Housing benefits costs taxpayers £22bn a year – more than we spend on police

High rents and rising house prices could be to blame for the country’s enormous housing benefit bill, according to an influential think tank.

A big drop in the amount of social housing is also implicted, Paul Johnson, director of the Institute for Fiscal Studies, said.

The Government now spends an “astonishing” £22bn per year on housing benefit to 4m claimants, which is more than it allocates for the police, the overseas aid budget and several departments. This figure has doubled since the early 2000s, he said in an article published in The Times.

But the massive increase in the cost of housing benefit is only a symptom of other problems, he said. “The doubling in the housing benefit bill is merely the very expensive canary in the coalmine.

“In the long run, the solution to these issues can’t come from the housing benefit system itself.

“The trade-offs are inescapable. It will come from fixing the underlying problems – high rents, high house prices, inadequate social housing,” he said.

It is unclear whether housing benefit is causing rents to rise, Johnson said. “If you’re paying that much money to that many people to cover their rent, you might expect that to push up the market level of rent.

“I say we don’t know because there isn’t a lot of robust evidence telling us that is definitely happening, and indeed some evidence that it doesn’t happen in the short term. But it must be a risk,” he said.

Johnson said that housing benefit gets very little coverage in the media, and this is surprising given it is so expensive amongst other reasons.

The article is available here: https://www.ifs.org.uk/publications/13940

 

 

 

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21 Comments

  1. JamesB

    Shame they make no mention of how many people are claiming it being an issue .. !

    There are towns full of claimants for life breeding new replacement claimants

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  2. Will2

    So another think tank that doesn’t even come up with an answer.  Well that’s a waste of their time and money.  Perhaps they should go back to simple o level ecomonmics.   May be something to do with influx of cheap labour from Eastern Europe depressing non skilled labour whilst driving up demand for a fairly fixed asset housing?  This caused a split in society whilst big business benefit from low labour costs and councils have asset stripped their former housing stock.

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    1. The_Maluka

      Cynically think tanks are there to provide the government with a good ‘spin’ rather than to solve the problem.

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  3. Deltic2130

    Only £22bn now? It usually gets reported as £24bn. Of the £24bn, 9bn goes into the PRS for which it gets 988,000 houses a year. 15bn goes to social, which supplies 1.15m houses to benefits claimants. From this we can see that the PRS is excellent value and provides more homes per £ than social does, possibly because social tenants are likely to be on maximum benefit whereas PRS has more ‘working poor’ on lower benefit. What these figures always fail to recognise is that the HB bill to PRS covers our capital outlay, our management time, repairing obligations, licensing and tax. Councils are avoiding these bills and would have to outlay on capital and staff as well as running costs if they owned them – something that is NEVER mentioned in articles like these.

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    1. Will2

      Excellent observations

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    2. JamesB

      No surprise media or the likes of self serving shelter don’t want to report that statistic

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  4. The_Maluka

    In view of the inability of the police to tackle knife crime surely this is an indication that hte police are underfunded rather than Housing Benefit overfunded?

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  5. IWONDER36

    High rents and rising house prices could be to blame for the country’s enormous housing benefit bill, according to an influential think tank.

    Really?

    I don’t have a think tank to think for me, instead I opt for my own common sense which tells me that if the HB bill is enormous, too many are claiming it!

    Now who’s fault is that?

    Is it the eternally work shy?

    The families who encourage their 18 year old daughter to have a baby so that she can finally get a place of her own?

    The “estranged” couple who don’t live together with their three children, only they do, and dad works for cash in hand?

    The government and previous governments who have encouraged many to believe that they’re entitled to free-load of the rest of us?

    The government for attacking an entire business sector in a way which has never been seen, and certainly wouldn’t be allowed if it was public sector industry under attack?

    The governments inability to recognize the damage they’re doing, which will inevitably push up rents and have a huge detrimental impact on the very people they claim to be saving?

    Or the landlords and agents who are simply trying to survive a hostile environment by working hard to retain staff so their kids have admirable role models to look up to?

    What a ****** Joke this country is!

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    1. surrey1

      Most housing benefit recipients are in work. The cost of housing has gone up. Wages have not. This is all a bit Daily Mail rambling to assume it’s all pregnant teenagers and the terminally work shy.

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      1. IWONDER36

        Hi Surrey

         

        Thanks for your input, I like how you assume that I assume instead of believing that I might have based my little rant on the fact that I deal with many of this type of person on a daily bases. I’m sure most, if not all letting agents outside the leafy green suburbs of Surrey do.

        Not only that, I live on a private estate which joins a council estate (nothing wrong with that I grew up on one) which is full hard working people, but I can guarantee you that when the sun comes out half of their front gardens are full of people of working age drinking around a gas barbecue, one even has a hot tub sticking out from behind the 20ft trampoline.

        Those housing benefit tenants that are in and out of work cause the biggest problem for agents and landlords due to the constant shift in what they are and are not “entitled” to claim, and the delays which go with the change.

        Of course I’m not saying that every person who finds themselves on HB is a bad person, or that bad luck and circumstance didn’t lead some of them there, these are usually the ones that do everything to get off benefits as quickly as possible.

        I can assure you that there are now huge swathes of people who not only think that it is their right to free hand-outs, but for who it is an actual  lifestyle choice, often navigated by the advise of their close family and friends who are all adept at working the system.

        What do our politicians do in their wisdom?

        Keep giving them more, while making it difficult for the tax paying entrepreneurs and business people who feed them to survive.

        You couldn’t make it up!

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      2. singlelayer

        Your username suggests you’re in the south (although your tone tells me that anyway). Come to Grimsby. Meet some of my tenants who will openly tell you they have kids for benefits. One mother had six and when she realised she didn’t get anymore money after a certain amount, which also coincided with her own mother’s youngest (my tenant’s youngest sibling) turning 18 meaning she’d no longer be eligible for some benefits and as a single female with no dependent children would be expected to get a job (after a lifetime out of the labour market). That’s when three of the six were off-loaded to their grandmother, meaning the whole benefits deal was back on (and it had virtually no effect on the income of the household from where they came). Dozens of my tenants do the whole ‘absent father’ (claims to live with his own parents), but works and really is a family with the claiming ‘single’ mum in one household. The problem we have here is that on benefits, someone with a couple of kids is earning the equivalent of £30-45k (once you factor in PAYE, free prescriptions, kids school dinners, council tax reduction etc), yet the average earnings is about £17k. Nobody is going to employ these people at anything like what they think they need to sustain their lifestyles. If we made minimum wage £30-45k, then the well-to-do accountants, solicitors and other professionals of the town that currently earn that much would want £60k+ and that simply cannot happen as the businesses could not sustain it. It’s time we had benefit tokens instead of cash payments. It’s time they were outright banned from Sky TV, cigs, booze, McDonald’s, iPhones etc. and made to ‘make do’ like generations before them. The government should drop them flour, eggs, milk, vegetables and meat off-cuts and they should learn to adapt and cook healthy meals for their kids, not shoving another Gregg’s sausage roll, that they can ill-afford, in their kids face (my colleague and I have lost count of the number of tenants that come to our offices with Gregg’s produce in their childrens’ hands.

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        1. IWONDER36

          Exactly!

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        2. JMK

          I have a friend on a council estate and he works fairly hard.  His wife does too and actually earns a very good income.  However they know their neighbours very well and the stories they tell about the blatant abuse of the benefits system is staggering.  The woman next door doesn’t work at all with all income coming from benefits, and she is complaining that after her rent and council tax is paid she only has £2k a month to live off!  Apparently she has no problem in getting through a bottle or two of vodka a day either, and all at taxpayers expense.

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  6. RadPropertyDude

    Stats! Stats! Stats!
    The government has no idea how to remedy a problem they have no experience of. They are advised by the servants around them, who i’m sure have good intentions, but their decisions are based on their experiences. And from what I can see, not many have ever experienced the bitter harshness of the “real world”
    The following is happening right now…
    Job Centre/Employment Plus staff are being targeted on placing benefit claimants into work. Which is fine I guess. The trouble with targeting somebody in this way means that the low paid staff member doesn’t really care if the claimant isn’t suitable for a particular job. They just need to place someone in work and hit their target.  The stats are captured, fed back to the government, and the picture is one of success. In reality, the benefit claimant rarely stays where they’ve been placed because their life is worse than it was claiming benefits. If you told me I would have a better life claiming benefits than going to a job I hated, I would probably choose claiming benefits. And so would you if you were in their position.
    I personally know someone who worked for one of these job placement agencies, She was one of the few who genuinely cared about placing an applicant into a suitable position. It meant taking more time with the individual and suffice to say she was reprimanded for it.
    Happy people stay in their jobs, people who work don’t need benefits, lower benefits don’t cost taxpayers £22bn a year. Its simple success management. Maybe creative agents could transform themselves into something which helped benefit claimants instead of squandering them.

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  7. Home Provider

    This muddled thinking is appalling, especially from an economist.  He claims that “The main drivers of the increase in spending have been the rapid expansion of the private rented sector alongside increased rents in social housing, in part because cheaper council housing has been in decline.” 
     
    The rapid expansion of the private rented sector has kept rents  – and housing benefit – lower than they otherwise would be.
     
    The rapid expansion of the private rented sector is not the cause of the increase in the number of benefit claimants.
     
    Why has the cost of housing benefits increased while we have record employment levels?  Because wages and salaries are low.  Housing benefit subsidises employers, if the claimant is employed.  And if the claimant is not employed it is sometimes because of cheap foreign labour, which also increases the demand for rented accommodation.
     
    What is his motive for publishing this?  He offers no solution.  He does not propose reducing individual benefits – he describes as bizarre that they are based on rent levels in 2012.  How does he propose “fixing the underlying problems – high rents, high house prices”?  
     
    He wrote “If you own your own home, you are not eligible for housing benefit, so the collapse in rates of owner-occupation has played an important role.”  The reduction in the rates of home ownership was due to the credit crunch, when mortgages dried up.  Is he suggesting that the 25 to 34 year-old cohort that would have bought a property went onto benefits instead?

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  8. Woodentop

    Its a broken wheel and has been for decades. Central and Local Government pushed the social housing into the private sector because it was a cheaper option than them building and managing costs and all the Cr**p that follows with so many of housing benefit claimants, who frankly have no commitment … easy money, easy living and often fraudulent claimants. Yes there are good ones to but it is the bad eggs that hike the costs up. Every time someone tries to reform the benefits system, it becomes an uphill battle and possibly an impossible one to sort out.So many people/organisation with their fingers in the pie and political clap trap from warring parties …. one reason why so many immigrants want to come to the UK is our free hand outs, but thats another story.

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  9. Benfield

    I personally know of a handful of different people that have decided they are better off not working and that claiming benefits, including HB is their preferred choice.

    It would also be interesting to know how many thousands of HB claimants are non-working non- UK born.

    How many Countries on this Planet can you turn up in and expect to be fed, sheltered and provided for, until that changes unfortunately the HB bill will just go upwards, more debt for our children of the future, disgraceful.

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  10. JMK

    As landlords either quit the HB market or just sell up altogether an increasing number of households are finding themselves in ’emergency accommodation’.  Some 80k households are now housed in the likes of Travelodge at a cost of well over £1bn.  Apart from the issue that this is probably far more serious a situation, I wonder if the Press will ever start referring to the cost as ‘hotel subsidies’ as they do ‘landlord subsidies’ when referring to the HB bill.

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  11. IWONDER36

    Here’s a chestnut for you. Yesterday we had a Libyan couple enter our office asking us to help them because they were desperate and every agent says they can’t help.

    Here is their plight!

    They have been granted 5 years to remain, they have been placed in temporary accommodation but have to keep moving. They managed to enroll their two boys aged 7 and 5 into a good local school.

    Suddenly they were told they had to move and the nearest place was 18 miles away. This couple get the train every morning to get their kids to school, they then pass the day hanging around town or in cafes until 3:30 when they collect the kids and return home on the train at huge costs.

    They were desperate to find a house, so we showed them a nice, clean, warm, large two double bedroom terraced property down the road from the school which has a rent set at only £450 PCM, and we offered to help them claim HB as they are already in receipt of UC.

    There polite response on viewing;

    Thank you for the opportunity, but we feel that the boys need a bigger bedroom!

    Well, wait there while I ring around the Lord & Lady land owners to see if they have any castles available!!!

    I have limitations even buying a property, but people think they can have their dream home at everyone else’s expense, even when they’ve not paid in!

    They need an address to seek work – tick

    It needs to be near school – tick

    The landlord must accept HB – tick

    The landlord must not be racist – tick

    A good agent to help us – tick

    A cherry on top – No, sorry, no cherry!

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    1. Robert May

      No cherry? No Cherry? NO CHERRY?  you uncaring, selfish, capitalist *******

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  12. PossessionFriendUK39

    Look at the link below from a Lorry driver questioning why there were so many mini-buses full of Europeans travelling back across from England –  They make the trip every Fortnight to collect their Benefit payments, then go back home !!!

    https://m.facebook.com/story.php?story_fbid=2264244107181763&id=100007885861967&sfnsn=mo

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