Centre for Social Justice Part 3: Housing Benefit

From pages 68, 69 of their 370 page report (pdf):

Housing-related benefits: the biggest benefits of all
... By August 2007 there were 4 million recipients of Housing benefit ... The average weekly amount of Housing Benefit was £71, thus pushing the total cost towards the £16 billion mark

Like so many, they have blindly accepted the DWP's figures without any further thought. The £16 billion is probably correct, but the total number of claimants is actually 4.4 million (page 2, pdf), of whom 3.2 million are local authority or housing association tenants (72%) and 1.2 million are private tenants (28%). It is very helpful to look at each half in turn:

1. 72% of that £16 billion is not actually a cost to the taxpayer at all, it is a transfer from one branch of government department (the DWP) to other branches of government (local councils and housing associations). Imagine, if you will, that local councils and housing associations charged all their tenants £250 per week but the DWP paid Housing Benefit to cover it; would the cost to the taxpayer suddenly rise to £50 billion? No, of course not, because Whitehall would just reduce taxpayer-funded central grants to local councils by a corresponding amount and the taxpayer would be none the wiser.

And what is the real cost of somebody in social housing? The real cost is the notional interest cost of capital tied up in bricks and mortar (which is about 1.5%, i.e. the rate of return on government-backed index linked bonds) plus another 1.5% for maintenance, repairs, insurance etc. Seeing as the average cost/value of the bricks and mortar of a council or housing association home is about £50,000, the real cost is barely £1,500 per unit. As the average rent paid by social tenants (after deducting the amount covered by Housing Benefit) is also [about £30 a week] per household (some pay much more than that; half of them pay nothing) the net cost to the taxpayer is a Big Fat Zero.

2. The remaining 28%, i.e. £4.5 billion is a real cost, but hardly "the biggest benefit of all" as the CSJ claim. It is a benefit, of course, but the main beneficiaries aren't the tenants; the main beneficiaries are private landlords, which makes it the worst kind of subsidy (subsidising property ownership doesn't increase the supply of property, it just makes it more expensive) and ought to be scrapped forthwith. Seeing as there are 1.6 million households on council house waiting lists, most of whom are claiming HB, why not just build more social housing and get the net real cost down to nil?

This would relieve the burden on the taxpayer, and be a G-dsend to people at the margins (esp. young people and lower income people on waiting lists); rents in the private sector would go down; so house prices would come down and there'd be less pressure to 'jump on the property ladder' anyway (i.e. swap being a rent-slave for being a mortgage-slave), which as we all well know is a straight wealth transfer from young people (most of whom themselves are taxpayers, so being conned twice over) to property owners.

I've run this idea before, and I know that people will say that social housing encourages welfare dependency.

Wot?

If a household is paying for the real cost of what it occupies, without ever making a penny profit therefrom or costing the taxpayer a penny, how is that 'welfare dependency'?

What makes social tenants (who bumble along, happily minding their own business and paying what they owe in order to temporarily occupy a modest property) morally inferior to NIMBYs, who have for half a century successfully choked off new developments with huge resulting windfall tax-free capital gains for themselves?

Why do people complain about the cash cost of the welfare system, oblivious to the fact that the tax-free income and gains accruing to home-owners are a much larger figure (the last couple of years' price falls notwithstanding)?

And don't give me that crap about 'personal responsibility', this government has firmly chucked that out of the window with a series of desperate measures to prop up house prices, and I don't hear the NIMBYs complaining about those.