Councils in England should be given control of the Housing Benefit budget and use it to build new, affordable housing, the Institute for Public Policy Research has said.
The think-tank today published the conclusions of its 18-month long review of housing policy. It found that, in the current four-year period, the UK will spend £95bn on Housing Benefit, but less than £5bn on building new homes. This contrasts with the position in the 1970s when four-fifths of the government’s housing budget was invested in bricks and mortar, and a fifth on rent relief.
Devolving budgetary control to local authorities and collapsing the divide between Housing Benefit spending and capital investment would start to reverse the current position. Councils could strike better deals with private landlords and invest in affordable housing to reduce demand for benefits.
Currently, councils administer Housing Benefit claims and payments on behalf of the Department for Work and Pensions, while housebuilding grants are passed on by the Homes and Communities Agency.
The IPPR is suggesting that central government gives councils a single 'affordable housing grant' to stretch over a minimum of three years. This would broadly match projected Housing Benefit spend in each authority, plus their likely share of capital spending allocated by the HCA. Councils would then be empowered to use this money in any way that increased access to affordable housing in their areas.
IPPR director Nick Pearce said it was time for a ‘radical’ change of direction. ‘Affordable house building has collapsed, homeownership rates are falling, homelessness applications are up and the Housing Benefit bill continues its inexorable growth. There is no shortage of bad news on housing, but dangerously little serious debate about the fundamental direction of housing policy,’ he said.
‘For 30 years a broad cross-party consensus has been maintained, based on shifting public money from building homes to subsidising rents and running housing policy from Whitehall. Labour didn’t challenge the status quo and the coalition is making it worse.’
The report also suggests improved levels of security, decency and affordability for tenants in the private rented sector and widening access to homeownership.
David Orr, chief executive of the National Housing Federation, backed the IPPR’s main recommendations.
He said: ‘Unlocking investment to build new homes is a way of managing down the Housing Benefit bill, by addressing the weaker supply side, and boosting the economy. Yet there is still too little recognition from government as to the impact a strong housing sector will have on our economic recovery.
‘Not only does it drive growth quickly but, unlike infrastructure investment, almost all of its benefits are retained within local economies. Local jobs are created, local suppliers used and local people housed.’
