Housing allowances and the fiscal crisis of the welfare state

Abstract

A rapidly growing public sector borrowing requirement, caused by the longest recession since the second world war, has promted the British Government to carry out a 'fundamental review' of state spending programmes. One of the areas on which much attention has been focused is the housing allowance scheme, the cost of which has increased substantially. This article examines the review of housing allowances that is being undertaken as part of the wider review of welfare spending. Some of the key differences between housing allowances in Britain and those in other countries are also discussed. Some of these differences are likely to be removed as a result of the review, thus making the British scheme more like those elsewhere.

Comparing demand‐side and supply‐side housing policies: Sub‐market and spatial perspectives

“…Kemp (1994) appropriately calls this response a reduction in the "quantity of housing services per unit of accommodation". Similarly, private builders who had planned to construct their apartments in the middle sub-market in anticipation of the most favourable rates of return there would now be encouraged to build instead in the moderate quality sub-market.…”

“…Britain's policy represents an extreme case, inasmuch as qualifying lowincome tenants have 100 per cent of their rental costs paid by the government, including marginal increases in rent (Kemp, 1994). Worries over the policy's costs as well as its perverse incentives to over-consume housing and eschew shopping for the best rental bargain have led to proposals to lower the maximum housing benefit to something less than 100 per cent and/or to establish a ceiling rent above which benefits would be inapplicable.…”

The present and future of income‐related housing support: debates in Britain and the Netherlands

“…If the income of the claimant and partner is equal to or less than the relevant benefit rate, they receive a housing benefit payment equal to all of their eligible rent. For incomes above the welfare benefit rate, housing benefit tapers down from 100 per cent of the rent by a fixed percentage (65 per cent) of the difference between income and the welfare benefit rate (Kemp, 1994).…”

Private renting in England

“…With such a large proportion of private tenants receiving significant amounts of housing benefit, the state is clearly an important determinant of the level of effective demand in the privately rented sector. Changes in the generosity of the scheme will have an important impact on the level of rents in the sector (Kemp, 1994).…”