Soaring costs difficult to predict

ONLY the most far-sighted Whitehall official would have predicted that the cost of help with housing costs would have risen from pounds 2bn in 1978-79, its first year, to a forecast pounds 10bn in 2000.

But the framers of what were once two separate schemes - the housing component of supplementary benefit, and the rent rebates and allowances system - would not have reckoned on the changes to come.

After an awkward start in 1982-83, the current scheme came into effect in 1988. Households, whether working or unemployed, with incomes at or below income support level get eligible rents paid in full.

Above income support level, benefit tapers off according to means. While that helps keep the costs down, the Tory-dominated Commons environment select committee has urged that the graduation should be more generous to encourage people to get jobs and eventually move off benefit altogether.

Ministers and the Department of Social Security are acutely aware that deregulation of the private rented sector under the 1988 Housing Act has played a significant role in the ballooning of the housing benefit bill as tenants struggle to meet market rents.

Even so, Shelter has recorded cases of families on income support - which total about 80 per cent of all housing benefit claimants - having to pay pounds 20 a week to make up the difference between their rents and the housing benefit paid by their local councils.

The DSS also blames high levels of unemployment and demographic changes - smaller family units in more households. Fraud is a further, though not major, factor behind the rocketing bill. Mr Lilley recently announced a crackdown.