Government cuts housing investment despite soaring housing benefit bill

The cuts come despite warnings from David Cameron that investment should take priority over benefits

Britain faces a shortage of affordable housing and a soaring housing benefit bill as a result (PA)

David Cameron has slashed housing investment since he came to power, while spending than ever on housing benefit – ignoring his own advice on the subject.

At Prime Minister’s Questions on Wednesday David Cameron warned opposition MPs that “every penny you spend on housing subsidy is money you cannot spend on building houses”.

However, a House of Commons Library analysis seen by the Independent shows that the Government has in fact been spending more on housing benefit than its predecessors – and less on building houses.

Housing benefit is usually paid directly to landlords and the amount the Government spends on it has increased dramatically in recent years as rents increase and more tenants are pushed into the private sector.

A lack of affordable homes is thought to be in part responsible for increases in rents that feed into higher social security costs.

Despite Mr Cameron’s warning, housing benefit expenditure grew from £20 billion in the last year of the Labour government to £24.3 billion in 2014/15 under the Coalition.

The same analysis found that total Government housing development expenditure has fallen from £11 billion in 2009/10 to just £5 billion in 2013/14 and £6 billion in 2014/15.

Green MP Caroline Lucas warned that the Government could only bring the benefit bill down by building enough new homes.

“The effects of the housing crisis are hitting people hard. In Brighton people are being forced out of the city because of sky high rents- and lengthy waiting lists make social housing am impossible dream for most,” she told the Independent.

“It's astounding that the Government are failing so miserably to get a handle on this situation. On their watch the money put into housing development relative to spending on housing benefits has dropped dramatically.

“This perverse situation sees landlords subsidised by the taxpayer, while action to permanently cut the cost of renting or buying stalls. It is an indictment of this Government that so many young people struggle to pay their housing costs.

“Ministers must act fast to address this failure by building more homes and, at the very least, controlling rents to stop them going up anymore. People deserve decent homes they can afford to live in- it's the Government's duty to make this a reality.”

Official figures released in January show soaring numbers of people being made homeless because they cannot afford their rent or their landlord kicks them out at the end of a tenancy agreement.

The increase in housing benefit spending comes despite harsh cuts to housing benefit rates for individuals over the same period.

Changes include the so-called “bedroom tax” – a reduction in housing benefits for people with rooms deemed unnecessary by the Government. That policy mainly hits disabled people and has been blamed for causing serious hardship and poverty.

Overall ministers are looking to cut £12 billion from the benefits bill. David Cameron has described the benefits system as a "ridiculous merry-go-round".

The Government has resisted growing calls to re-introduce rent controls for private rented accommodation; the Scottish Government is however consulting on the move, which could save taxpayers significant amounts of money in housing benefit.