Are we spending more on Housing Benefit than bricks and mortar?

7th Jun 2013

"Thirty years ago for every £100 we spent on housing, £80 was invested in bricks and mortar and £20 was spent on housing benefit.

Today, for every £100 we spend on housing, just £5 is invested in bricks and mortar and £95 goes on housing benefit."

Ed Miliband's speech on social security, 6 June 2013

Yesterday Labour leader Ed Miliband set about repositioning his party's stance on social security, and we provided a summary of the facts behind his key claims.

One claim was particularly eye-catching and worth a more detailed look: according to the Labour leader, spending on Housing Benefit has eclipsed investment in "bricks and mortar" over the course of 30 years.

After getting in touch with Labour, they pointed us to a 2005 report from the Office for the Deputy Prime Minister (ODPM) on challenges for the future of UK housing policy. Specifically, the party cited this graphic:

Ed Miliband looks to be referring to 1975/6, when supposedly the ratio of 'supply' to 'demand' was about 8:2. So what exactly does this mean?

The ODPM explains that this is a story of "restructuring housing subsidies":

"In 1975 more than 80 per cent of housing subsidies were supply-side subsidies intended to promote the provision of affordable homes. By 2000 more than 85 per cent of housing subsidies were on the demand-side reducing housing costs for those on low incomes, with Housing Bene?t emerging at the main subsidy instrument."

So we're specifically talking about subsidies for housing towards the construction of affordable homes (social rented and intermediate housing, provided to certain households whose needs are "not met by the market", according to the DCLG).

The original sources for the figures from the ODPM are vague, and we're trying to track down the original authors of the report. But looking closer at the data we do have reveals that in 1975 government invested nearly £13 billion in affordable homes (in 1999/2000 prices - about £16.5 billion in today's money), compared to just under £3 billion (£3.6 billion today) on various housing benefits.

So how does this compare to today? It's easy to get figures for Housing Benefit spending from the Department for Work and Pensions (DWP) - showing that about £22.8 billion was spent in 2011/12.

But what about affordable housing? For this, Labour directed us to the Homes and Communities Agency (HCA) which oversees the Affordable Homes Programme (AHP), through which the Government funds new affordable housing. The HCA's own corporate plan for 2011-15 estimates that £4.5 billion will be spent on the AHP and remnants of previous schemes over four years.

Comparing the £4.5 billion funded through the AHP and others to the forecast Housing Benefit bill for the same years - £94.8 billion gets us to Ed Miliband's £5 versus £95 spent on bricks and mortar versus Housing Benefit.

We can compare the AHP with the previous government's scheme - the National Affordable Housing Programme (NAHP). The HCA invested £8.4 billion in the NAHP from 2008-11, equivalent to £58.5 billion of Housing Beneift spending over that period. This suggests spending on Housing Benefit has continued to rise faster than investment in affordable homes since the NAHP began to be replaced.

Until we know more about how the old estimates have been made, it's difficult to draw direct comparisons between the old and new ratios being quoted. Nevertheless, the Labour leader missed out the significant detail that his claim referred to affordable housing rather than the entire housing budget, which would have been helpful for anyone seeking to understand what it meant.