Osborne’s failure to deliver on new housing stock is blowing out the Housing Benefit Bill
Little noticed data released on Friday by the Office of National Statistics (ONS), which revealed that private rental prices paid by tenants in Great Britain rose by 2.6% in the 12 months to January when is inflation was running at zero during the same period will lead to a blow out in Treasury forecasts of the housing benefit bill, Seema Malhotra MP, Shadow Chief Secretary to the Treasury, has said.
The ONS data – which showed the situation was even worse for private renters in London, where rental prices increased by 3.9% - comes on the back of a little noticed official benefit expenditure forecasts slipped out by the Department for Work and Pensions in February. These revealed that the total amount of Housing Benefit the government now expects to pay over £8.5 billion (in today’s prices) in housing benefit to private landlords in 2020-21, £350m more than it forecast at the time of George Osborne’s summer budget.
The English Housing Survey that there were 201,000 fewer households owning a home in 2014/15 than there were in 2010, the period when Osborne has been Chancellor. Over the next five years the DWP expects 75,000 more housing benefit recipients to be in the private rented sector, bringing the total to 1,638,000 in 2020-21. In 2010 it stood at 1,320,000.
Seema Malhotra MP, Labour’s Shadow Chief Secretary to the Treasury, who challenged George Osborne on his support for housebuilding during Treasury Questions in the House of Commons yesterday and comments on his failure, said:
“This evidence that home ownership is down and private rents are soaring in excess of inflation is terrible for the millions of people trapped into private renting because of George Osborne’s continual failure to deliver enough new houses to buy and affordable housing to rent. British families are now literally paying the price for George Osborne’s failure to deliver enough affordable housing to buy and rent. Home ownership is falling fast and a whole generation of young people are set to never own their own home.
“But it’s bad news for public finances too. Housing Benefit paid to private landlords is soaring because of lack of housebuilding – and this is all despite the Government’s proposed draconian approach to housing benefit, which they have now backtracked on. Labour is committed to getting the Housing Benefits bill down fairly, but under Osborne it is rapidly going up. The extra £350 million blow-out in the housing benefit budget since last July alone is astonishing and it will only get worse as Osborne’s recovery built on sand looks shakier with every day he is at the Treasury. Millions of British people – and the public finances – can’t afford the cost of Osborne’s false economies and continued economic failure.”
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
PRS cost summer forecast
9,065
9,016
8,756
8,591
8,334
8,166
PRS cost updated forecast
8,939
8,766
8,696
8,745
8,621
8,516
difference
-126
-250
-60
154
287
350
PRS caseload summer forecast
1,585
1,641
1,664
1,686
1,693
1,698
PRS caseload updated forecast
1,563
1,593
1,610
1,625
1,632
1,638