MPs seek data on soaring benefit bill: Housing subsidy switch questioned

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MORE information is needed on the effects of switching housing subsidies away from bricks and mortar and towards people, a cross-party committee of MPs has said.

The call for the Government to publish more data on the effects of a policy which is sending the housing benefit bill rocketing, and which critics say is raising the number trapped on benefits, comes as cuts in the housing benefit scheme are being considered.

Government policy since 1988 has been to cut subsidies to council housing and homes provided by housing associations, forcing them to move towards market rents. The rents are then subsidised by housing benefit for those who cannot pay. At the same time, the private sector is increasingly being used to house the homeless, with benefit there having to meet rent bills which on average are still 50 per cent higher than for council housing.

The effect has been to nearly double the benefit bill in five years to almost pounds 8bn.

The Government's independent social security advisers, who are preparing their own report on housing benefit, have been told that the Government's pursuit of market rents is 'a false goal'.

The existing policy is drastically affecting work incentives and is not sustainable, John Perry, director of policy for the Institute of Housing, told the Social Security Advisory Committee.

He said: 'As soon as it is subject to any kind of scrutiny, the market rent policy falls apart.' In most parts of the country there is virtually no market in private lettings - either because the private rented sector is tiny or because, as in London, it is so dependent on subsidies from housing benefit that it has become in effect an expensive part of public provision.

The policy has also re- inforced the polarisation of social housing - council and housing association homes - from other forms of housing, leaving those in social housing marginalised and trapped on benefits, Mr Perry said.

In the mid-1970s, social housing catered for a broad mix of people. Only the top fifth of the income group had less than 25 per cent of its members in social housing.

By 1990, thanks to the right-to-buy, much higher unemployment and shrinkage of the private sector, 'social housing has been effectively residualised and has become largely a tenure of the poor'.

If the Government sticks to its policy, the inevitable result will be 'rents will continue to soar as the same time as benefits are cut'.

Alternatives, Mr Perry suggested, include more investment in council housing, creating a regime that allows housing associations to charge reasonable rents, and limiting private rent levels that housing benefit will meet.

The House of Commons Select Committee on the Environment has said the Government should publish more information about the impact on public spending.