David Hall has some radical ideas for the future of housing benefit
The news that the Department of Work and Pensions will be piloting a new approach to housing benefit in 10 areas next year represents a bold step for the government (HT 24 October, page 11).

The proposal to introduce the new housing allowance, initially in the deregulated private rented sector, will mean eligible tenants being given a cash sum, linked to area and family size, to go towards their rent. Where the allowance exceeds the rent, the tenant will be allowed to keep the difference. Safeguards are being introduced for landlords to cover tenants in arrears or vulnerable tenants unable to look after their own affairs.

It appears to be the next step in the government's long-expected move towards reforming the rents and benefit system and will, no doubt, be monitored closely by those in the social housing sector.

I wonder how allowances will be set, given the different rent levels between the sectors, and indeed whether there are already plans afoot to develop the idea more widely. Given the tendency towards blue-sky thinking these days, it may be worth exploring some of the wider, knock-on issues that we could address.

Opportunity for major change
In particular, there appears to be an opportunity here to review at a fundamental level the way housing subsidies are provided.

At the moment, we have a complex system of personal subsidies (housing benefit among them) along with capital subsidies (social housing grant) and revenue subsidies (housing revenue account subsidy). In addition, there are personal capital subsidies, for example in the form of right-to-buy discounts and private sector renovation grants.

A first step might be to give a common housing allowance to all of us, which could then be recovered from those on higher incomes

The extent to which someone on a low income gains from these is often a matter of geography and timing as much as anything else. In some areas where demand is high, we are only too aware that the availability of social housing is limited, and while there is also a renewed push towards providing key-worker accommodation, this is often in short supply as well.

The debate on right to buy is intrinsically linked to this since, like it or not, right to buy is a subsidy that's only available if you have managed to get access to local authority housing in the first instance. The Tories' proposal to extend the right to buy to housing associations has been met with scorn by many inside the sector, but perhaps we are looking at this whole issue from the wrong angle?

Housing allowance for all
A first step might be to give a common housing allowance to all of us as part of the tax/benefit system, which could then be recovered from those on higher incomes by changing the tax rate. Variations could be introduced to reflect local adjustments, family size and so on.

This might help key workers, and other people who don't get access to conventional affordable housing, to find a way into the market. The next key step would address the whole home ownership conundrum. The allowance would continue to be available if the tenant wanted to buy, but if the policy was to positively encourage home ownership, the allowance might need to be enhanced in some way. Discounted right to buy could then be discontinued.

Obviously this is just a selection of thoughts but my point is that perhaps we ought to be looking at the issue in a more holistic way.