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fru-gal

Labour Studies Plan To Shift Housing Power To Councils

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http://www.theguardian.com/society/2014/jun/06/labour-housing-benefit-subsidising-rent-housebuilding

Labour studies plan to shift housing power to councils
IPPR plan would reverse 30-year trend of government spending on housing going to subsidise high rents rather than housebuilding

Billions of pounds paid in housing benefit could be handed to England's councils to shift spending from subsidising high rents to building homes, under proposals to be studied by Labour's Treasury team.

The plan could mean the transfer in a five-year budget of almost £1.5bn for west Yorkshire, more than £1.4bn for Greater Manchester and Liverpool, just under £1bn for south Yorkshire and just under £700m for the north-east.

The proposals would be a large shift in the architecture of British welfare, reversing a 30-year trend of subsidising high rents rather than housebuilding. They would also transfer power from Whitehall to England's regions.

The plan has been drawn up by the centre-left Institute for Public Policy Research, which warns of the consequences for welfare spending if housing benefit is not reformed. The plan comes as Sir Michael Lyons is examining reforms for Labour to boost housebuilding.

During this parliament, 95% of government spending on housing will go through the benefit system, with just 5% invested in new homes, reversing the balance of spending in the late 1970s.

Although the government has sought to constrain benefit through the bedroom tax, the housing benefit caseload is expected to rise by 150,000 by 2019, with more recipients in work unable to pay their rent without a subsidy. The bill is projected to rise in real terms in the next five years, reaching £25.4bn by 2019, settling around £8bn a year higher in real terms than before the recession.

The rises have been triggered by a combination of above-inflation rent increases in the private and housing association sectors, as well as a growing share of claimants in the private sector. Nearly 40% of housing benefit spending – over £9bn a year – is going to private sector landlords, many of whom charge more than £50 a week more than council housing.

The IPPR says the current "distribution of power and incentives means that local government is left administering a rigid system over which it has little control, while gaining no rewards and facing no penalties for its performance".

The thinktank proposes a phased transfer of control to local authorities that would firstly give councils greater scope to borrow against their housing assets, to provide an injection of additional local housing investment to reduce the pressure on housing benefit in their area. Estimates suggest this could support the construction of between 12,000 and 17,000 new affordable homes a year.

In a second transfer it suggests councils be entitled to set rent subsidy levels in their local private sector. Sheffield council alone believes it could reduce its housing benefit deal by £300,000 a year through this reform.

In a third phase councils would be given control over central government capital housing budgets, and also empowered to set higher rent levels for richer tenants. It has been estimated, for example, that if a premium was charged on 115,000 higher income tenants in London, nearly £300m would be raised.

In the final phase of the reform, big councils and combined authorities would be given multi-year budgets to oversee affordable housing expenditure earmarked for their area.

Edited by fru-gal

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Kill two birds with one stone? -

1) Councils build more social homes with the money instead of it being used to subsidise rents

2) Less money for housing benefit, so less money going into the pocket of private landlords

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Read somewhere today that £1.1billion is spent on housing benefit for those IN WORK! That money would be better spent building social houses instead of providing a state subsidy to landlords.

Those councils mentioned probably have a lot of land they already own so £1bn could build them something like 12-15,000 homes (flats and houses). Then give those homes to those same people who are in low paid work and on housing benefit. Hopefully, the removal of the state subsidy will encourage the landlords to either reduce rent or sell up.

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Of course, under labour as part of the transfer of the housing stock (pseudo-privatisation), rents were driven upwards to 'market' levels. Bonuses all round. Let's not worry about pricing people out of housing and the rocketing benefits bill. Scratch the surface and I dare say there will be a fair bit of corruption/malfaisance.

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Sounds like a decent idea. It will probably therefore never happen or Labour will renege on the plan when they get into power next year.

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Read somewhere today that £1.1billion is spent on housing benefit for those IN WORK! That money would be better spent building social houses instead of providing a state subsidy to landlords.

Those councils mentioned probably have a lot of land they already own so £1bn could build them something like 12-15,000 homes (flats and houses). Then give those homes to those same people who are in low paid work and on housing benefit. Hopefully, the removal of the state subsidy will encourage the landlords to either reduce rent or sell up.

Worse than you think:

Today we are publishing new figures from the House of Commons library which show that an extra £1 billion in Housing Benefit will be paid to people in work by 2018.

http://www.mirror.co.uk/news/uk-news/housing-benefit-bill-working-families-3664899

If HB is £25b and the average rent covered is £500, that's about 4m households (1 in 6?). Could be 8m people.

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Is that just for the PRS or social housing too?

I suspect it's both. It's difficult to tell, as no-one seems to know the difference between Housing Benefit (social housing) and Local Housing Allowance (PRS). Not even, apparently, the Labour Party. Unless they're using the catch-all term so as not to confuse the media and the populace. http://www.labour.org.uk/news

Also note that in the Labour Party website newsfeed, £1 billion pound increase figure is described in the story as "Housing Benefit ...paid to people in work" but in the footnote as "Housing Benefit paid to people of working age".

Confused? Incompetent? Deliberately misleading?

Edit: formatting

Edited by Snugglybear

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