Housing benefit bill to hit £71 billion by 2050

The failure by multiple governments to build social housing will send the cost of housing benefit soaring to over £70 billion a year by 2050 unless action is taken urgently, the Centre for Social Justice (CSJ) has warned.

The alarm is sounded as the Chancellor puts the finishing touches to an “end of austerity” Budget in which he has to balance pressures for higher spending on areas such as health and welfare, while avoiding big increases in taxation.

It also comes after the Prime Minister has sought to strengthen councils’ ability to build more homes by scrapping their borrowing cap, and get tougher on private developers dodging their social housing commitments.

But the CSJ warns that so-called ‘affordable’ new homes will to be out of the reach of the lowest earners and so will do nothing to reduce the burgeoning housing benefit bill.

The lack of council houses has led to a surge in the number of housing benefit recipients renting in the private sector. The number of private renters doubled since the millennium. A benefit recipient in the private rented sector costs the taxpayer 25 per cent more on average than one living in social housing.

CSJ analysis shows half the housing bill – a total of £34.5 billion a year – will go to private landlords by 2050.

The CSJ is calling for the Government to scrap the obligation for developers to build so-called ‘affordable houses,’ which the CSJ says are “ultimately inaccessible to those most in need,” and instead mandate the building of social housing in the planning system.

The CSJ also argues that councils should be able keep more of the money raised through Right to Buy sales to fund new housing, rather than having to send huge sums back to the Treasury.

Andy Cook, chief executive of the Centre for Social Justice commented:

“The drastic reduction in the supply of new council homes over the decades has had devastating consequences for both the taxpayer and the lowest earners to struggle to meet the cost of rent.

“At the moment billions of pounds are being ploughed into subsidising rents but too little is being done to boost the supply. As a result, fewer than 6,000 social rented homes were built in 2016, down from almost 40,000 in 2011.

“Housing has become one of the most urgent political issues of our time, but often the difficulty for the middle classes to get on the property ladder deflects focus from those for who struggle to meet the growing cost of rent.

“Rather than subsidising more so-called ‘affordable’ housing for middle earners, we need to focus on the construction of social housing for those on the lowest incomes, while also ensuring that these become a springboard to homeownership.

“The alternative is an eye-watering bill for the taxpayer and no alleviation of the misery of ever-rising rents for those at the bottom.”

CSJ housing commission chairman Lord Best commented:

“The CSJ is to be congratulated on highlighting the costs of failing to build homes at rents affordable by those on the lowest incomes.

“This is not only about the pain to the families pushed into private renting they can ill afford but is also about the huge costs to the taxpayer of funding support for these households – rather than investing directly in new low rent homes from councils and housing associations.”

The report states:

“The housing crisis has devastated lives. The experiences of millions of families squeezed by soaring housing costs, thousands of children growing up in (at best unstable, at worst unsafe) temporary accommodation, and many of those sleeping rough on the streets have been immeasurably shaped by the lack of housing they can afford.

“Both the prime minster and the leader of the opposition have made fixing the housing crisis a key component of their domestic policy agendas. Yet while all parties increasingly recognise the electoral significance of housing, it is vital we do not forget those sometimes heard less loudly at the ballot box.

“In this report the CSJ housing commission examines the costs of crisis – that is, not only the consequences of the affordable housing shortage for poorer households in England, but also the eye-watering financial implications for the taxpayer of maintaining the status quo.”

The report concludes: “We believe that, if the Government adopts our social justice housing strategy, the people facing the worst of the housing crisis may find their lives immeasurably improved.”

 

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