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Spare Room Subsidy Reform has Improved Social Housing Allocation

    Last month, the Court of Appeal ruled that the Government’s spare room subsidy – introduced in 2013 – is discriminatory against domestic violence victims and families with disabled children needing overnight care. This case will now be considered by the Supreme Court, which is expected to deliver a judgement this week.

    The affected parties in this case were receiving discretionary housing payments from their local authorities. These discretionary housing payments can be used by local authorities to mitigate the effect of the spare room subsidy for certain claimants. However, the claimants in these particular incidences argue that the spare room subsidy should never have been applied in their cases. The subsequent judgement is expected to affect a few thousand claimants across the country.

    While this court case is important, it should not be used as a precursor to scrapping the spare room subsidy reform as a whole. There is strong evidence to suggest that this reform has led to a more efficient allocation of social housing. A recent evaluation of the spare room subsidy suggests there is now a declining proportion of lets to those who under occupy their new home, and an increase in the proportion of lets to families from 36.3 per cent in 2012-13 to 40.7 per cent in 2013-14.

    There has also been a reduction of 100,000 in the number of people affected by the spare room subsidy. According to the Government Minister Lord Freud, half of these people have successfully downsized, with 45,000 remaining in the social sector and 12,000 moving into the private sector.  This more efficient allocation of social housing is vital for the 1.36m people on social housing waiting lists.

    Before the policy was introduced, some argued that it would cost money to implement. The National Housing Federation, for example, claimed that the policy could cost £143m due to people being forced to move into the private sector. This concern has not materialised, however. The policy saved £490m in 2013-14 and £525m in 2014-15.

    Of course, the social housing crisis – and the housing crisis more broadly – is not simply down to inefficiency in allocation. As highlighted by the CPS’ economic bulletin What’s Behind the Housing Crisis, housing construction is being dramatically outpaced by housing demand. The Government needs to act on this with urgency, not least by tackling the UK’s stringent planning laws.

    However, given the current shortage of homes in the UK, efficiency in the use of social housing stock is essential. The Government must therefore stick to its policy on the spare room subsidy, while taking account of this week's court judgement. 

    Daniel joined the Centre for Policy Studies as Head of Economic Research in November 2015. He was promoted to Deputy Director in March 2017. Prior to joining the CPS, he worked in research roles for a number of parliamentarians. Daniel left the CPS in March 2018.

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