Housing benefit – still waiting
Housing costs play a key role in determining net disposable incomes, so housing benefit (HB) should occupy a key place in any anti-poverty strategy. Nevertheless, readers of Poverty could be forgiven for having lost track of where the Government's much-delayed review of the HB scheme is up to.

The previous Government pursued over many years a policy of promoting higher rents, through decontrol in the private rented sector and subsidy reduction within social housing. HB would, we were told, 'take the strain'. The Treasury and Department of Social Security then cited rising HB costs as an excuse for repeated benefit cuts.

The new Government, elected in 1997, resolved not to fall foul of this contradiction and set up a review of the HB scheme designed to dovetail with its parallel review of housing policy. Unfortunately, the review ran into two significant problems. Firstly, the various interested central government departments had different agendas. Notably, the Department of the Environment, Transport and the Regions wished to emphasise housing policy, while Gordon Brown's Treasury saw HB policy as a vehicle for promoting the 'welfare to work' strategy – the New Deal – through a possible integration with tax credits. The second problem was that the HB review was charged with producing meaningful results without incurring significant additional costs or generating substantial numbers of losers. These were three incompatible requirements – rather like being asked to alter the height of a picture on a wall without moving it up or down.

Thus, the review fell behind schedule. Towards the end of 1998, the Prime Minister became impatient and, as an interim measure, initiated the Simplification and Improvement Project, intended within the existing framework to produce meaningful results…again without incurring significant additional costs or generating substantial numbers of losers. The Project reported in January 1999, but a year later its proposals are – unsurprisingly, given its remit – gathering dust in Downing Street. They may perhaps appear in some form if, as appears increasingly possible, the main review fizzles out.

Meanwhile, the problems of the existing system continue, including benefit shortfalls, lack of coverage for owner-occupiers and frequently poor administration.

The previous Government's policy of sneaky above-inflation increases in non-dependant deductions also continues. For example, reductions in HB to reflect assumed contributions from grown-up working children are to be raised in April 2000 by around 3 per cent, to a maximum of £47.75 a week, more than double the rate of price inflation during the relevant measurement period. (Most council tax benefit non-dependant deductions will be raised by around 7 per cent.) The assumption seems to be that the complexity of this manoeuvre will deter public scrutiny.

For more information, contact Geoff Fimister at CPAG

Geoff Fimister
Poverty 105, Winter 2000