Bedroom tax

The under-occupancy penalty (also known as the under occupation penalty, under-occupancy charge, under-occupation charge or size criteria) is a reform contained in the British Welfare Reform Act 2012 whereby public-housing (also called council or social housing) tenants with rooms deemed to be "spare" face a reduction in Housing Benefit, resulting in them being obliged to fund this reduction from their incomes or face rent arrears and potential eviction by their landlord (be that the local authority or a housing association). The under-occupancy penalty has been widely branded the Bedroom Tax, especially by critics of the changes who argue that they amount to a tax because of the lack of social housing (or in some areas, any rented accommodation) for affected tenants to downsize to (and the refusal to accept the risk of taking lodgers in). The penalties are also criticised as having a disproportionate impact on disabled people.

In 2016 it was announced that the penalty would be extended to old people despite the government promising to protect the elderly from benefit cuts. Caroline Abrahams of Age UK, said: “Imposing the cap on older tenants will not only cause them anxiety and distress, it is also pointless given the lack of affordable housing options available to them.”

Supporters of the changes have referred to the unreformed system as a "spare room subsidy" whereby tax-payers are said to be subsidising social housing tenants living in houses larger than their needs require. The stated intention of the under-occupancy penalty policy is to reduce these costs and ease housing shortages and overcrowding. A similar policy was enacted over a decade beforehand in private sector housing, as the Local Housing Allowance, without attracting controversy, and this policy essentially represents an equalisation of treatment of benefit claimaints, regardless of whether they live in private tenancies or social housing. The reforms were one part of the 2010-2015 Coalition Government's wide-ranging welfare reform agenda which included the introduction of Universal Credit, the introduction of a cap on the total size of the welfare bill (see welfare cap), reform of Council Tax and reform of disability benefits (see Personal Independence Payment).

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