Wrong policy Ms Rayner, disguising the bill doesn’t make it go away
As an arrow flighting towards the centre of the target politics gives us wholly and entirely the wrong economic answer:
Angela Rayner has vowed to get benefit claimants out of “expensive private rented accommodation” after analysis found that landlords will be paid a record £13bn in housing benefit this year.
The amount of taxpayer money spent on supporting private tenants has surged by 30pc since the pandemic began, rising from £9.9bn in 2019-20 to £12.1bn in 2022-23.
The Housing Secretary has promised to deliver “the biggest increase in social and affordable housebuilding in a generation” as official forecasts predict benefits spending on private tenants will hit £12.8bn this year.
The push will be to provide more social, housing association and “affordable” housing. Instead of just paying the cash to prviate landlords. Which is entirely and wholly the wrong thing to be doing - for disguising the bill doesn’t make that bill go away.
British housing is too expensive for many Britons to be able to afford reasonable quantities and qualities of it. That’s our central starting point. As solutions we have those two ideas. One is to build more of those “affordable” houses on the government tenpence. The other is to provide the cash to tenants to pay to their landlords.
But the cost of housing being too expensive is still there either way. The capital used to build those affordable houses - also the land - could be used in other ways. That’s an opportunity cost and if we’re not to include opportunity costs then whatever it is we’re doing it’s not economics. Further, those “affordable” houses could be rented out at market rent. The gap between affordable and market is a cost of those affordable houses. An opportunity cost again.
The correct answer is to entirely abolish all indirectly subsidised forms of housing and only subsidise through those direct - and visible - cash payments. Yes, we’ll all shriek in horror as the housing benefits bill rips up through tens of billions a year toward the century. Which is exactly the point of the exercise. This is a cost that we have to carry - whichever system we use to deal with it - of the nationalised planning system’s refusal to allow people to build houses Britons wish to live in, where Britons wish to live, in Britain.
The cost of affordable housing is the same as subsidising housing benefit. Better to have all those costs where we can see them so that we finally bite the bullet - driven by shock at the size of the bill - and blow up the Town and Country Planning Act 1947 and successors. Proper blow up - kablooie.
Hiding the bill doesn’t make costs go away but seeing the full bill might well mean we get to grips with the real problem.
Tim Worstall