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ippr: Don’t cap Housing Benefit, devolve it

Decentralised ‘Affordable Housing Grants’ would get Britain building again,

Local councils should have a duty to provide affordable housing but the right to decide how to spend the money currently going to landlords through Housing Benefit, according to a new report published by the think tank IPPR.

The report shows that current levels of new house building, at around 100,000 a year, are the lowest for a century, and set to get even worse.
 
The new publication is the final report of IPPR’s 18-month-long fundamental review of housing policy. It shows that over the current four-year period the UK will spend £95bn on Housing Benefit and less than £5bn on building new homes. In stark contrast, the report shows that in the late 1970s, four-fifths of public spending on housing went on bricks and mortar, and just a fifth on rent allowances.

The report also argues that rising private rents mean too much Housing Benefit is going straight into the pockets of private landlords, without sufficient quid pro quo for the taxpayer or tenant.
 
The report argues for the divide between capital grants and Housing Benefit spending to be collapsed by devolving expenditure to local authorities and putting them in the lead.

Councils would be under a legal duty to use their ‘Affordable Housing Grants’ to improve affordability in their area, such as through striking better deals with private landlords and ‘investing to save’ their multi-year funding in affordable house building that would reduce demand for benefits.
 
IPPR argues that this act of decentralisation would represent a far more ambitious institutional reform than the current government’s half-hearted localism. Councils would be required to forge a consensus for their spending plans and housing strategy among a balance of local interests – housing providers, landlords, tenants, owners and those in housing need – and be accountable for progress in improving affordability.
 
The report also recommends a new ‘something for something’ approach to private landlords and tenants to improve levels of security, decency and affordability in the private rented sector and argues that, if we want to live in an integrated society, widening access to homeownership should remain a primary aim of British housing policy.
 
Nick Pearce, IPPR Director, said:
 
“Affordable house building has collapsed, homeownership rates are falling, homelessness applications are up and the Housing Benefit bill continues its inexorable growth. There is no shortage of bad news on housing, but dangerously little serious debate about the fundamental direction of housing policy.
 
“For thirty years a broad cross-party consensus has been maintained, based on shifting public money from building homes to subsidising rents and running housing policy from Whitehall. Labour didn’t challenge the status quo and the Coalition is making it worse.
 
“Now is the time for a radical new direction, shifting from benefits to bricks and mortar and moving power down to the local level to tackle the housing crisis.”
 
The report recommends three major areas of radical reform:
 
  • Shifting from subsidising rents to building homes through decentralisation – phasing out housing benefits and replacing them with affordable housing grants to local authorities, based on a national formula taking account of local population, housing costs and relative deprivation.

     

  • Spreading opportunities for sustainable homeownership by finding new sources of finance to pay for new homes, reforming the planning system and shaking up the development industry, while maintaining sensible credit control.

     

  • Ensuring a better, more balanced offer for those who rent by increasing the security of families in the private rented sector while giving local authorities more freedom over the allocation of social housing and offering fixed-term social tenancies as the norm.

     

Notes to Editors
 
IPPR’s new report – Together at home: a new strategy for housing – is available from:
http://bit.ly/IPPR9279
 
The seven previous reports of IPPR’s fundamental review of housing policy were:
 
Affordable house-building starts have fallen from 49,363 across England in 2010/11 to 15,698 in 2011/12. The figures below are for affordable house-building starts in 2010/11.
 
Housing benefit spend and number of affordable houses starting construction, 2010/2011
 
                                                                Housing Benefit               Affordable new house starts
 
England                                                   £188,760,000                      49,363
 
Regional Breakdown:                                   
 
North East                                               £9,238,000                           1,247
 
North West                                              £23,715,000                         4,407
 
Yorkshire and Humber                            £14,971,000                        2,503
 
East Midlands                                         £11,126,000                        2,297
 
West Midlands                                        £17,366,000                        3,133
 
East                                                        £16,326,000                        6,116
 
London                                                   £55,390,000                        16,331
 
South East                                             £25,369,000                        9,110
 
South West                                            £15,259,000                        4,219
 
 
Contact
 
Richard Darlington, 07525 481 602, r.darlington@ippr.org
 
Mavis McKenzie-Cecil, 07929 132 716, m.mckenzie-cecil@ippr.org

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