Introduction

Great Britain has provided income-related assistance with housing costs since the 1930s, but it is only since the 1970s that it has assumed central importance within housing policy. It has also become a major component of social security expenditure in recent decades. At present, housing allowances in Britain take two major forms. The first is a scheme called Housing Benefit, which provides help for low-income tenants. The second is known as Income Support for Mortgage Interest and is available to home buyers who are in receipt of social assistance. Housing Benefit is by far the most important of these two schemes in terms of expenditure and the number of recipients.

During the last two decades, Housing Benefit has become the central component of government support in housing. It has also been instrumental in facilitating a major transformation in rented housing provision (Stephens, 2005). Yet it has also had a highly troubled history over the same period, with numerous problems, including both structural deficiencies and administrative difficulties. There have been several major reforms of Housing Benefit since the early 1980s and another reform is currently being piloted prior to being rolled out nationally. Tensions between housing and social security objectives have contributed to these problems (Kemp, 1994).

This chapter examines income-related housing allowances in Great Britain and focuses largely, but not exclusively, on the largest of these, Housing Benefit. The next section briefly outlines the housing market and social security policy context. Subsequent sections discuss the origins and development of Housing Benefit, the design of the current scheme, and its role and impact. The chapter then looks at Income Support for Mortgage Interest. This is followed by a discussion of the reform of Housing Benefit, the problems that reform was or is intended to address and the difficulties involved in attempting to resolve them. The chapter then discusses the impact of the new Local Housing Allowance, which is the most significant element of the reform. The final section sets out some conclusions.

Context

Although Esping-Andersen (1990) has described Britain as a ‘liberal welfare regime’, that characterisation is not strictly accurate. It is true that, in some respects, the British welfare state bears the hallmarks of a liberal welfare regime.