An Assessment of the British Housing Benefit System

Abstract

The British Housing Benefit system has become one of the central pillars of housing policy as well as a major element in the social security system. Housing Benefit has enabled government to switch housing subsidies away from 'bricks and mortar' subsidies and it has become the main housing subsidy. It has also underpinned other policies that have transformed the housing system, including the homelessness legislation, the liberalisation of the private rented sector, private finance for housing associations and the transfer of local authority housing to housing associations. Over time its objectives have narrowed with much more emphasis being placed on its income maintenance objective and rather less on a wider affordability objective. Nevertheless, it performs both objectives reasonably well in the social rented sector, but is increasingly failing in the private rented sector where restrictions aimed at controlling costs have become much more onerous. It is often suggested that design of Housing Benefit seems likely to lead to work disincentives and over-consumption of housing, but the evidence is weak. While the system is difficult to administer, it is cheap to administer (compared to many other benefits). Current policy development is aimed at extending choice by creating incentives for claimants to consume housing more efficiently, as well as removing some of the administrative deterrents to moving into work. Longer term it seems likely that the system will need to adapt to the growth of tax credits with which it is not well aligned.Housing allowance, Housing Benefit, local housing allowance, Great Britain,

Towards the More Effective Use of Housing Finance and Subsidy

“…The evidence presented in the Evaluation of Housing Policy provides little or no support for any direct and separable impact on either output and prices in part because the money user costs of owner occupation were falling rapidly during the 1990s so that the slow loss of mortgage tax relief was hardly noticed (Stephens, 2005).…”

The Dynamics of Housing Allowance Claims in Sweden: A Discrete-Time Hazard Analysis

“…Thus, the assumed disincentives of housing allowance could in fact change very little of a household's behaviour. Gibb (1995) and Stephens (2005) expressed similar opinions in the case of the UK housing benefit.…”

“…Compared to other countries (Kemp, 2000;Åhren, 2004;Stephens, 2005), it is apparent that the Swedish government operates a generous housing allowance system. Its generosity interacting with other parts of the Swedish welfare system that is already internationally renowned for its generosity, inevitably invites one to speculate regarding the extent to which the housing allowance may weaken a household's work incentives.…”

“…Secondly, explicitly or implicitly, housing allowances are thought to help households only during economically difficult periods (Boverket, 1999;Stephens, 2005). Yet persistent participation in the housing allowance system may undermine the financing foundation of welfare.…”

The impact of the direct payment of housing benefit: evidence from Great Britain

“…Third, in a UK context, there is a literature on HB, which has examined a number of issues including: the efficacy of the HB system as a whole (Kemp, 1998(Kemp, , 2000Kemp et al, 2002;King, 1999;Stephens, 2005); comparing systems (Kemp, 2000;Priemus & Kemp, 2004); the impact of changes to the system (Gibbons & Manning, 2006;Fenton, 2011); and its cost (Johnson, 2015;Phillips, 2013;Wilcox & Perry, 2014).…”