A lesson in taxation for Smith and Shapps


Grant Shapps and Iain Duncan Smith (Vox‘s Monster of 2012, let’s not forget) delivered woeful performances on radio and TV respectively, during the weekend – discussing the Bedroom Tax.

That’s right – the Bedroom Tax. Not the “spare-rooms subsidy”, not the “under-occupation subsidy” – the Bedroom Tax. The tax on bedrooms that is being levied on some of the poorest people in the land, who cannot move to smaller premises because a previous Conservative administration stopped them from being built.

Tweedle-Shapps and Tweedle-Smith clearly need a lesson in what taxation actually is. The sad part is that they probably think they delivered good performances.

Appearing on BBC Radio 4’s The World This Weekend, Shapps said: “Labour have very cleverly deemed this to be a tax; of course it’s exactly the opposite to a tax. It’s a spare-rooms subsidy, that’s being paid through the benefits system, on a million empty bedrooms in this country, which makes no sense.

“We’re not using the housing we have in this country in a proper way… What we can’t continue to do, and we can’t afford to do, is pay for a million empty rooms whilst we’ve got a waiting list that doubled under the previous administration and with so many people in desperate need of a house at all.”

Mr Smith, on The Andrew Marr Show said: “We have in social sector housing a very large number of people in houses where they have many more bedrooms than they actually need… Meanwhile we have over a quarter of a million people in overcrowding and a million people on the waiting list, trying to get into housing.

“The last government let house building fall to the lowest level since the 1920s… What we want is those that are under-occupying their properties, we need to help them to be able to move to property that they would occupy-”

Eddie Mair, standing in for Andrew Marr, interjected: “You mean force them?”

Smith plunged on: “What we’re saying is, ‘Look – you can stay where you are, but if you do, you have to pay more.'” (In other words, yes, he means “force them out”).

Mr Mair again: “But cough up. We know you’re very poor, but pay more.”

Smith was determined: “People… who rent in the private sector under housing benefit – they’re not allowed to have extra bedrooms. They’ve never been. So they are only paid, in the private sector, for the number of bedrooms they occupy.”

Mr Mair, an astonished inflection in his voice, spluttered: “But the point of social housing is to help-”

Now Smith fell back on the real reason for the change: Money. “Look, the taxpayer is paying about £900 per household to help people stay in social housing.”

Put these things together and we get a clear picture of what’s going on. First, a bit of history:

Back in the sunlit days before Margaret Thatcher first won an election, local councils were permitted to build and maintain social housing stock. I know this seems an alien concept now, but they were actually allowed to build houses in which poor people could live, for a rent that they could meet.

Then the Thatcher government came into office and she decided to sell off council houses at discounts of up to 70 per cent. Of course, take-up was huge. People believed they would be able to sell the properties on at a later date – for a profit – and go further up the housing ladder, and this appears to be what happened. The houses that were sold on again tended to go to professional private landlords, who then rented them at a higher price than the councils who originally owned them.

The policy raised more than £20 billion for the Conservative government, but it never allowed that money to be ploughed back into council house-building. That money has disappeared; we don’t know what was done with it (in fact, if anybody does know where it is, please write in and let us know)!

My understanding is that councils had expected to be able to use the receipts for a new house-building programme but then, by one of those “coincidences” – and I put that word in quotation marks for a very good reason; I don’t think they are coincidences at all – for which the Tory Party should be infamous, another policy was introduced – the Rate Cap.

Local taxation at the time was done by a method known as the Rates. We’ve had Poll Tax and Council Tax since then (and will soon have the Poll Tax back, thanks to Eric Pickles and his evil, misnamed little ‘Council Tax Reduction Scheme’) so many readers may not remember them.

The idea was to stop councils from spending more than the Tory government thought they should, by limiting the amount of money they could spend every year, and creating a blacklist of councils that transgressed, with associated penalties.

Result: any new council house-building was stopped dead.

It’s a situation that has continued to this day. During the New Labour years, there was a push for new social housing with a condition on planning permission for new estates, that a certain proportion of the new build had to be “affordable” housing.

Result: We now have a huge amount of land with planning permission for estates that have never been built, as developers are reluctant to create housing for which they won’t be able to screw maximum profit from the buyers.

So, successive governments have created a situation where the queue for social housing is very large. Even though the plan during New Labour’s time had the best intentions, my opinion is that it was scuppered by the greed of developers.

Now we have the Nasty Party in office again, and of course they want to screw as much money out of the poor as possible.

They don’t want to build any new social housing; they want people to rent from the private sector, who will try to screw the highest amount out of them.

In order to push them out, they have invented this new term, “spare-rooms subsidy”, or “under-occupation subsidy” – that never existed before. They have declared that people – who are only occupying the houses that were available to them when they went into social occupancy – are now receiving that subsidy for any spare bedrooms they may have (no matter whether there was a reason for having those rooms in the past, or may be one in the future). And in April they will remove an arbitrary amount – nobody knows how they arrived at the figure – from tenants’ housing benefit.

Result: As Eddie Mair said, these people will be forced out – into the arms of private landlords, who will charge more while they will receive less help from the government.

The money saved will, we’re told, be used to help balance the national finances, which is a policy of this government.

So, getting back to the point – the removal of this recently-dreamed-up “subsidy” is taxation, because the money removed from UK citizens will be used to finance government expenditure. That is the definition of tax.

Mr Shapps, Mr… Smith: Look it up.


  1. Sasson February 18, 2013 at 1:15 pm - Reply

    If this charge is a pure bedroom subsidy, then in each area the deduction would relate to the cost of a lesser sized house/flat deducted from a larger sized house/flat.

    Now the reason why they wouldn’t have done that is quite simple. One bedroom flats are generally newer than the old 2/3 bedroom homes that were built in the 1950’s, and newer council/social housing properties cost MORE to rent as a result. So if I’m forced into one of these flats (I’ve been told they have nowhere for me to move to anyway), the subsidy on that flat is many times more than my 60 year old home attracts, since my home has paid for itself. Basically, my home is literally not subsidized, I only receive rent payments from the DWP to house me. The idea of subsidized housing is not that simple then.

    Also, if this charge was a subsidy, it would attract a flat rate charge across the country, but rather it percentage based, and percentages are nearly always associated with calculation of taxation.

    It would cost the government more for me to live in an appropriately sized social housing home. But, if I was forced into the private sector, the Local Housing Allowance in my area for a one bedroomed property is £77 per week, which would actually cost the government less. Now, since there are NO flats in my area to rent at that price, only perhaps bedsits, it is me who have to take the financial hit if I have to rent in the private sector, not the government. Ironically, the amount I would need to pay would be around the same price as staying put, so I may as well stay put.

    In the vast majority of areas the LHA is slightly lower than social housing rents, which is ludicrous when you consider that social housing is always lower than private sector housing; you would think then that the opposite would be the case. The only way then that these housing reforms cost the government more is when no suitable properties can be found to rent in an area and the local authorities then have to pay out for bed and breakfast or hotel accommodation, which is what has happened since the new LHA rates were implemented last year. A staggering 800% rise in this sort of temporary housing last year.

  2. Phil The Folk February 18, 2013 at 4:54 pm - Reply

    Mike, as remember it at the time, all Councils were told hold onto the receipts from the sale of Council properties in a separtae fund. It sat there for years, as they were not permitted to use those funds for building more Council Houses. I thought New Labour opened up using this money to build again when they were elected in 1997. So, the money should still be with all the Councils??..unless it’s been used for something else??

  3. Darroch February 18, 2013 at 5:31 pm - Reply

    Shapps is a unconscionable uber-rightwing weasel of the very worst kind but I think Iain Duncan Smith may be genuinely mentally ill.

  4. Graeme February 19, 2013 at 7:43 am - Reply

    “The Liberal Democrats exist to build a fair, free, and open society in which we seek to balance the fundamentals of liberty, equality, and community and in which no one shall be enslaved by poverty, ignorance, or conformity.”

    So goes the LibDem pledge printed boldly on each and every one of their membership cards. Laudable, noble, and admirable, it has now become empty, crass, and utterly betrayed. It is by their actions that you are known and not by what has proved to be hollow and mocking rhetoric.

    Hollow and mocking it is too since they joined themselves at the hip to a Tory Party hell bent on the application of Malthusian economics and the compulsory destitution of the poor. And as much as they protest innocence and claim to be a restraining influence on Thatcher’s children you can’t lay with the devil and wear white.

    They are an integral part of a government hell bent on turning the poor in to an income stream for the rich. No ‘Mansion Tax’ for the rich yet a ‘Bedroom Tax’ for the poor. Cuts in benefits for the unemployed and cuts in taxes for millionaires. Austerity for the many and comfort and increasing wealth for the few. “Fair”? “Free”? “Equal”? “No one shall be enslaved by poverty….”? A soul sold for what? Status? Power? Fame? 30 pieces of silver?

    It has to be the most culpable betrayal of core principles in the history of British politics for many a generation. At least with the Tory Party you know they are inhuman and feed off fear, greed and their hatred of the masses they regard as the undeserving poor.

    The LibDem’s laid claim to being different but they have become an arm of a beast it once claims to have detested. They have become one.

    There are huge storms coming and they will be a part of the maelstrom. “If you are not part of the solution you are part of the problem” it is said. They and their Tory masters are not ‘part of the problem’ – they are the problem.

    • Thomas M February 20, 2013 at 6:07 am - Reply

      The Lib Dems have destroyed themselves in the eyes of the voters and after the next election they won’t feel the warmth of power for a very long time-if ever.

  5. Silver February 19, 2013 at 4:53 pm - Reply

    I read some time back,I cannot remember were.They used a lot of this money from council houses in energy efficiency schemes.Double glazing,draft excluding,loft insulation etc.

    If that is true or not I do not know,what I do know is that this bedroom tax is not about houses.Its about peoples homes,communities,neighbours and well being.Its the most ill thought out regressive scheme these ConDems have done to date.And they have done quite a few.It will tear at the very fabric of a healthy society.

    IMHO this will be the straw that breaks the camels back,if they are looking for trouble,as it often appears.This is the one Emotive issue that will cause it.To lose a bit of money hurts,but to lose your Home!!

    It would be bad enough if this applied only to new tenants.Then at least they would know the rules.But to use it Retrospectively.It is immoral.It is all things that the arch typical Brit stands against.

    Can you imagine IDS on the News,defending bailiffs throwing out a sixty year old man and his Wife.They are not pensioners and are not covered.Can you see the Uriah Heap Clegg on newsnight,defending a disabled person being evicted because he/she wanted room to store equipment.

    There are not even enough places to downsize to.This policy will expose the ConDems for the B——s they are.

  6. rainbowwarriorlizzie February 21, 2013 at 8:20 am - Reply
  7. pat February 23, 2013 at 1:26 pm - Reply

    Mr Smith, on The Andrew Marr Show said: “We have in social sector housing a very large number of people in houses where they have many more bedrooms than they actually need

    Yes your right IDS, the majority are under-occupied by pensioners, so in reality it is not the bedrooms you need, because if that was the case it would affect all these single pensioners rattling around in 3 bed houses, it is just an excuse to attack the working age unemployed to get a job, oops I forgot there is more chance of finding hens teeth than finding a job, and attacking the low paid workers into doing 2/3/4 more jobs, IDS will you take in a few JSA claimants in when they are evicted, you have plenty of spare bedrooms, tell you what IDS I will answer for you “””NO NO NO I would not even give scroungers a second glance, they are scum, never mind having even one in my home”””””

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