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The Chartered Institute of Housing is the independent voice for housing and the home of professional standards

Spending on new homes plummets while housing benefit soars – new analysis

21/03/2018


Government investment in building new homes has plummeted while spending on housing benefit has soared, new analysis from the Chartered Institute of Housing (CIH) has revealed.

In 2015/16, just 4.3 per cent of the government housing subsidy went towards measures to boost new building – down from 82 per cent in 1975/76 – while 95.7 per cent went on housing benefit and support for mortgage interest (up from just 18 per cent 40 years earlier). The vast majority went to housing benefit, with support for mortgage interest accounting for around £200 million.

The extent of the shift is revealed in the UK Housing Review 2018, launched today (Wednesday 21 March).

 

pie charts showing change in balance of government housing subsidy

Meanwhile the review shows that investment in social housing has dropped from £13.7 billion in 1979/80 to 5.1 billion in 2016/17, in today’s prices. Government spending on the private market dwarfs support for affordable housing. The review shows that 79 per cent of its £53 billion budget up to 2020/21 (including loans and guarantees) is directed towards private housing, with just 21 per cent going to affordable housing.

The review also reveals that 1.97 million homes have been sold through right to buy across England between 1980 and 2016/17.

CIH chief executive Terrie Alafat CBE said that social housing has reached a critical point – and that ministers have some big decisions to make.

She said: “The government has pledged to deliver 300,000 new homes a year. That is absolutely the right ambition, but we are never going to reach that target unless more investment is switched to bricks and mortar. Investing in new homes would help make housing more affordable for people who are struggling – and it is also the only sustainable way to cut the housing benefit bill in the long-term.”

Terrie Alafat said the government also needs to consider the kind of homes it is investing in. She said: “We need to increase the number of homes we are building but it’s not just a numbers game – we need to make sure we are building the right homes, in the right places, at the right prices. For many people on lower incomes, the only truly affordable option is social rent.

“Our analysis shows that more than 150,000 homes for social rent were lost across England between 2012 and 2017. It is simply unacceptable that we are losing so many of our most affordable homes at a time when more and more people are in need.”

The UK Housing Review 2018 is being launched today (Wednesday 21 March) at Clarion Housing Group, Tooley Street, London. It has been written by professor Mark Stephens, director of the Urban Institute at Heriot-Watt University, CIH policy adviser John Perry, Steve Wilcox, former professor of housing policy at the University of York’s Centre for Housing Policy, Peter Williams, land economy departmental fellow at the University of Cambridge, and Gillian Young, honorary research fellow at Heriot-Watt University. Financial support for this year’s edition has been received from: Clarion, Crisis, HouseMark, Housing Studies Charitable Trust, London & Quadrant, the Northern Ireland Housing Executive, Orbit Group, the Scottish Government, Southern Housing Group, UK Finance and the Welsh Government.

  • The UK Housing Review 2018 is available to buy now


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