Government saves £6.5 billion as Housing Benefit claims continue to fall
A sharp decline in the number of Housing Benefit claimants during the past four years has enabled the Treasury to save around £6.5 billion, compared with the previous government’s spending plans. The savings are largely due to a drop of almost a third in the number of private sector tenants claiming Housing Benefit.
Research findings published by the Joseph Rowntree Foundation show that the decline has coincided with restrictions placed on claims in 1996. These linked the maximum rent for which benefit can be claimed to local circumstances. They also meant that Housing Benefit became payable in arrears.
Other factors identified as having contributed to the fall in claimants include lower unemployment and introduction of the Working Families Tax Credit, which has raised the income of some families above the threshold for Housing Benefit entitlement. Local authority and government anti-fraud measures are also likely to have had some impact.
Author Steve Wilcox, a Senior Research Fellow at the University of York, said: “The fall in the number of Housing Benefit claimants living in properties rented from local authorities or housing associations (Registered Social Landlords) has been much smaller, at around 10 per cent over four years. This reinforces the suggestion that the 1996 restrictions affecting the private rented sector are the main reason that the number of claimants has dropped.”
He added: “The savings on Housing Benefit expenditure provide the Government with the opportunity to introduce radical reforms to simplify and improve the scheme.”
The new figures are being published on the internet in a series of on-line updates to the Housing Finance Review, the annual compendium of statistical information and research papers funded by the Joseph Rowntree Foundation. They include the latest available data on repossessions and housing investment by English councils, as well as Housing Benefit expenditure. For example:
- The 22,610 private homes repossessed in 2000 was the lowest annual figure since 1986. The number of households with more than six months’ mortgage arrears has also fallen. However, the potential vulnerability of home owners in a future economic recession is highlighted by evidence that the take up of mortgage payment protection insurance amounts to fewer than 30 per cent of new loans.
- After concern about the increasing concentration in the 1980s on social housing estates of households where no one has a paid job, the last ten years have seen a modest rise in the proportion of working households moving into the sector. Even so, only 32 per cent of households are headed by a working adult, compared with two thirds of owner-occupied homes.
- Housing investment by English councils during 1999/2000 was higher than previously estimated, at £2,418 million. The estimated spend for 2000/01 has also been revised upwards to £3,061 million. This reflects a rising trend in receipts from Right to Buy sales, as well as reinvestment of proceeds from stock transfers by some authorities. Out-turn housing investment, nevertheless, remains lower in real terms than in 1994/5 or any previous year for several decades.
