3 February 2014

Legalling Nicola's bedroom tax plan

Scratching your head about this morning's bedroom tax headlines? Me too. The essence of the story is straightforward enough to get your head around. The SNP government wants to spend another £15 million to mitigate the effects of the coalition's changes to housing benefit, better known as the bedroom tax.  This on top of £20 million which has already been allocated to Scottish local government discretionary housing funds. But there's a legal problem and Nicola Sturgeon has written to the UK welfare minister in an attempt to eliminate this problem, and allow the Scottish Government to spend the extra cash. 

So far, so clear. But I never like vague allusions to "government rules" and "missing powers". From the perspective of the struggling punter with mounting bills, I'm sure such details appear piffling, and understandably so. All that matters is securing an outcome which takes some of the pressure off your rent. It really doesn't matter who does so, or how. But these details aren't process for process' sake: understanding them gives you a better understanding of what the legal problems are and who can fix them and how

The tale also gives you a flavour of some of the complexity characterising the current law around devolution. The Scottish Government is framing the issue in terms of Westminster fettering Holyrood's powers. There's a bit of truth to that, but less than you might think. 

Our starting point: discretionary housing payments are regulated by this 2000 Act of the Westminster parliament. As the name suggests, instead of being a benefit you are entitled to if particular conditions are met, the basic idea is that councils are invested with the power to pick and choose who their money goes to. And once the money's gone, it's gone. The Secretary of State stumps up a kernel of funding each year for each local authority, which councils may add to if they wish.

Section 70(3) of the Act empowers the Secretary of State to limit how much extra cash local authorities can add to these funds.  A 2001 statutory instrument sets this limit at two-and-a-half times the money allocated by the UK central government to the local authority housing fund. For every £1 put into the pot by the central government, councils can spend £2.50. That's the "maximum contribution" folk have been bandying about.

But wait a second. Where are the Scottish government and parliament in all of this? I thought the problem was limits to Holyrood's powers? Well, yes and no. The Scotland Act reserves social security to Westminster. This includes housing benefit and discretionary housing payments. They have no legal power to reject the bedroom tax off their own bat, or adopt an alternative scheme.  By the same token, the Scottish Government does not and cannot legally operate its own discretionary housing fund either.

On the other hand, Holyrood is responsible for meeting the budgets of Scottish local authorities, contributing around 85% of Scottish local authority funding annually. What Nicola is effectively trying to do is use local government powers and Scottish Government money as her weapon against the bedroom tax, beefing up council budgets. Today's letter to the UK Welfare Minister doesn't require complex constitutional wrangling or legislative amendments to the Scotland Act. All the UK Government need do is vary the terms of this statutory instrument to allow Scottish local authorities to increase the cash they can lawfully allocate to their discretionary housing payment funds. Nicola is essentially arguing for the extension of local authority powers, not Holyrood's powers.

But will Lord Freud and his colleagues do so, and lay the instrument before Westminster? The Daily Record seem to be depicting the issue as done and dusted this morning. I wonder if they're jumping the gun a bit. UK ministers might not be keen on changing the multiplier across the UK. Could they single Scottish local authorities out instead? The cheering answer is: no bother. Section 70(7) of the 2000 legislation makes it clear that the Secretary of State can "make different provision for different areas or different" local authorities.   But that doesn't answer the overriding question of whether coalition ministers can be persuaded to do so. 

After all, the stated purpose of removing the "spare room subsidy" was to save money and rebalance tenant incentives.  Whether or not this was ever a viable or fair project, at least one of its two stated goals will be frustrated if - in effect - Scottish Government money fully mitigates its impact on individuals.

I'll believe it when the ink's dry on the statutory instrument: not before. 

1 comment :

  1. The DWP clearly have no intention of allowing this & they have a clear argument in that much of the discretionary housing payment fund has actually not been spent yet, because affected tenants have not applied for it. Matching up DHP requires individual tenants affected by the bedroom tax to go through an administrative process, & frankly that can be like herding cats as many tenants simply don't engage. Or they are so opposed to the tax that they don't want it to be mitigated, they want to protest by getting into arrears. Or they are too proud to ask for additional help which requires them to reveal how they can't manage. So there are huge practical problems involved in writing off the bedroom tax by boosting DHP.

    Labour seem to have a policy whereby local auhorities are allowed to wipe out bad debt caused by the bedroom tax without being penalised. But what about Housing Associations?

    The only practical solution I can see is that the Scottish government give the bedroom tax shortfall direct to landlords. Landlords can track their bedroom tax arrears & Housing Benefit administrators could verify that as it is all done electronically so the information could be extracted.

    But this all needs to be sorted out sooner rather than later, because currently a lot of tenants are paying the bedroom tax at considerable hardship to themselves. Ironically a lot of this compliance is because of fear generated by anti bedroom tax campaigners.