Posted: 26 February, 2014 at 12:34 pm

Government underestimated impact of bedroom tax error

Government underestimated impact of bedroom tax error

THOUSANDS more people than the Government thought have been wrongly paying bedroom tax.

In January the Department for Work and Pensions admitted it had made a mistake when passing bedroom tax legislation and said 3,000-5,000 would be entitled to a refund.

But Dearne MP John Healey told the Commons one in 14 of those paying bedroom tax in Rotherham and Barnsley were eligible for money back.

That means the number is likely to be 10 times as many as thought – around 50,000 nationally. At the start, experts predicted the error would affect more than 40,000.

In Rotherham, 281 tenants have been paid back nearly £150,000 and in Barnsley, 264 have received nearly £170,000. Around 8,000 households in Rotherham and Barnsley pay bedroom tax.

Speaking today (26 February), Mr Healey told the minister for employment Esther McVey:

“In a Parliamentary answer last month she told me ‘we estimate the numbers affected are likely to be fewer than 5,000’.

“Will she admit that Ministers have massively underestimated the number of people affected and massively underplayed the distress and difficulties they’ve caused?”

The mistake happened when the government did not update housing benefit regulations when new legislation was drafted.

It means working age council and housing association tenants who have lived in the same home and been entitled to housing benefit since 1996 are eligible for a refund on bedroom tax paid since April.

Mr Healey was speaking during a debate called by Labour aimed at stopping the government closing the loophole.

Nationally, the bedroom tax hits 660,000 people, of which 400,000 are disabled.

Many people who claim housing benefit are working but on low incomes, and the bedroom tax costs the average family £720 a year.

Mr Healey said afterwards: “Instead of scrambling to close the loophole, the government should scrap the bedroom tax altogether, as Labour have pledged to do.

“It’s a cruel and unfair policy that has forced families to use food banks and could end up costing more than it saves.”