Shift spending from benefits to building homes and tackling unemployment, argues the Chartered Institute of Housing

23rd September 2014

The Chartered Institute of Housing (CIH) has published a report arguing that shifting spending from housing benefit to house building and tackling low pay and unemployment is the best way of lifting people out of poverty and cutting the housing benefit bill. 

The report concludes that short-term measures that cut the amount of benefits people can receive (such as the bedroom tax and the benefit cap) do nothing to tackle the causes of welfare dependency and are unlikely to have any significant impact in reversing it.

Using 2013/14 prices, spending on housing benefit has risen from £16.5 billion in 1996/97 to £24.4 billion in 2012/13 – a 48 per cent real terms increase. CIH said the main drivers are increasing rents (for both private and social rented homes), the growth in insecure employment (such as zero hours contracts) and the falling value of wages (in real terms).

The report recommends a fundamental shift in housing, labour market and regional policy, including:

Substantially increasing investment in low-cost rented homes that are genuinely affordable, partly through increased grant rates for new social homes and partly by allowing local authorities to borrow more so they can build more homes
Making sure that housing and welfare policies are more strongly linked to meet the common aim of helping workers escape welfare
Allowing councils to use more of the cash from right to buy sales to make sure that every home sold is replaced by a new one for social rent
Scrapping the bedroom tax
Creating regional grant rates and rent-setting mechanisms to reflect the country’s widely differing housing markets
Making consideration of current and future rent affordability for local workers a key element in the assessment criteria for the social housing grant bidding regime.