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DWP 'has overestimated savings generated by under-occupancy penalty'

Tue 15 Oct 2013

The amount of money the government will save as a result of implementing the under-occupancy penalty is likely to be lower than it predicted, a new report has suggested.

Estimates from the Department for Work and Pensions (DWP) had indicated that the policy could yield savings of approximately £10 million.

Nevertheless, research by the University of York, in collaboration with Gentoo, Affinity Sutton, Riverside, Wigan and Leigh Housing, suggests it may only achieve about 60 per cent of this figure.

Professor Rebecca Tunstall, director of the University of York's Centre for Housing Policy, believes the disparity has arisen partly because the DWP does not believe any households affected by the under-occupancy penalty will actively seek to avoid it.

However, she noted that more than 20 per cent of these people are looking to downsize to a smaller home, so they cannot be penalised for having surplus living space, such as a spare bedroom.

Professor Tunstall pointed out that almost half of those who have remained in their homes have slipped into rent arrears, which means that demand for smaller accommodation is likely to continue heading up.

Hugh Owen, director of policy and communication at Riverside, stressed that the figures in the research are not meant to represent a "definitive alternative savings estimate".

However, he said the fact they are so different from those produced by the government means that the DWP needs to take another look at its numbers.

Mr Owen stated that this needs to happen because the under-occupancy penalty is "based on the assumption that it will save money".

The National Housing Federation added that the government has said "time and time again" that the under-occupancy penalty is necessary in order to cut the welfare bill.

Chief executive David Orr has therefore urged the coalition to reconsider its support for the policy "now that the savings have been called into question".

For further information on any of the points raised in this article please contact Andrew Murray in our Social Housing Team.

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