and not in leased or
licenced TA (more typical England) when they have no choice is just wrong
Summary of estimated costs of Bedroom Tax in Scotland
This is a policy which cannot be made to work. Even if councils had all the money they
wanted, building enough 1 bedroom properties (and ignoring all other indicators of housing
need and demand) wouldn’t happen in under 3 or 4 years! This policy won’t help housing
supply – it is just about cuts – which tenants, councils and RSLs are paying for.
It is clear that this policy contributes nothing to housing supply. Anecdotal evidence suggest
that most people do not want to move from areas where they have connections, family,
employment and, in any case, options to do are very limited.
Assuming that the policy was intended to save money, how does the balance sheet stack up
in Scotland?
This policy was estimated by the UK government to save c£500m, around c£50m is
Scotland.
COSLA estimates total annual implementation costs in Scotland as:
o Costs of DHPs
£33.5m
o Extra administrative costs for councils
No clear figure but feedback from councils suggests major
new burden of administration, promotion, advice, rent recovery etc.
Experience of admin costs of Scottish Welfare Fund would suggest
£ 5m
o Additional rent arrears for councils (may in part be mitigated by DHPs)
COSLA sampling suggests annual figure of
£10m-£12m
o Additional rent arrears figures for RSLs
SHR data suggests will be less than councils. Estimate
£5m
o Additional advice and support services – social landlords.
Scottish Government provided £2.5m to housing association; Councils
will probably be spending a similar proportion.
£5m
o Loss of rental income due to inability to let
E.g.2 or 3 bedroomed property, and the additional costs to the
Public purse of more expensive private rented accommodation
£??m
Estimated total cost of implementing policy
£58m - £60m
Thus, it looks likely that any saving to the UK Government (itself predicated on tenants not
taking UK Government advice to move) will be balanced by expenditure of at least as much
additional public money.
This does not take account of any additional social cost of distress to tenants, many of whom
will find themselves in rent arrears for the first time (increase of 31% in COSLA’s sampling).
Salient points from some of COSLA’s recent surveys and sampling
Discretionary Housing Payments
COSLA had feedback from 26 (78%) councils on the position at 30 September. The original
DHP allocation in Scotland was c£10m for 13/14. Funds since added – mostly for very rural
authorities, take the DWP allocation for DHPs to c£13.5m in Scotland. Councils can add a
maximum of 150% and with SG allocation of £20m to help councils do this, total available in
Scotland is now over £33m. DHP is not just for bedroom tax but for housing need/hardship for
those on HB. However, prior to recent WR changes, Scottish allocation was only about c£2m.
Key findings at 30 September from 26 councils are:
 58%(15) have spent or committed 50% or more of their DWP DHP allocation
 15%(4) have spent or committed 100% or more of their DWP DHP allocation
 Only 3 councils had spent less than 30% of their DWP DHP allocation. All were rural.
 At end September these 26 councils had received 42,247 applications and made
27,828 awards (66%). Some may still need to be processed.
 Total spent or committed by these 26 was £7,431,642 on 30 September.
However the picture is changing very quickly and we now expect spend to increase more
sharply. Councils are now revisiting earlier awards and changing practice in the light of more
available funding. Many are adopting a more targeted pro- active approach e.g. Renfrewshire,
Highland.
Key points on DHPs:
 DHPs help but are not the answer. They are designed for short term relief. All the
evidence suggest that most people cannot easily get out of their situation (Lack of
smaller houses, Jobs etc.)
 People are also being moved from an entitlement system to the uncertainties of a
discretionary system. We don’t know how much DHP will be available from DWP next
year and whether same level of help is possible.
 DHPs are creating an enormous amount of extra work for councils – dealing with
applications, promoting, targeting and an extra assessment required.
 It would be better to take account of circumstances and widen exemptions from the
bedroom tax.
Rent Arrears
The picture is complex and changing but key points are:

Arrears are up. At the end of May, all but one council with housing stock reported an
increase in arrears due to the bedroom tax. 75% reported that non-payment of rent due
to the bedroom tax was directly responsible for the increase in their rent arrears.

Of that rent due to be collected from tenants affected, 60% of councils then reported
receiving 40% or less and 80% reported receiving 50% or less (based on responses
from 20 of 26 councils).

The Scottish Housing Regulator survey of the position at the end of June for all social
landlords appears to show that arrears rises are not so dramatic, only reporting a
change from 3.51% to 3.73% increase in gross arrears for all social landlords.
However they also showed a sharper rise for councils – 4.62% (30 June13) vs. 3.73%
(30 June 12).

Just below 1% gross rent arrears doesn’t sound too bad BUT if no council tenant hit by
bedroom tax paid anything at all, this would only increase gross arrears by 2.5% to 3%
and they are still showing a 24% gross rise for councils.
To increase our understanding COSLA checked the 30 September position with 6 councils –
North Lanarkshire, North Ayrshire, Dundee, Highland, Edinburgh and Fife a good
geographical and demographic mix. The selected councils have the following coverage:•
•
•
•
•
They cover 43% of all working age local authority tenants on HB in Scotland.
They cover 48% of all local authority tenants affected by under occupation
Two had rent arrears over 4% of their gross rent in 2011-12 and 4 had rent arrears
under 4% of their gross rent in 2011-12
Four are urban (prop. density over 200 per Sq. Km; Two are rural (Pop. under 200 per
square Km)
Three had an HRA surplus of more than 10% of their gross rent in 2011-12 and three
had surpluses of less than 3 per cent.
The following information is based on returns from all of the 6 councils:
Highland
North
Lanarkshire
North
Ayrshire
Fife
Edinburgh
Dundee
At 30 September
2013 what was your
total gross rent
arrears figure?
£1,427,489
£2,534,000
£1,207,574
£5,668,750
£4650000
£2,085,051
£17,572,864
What was the total
gross rent arrears
figure for the same
period last year i.e.
at 30 September
2012?
£1,136,335
£1,532,000
£849,214
£4,764,542
£2,700,000
£1,468,407
£12,450,498
How many people
in your council area
have had a HB
reduction as a result
of the under
occupancy
(bedroom tax)
changes?
1677
5201
2260
5267
3319
2297
20021
Can you provide a
figure for the
number of those
with an under
occupancy
reduction who had
rent arrears at 31
March 2013?
623
2333
779
1882
969
859
7445
Can you provide a
figure for the
number of those
with an under
occupancy
reduction who have
rent arrears at 30
September 2013?
949
3449
1294
3642
2523
1855
13712
TOTAL

The 6 councils identified 20,021 council tenants impacted by the bedroom tax

37% (7,445) of these were in arrears on 31 March before bedroom tax came in.

On 30 Sep, 68% (13,712) were in arrears, a rise of 31%

Arrears at 30 Sep 2013 were 41%(£5,122,366) higher than for the same period last
year
What are councils doing generally?

Feedback suggests that councils continue to put a lot of efforts into publicising what
help is available and providing assistance – DHPs, budgeting advice, housing options,
home visits etc.

With more funding available than at the beginning of this financial year, a lot are now
revisiting awards, targeting tenants they know are in arrears and not coming forward
and reviewing their practice. However, this is a heavy administrative burden.

Councils are also directing councils to other supports like budgeting advice and
employability support where tenants are interested e.g. North Lanarkshire

Quite a few councils have existing schemes to encourage downsizing based on swaps
and mutual exchanges and these are being promoted – but will not help large numbers
e.g. Fife, Aberdeen.

All councils produce local housing strategies which take account of housing need and
investment plans, population change and the needs of the local economy. They work
closely with RSL partners. Allocation policies are geared to take account of local
circumstances. This planning and delivery process is being undermined by the
bedroom tax.
What smaller housing stock is available in Scotland?
Scotland has about 61% dwellings owner occupied with around 35% rented (June 2011, latest
figures). The rented sector is split with roughly one third each for councils, RSLs and private,
thus social renting comprises around two thirds all rented properties, a much larger sector
than England.
In Scotland, COSLA identified in June 82,500 households affected by under occupancy
penalties, 68,500 (1 bed reduction) and 14,000 (2 bed reduction). Most of those affected are
likely to require one or two bedroom properties.
Scottish Government analysis estimates 21,657 1 bedroom properties and 27,791 2 bedroom
properties available for rent in 2009/10 in the social sector and it is likely that the current stock
availability reflects this. Demand for these properties comes from housing lists and homeless
applicants in addition to increased demand generated by under occupancy changes.
COSLA sampled 6 councils in July. (Fife, North Ayrshire, Highland, Dundee, North
Lanarkshire, Edinburgh) with all except Edinburgh responding. In total these councils
estimated availability of 4697 (1 bedroom) and 5337 (2 bedroom) properties. For these local
authorities, 18123 tenants are subject to a 1 bedroom reduction and 4229 to a 2 bedroom
reduction. To put these figures in context North Lanarkshire identified 12,393 applicants on its
Common Housing Register requiring a 1 or 2 bedroom property at April 2013, with a total
annual availability of 2811 1 and 2 bedroom properties in the social sector.
Most of the 5 councils lacked detailed knowledge of the numbers of 1 and 2 bedroom private
rented properties in their areas. Typically, rents are more expensive in the private sector and
there is likely to be no saving and likely increased housing benefit expenditure if tenants move
into that sector to avoid a reduction. Additionally, the composition of the private sector is very
variable with most smaller sized properties only available on a sharing basis, with prospective
tenants having already identified a flat sharer. In many areas outside cities, the private sector
market is limited, e.g. North Ayrshire, or affected by holiday lets, e.g. Highland. North
Lanarkshire estimates 13% of 1 bedroom private sector lets are sheltered housing and in
other areas students will comprise a significant component.
Possible moves to available properties are also constrained by issues of employment, travel,
family responsibilities and community ties. In some rural areas like Highland (the size of
Belgium) remoteness and sparsely populated is especially relevant, where 24 communities
have no 1 bedroom accommodation.
Prof. Gibb looked at this in his research for Scottish Parliament and concluded that looking at
all estimates currently available, clearing the backlog of under occupiers is likely to take from 3
to 10 years or more!
Therefore, for the majority of tenants affected by under occupancy penalties in Scotland, there
are likely to be very limited opportunities to avoid the penalty through moving to a suitability
sized property in the near future.
Further Information:
Michael McClements
Policy Manager
michael.mcclements@cosla.gov.uk
0131 474 9307
21 November 2013