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