Why Housing Benefit should be paid from locally raised taxes
Even if the debate about Housing Benefit has gone wrong in many ways, it is a good thing that it is being held at all, if only to raise awareness about the issue. The HB bill is running at about £20bn per year. In a country with 30.5m income-tax payers, that makes £650 each, never mind the cost of social housing and other forms of rent subsidies. Moreover, it is not a secret anymore that a major cost driver is the heavy concentration of HB recipients in high-rent areas. There is not a single borough in Inner London where the prevalence of HB dependency is not above the national average; and in some boroughs it is more than twice that average.
No problem at all, says Angela Phillips in the Guardian. According to her, HB is a bargain. It is a small price to pay for the joy of living in a diverse area:
“As a hard-working Londoner, I have always been delighted that housing subsidies ensured I didn’t have to live next door to people like George Osborne and David Cameron.”
Phillips then goes on to boast about her actual neighbours, the Campbells, because they are “a Caribbean Catholic family with 10 children […] just the kind Jeremy Hunt had in his sights when he said that the state shouldn’t subsidise large families.”
The author does mention that the HB bill is inflated, which she blames on private landlords who cash in the benefit, and on Margaret Thatcher for having sold off council housing. But the bottom line is: “I want to share my streets with the likes of the Campbells. I think good communities are mixed communities, and I don’t mind paying for that.”
Fair enough. The problem is that everyone else is compelled to pay for it as well, regardless of whether or not they share Phillips’s personal preferences. But the author raises an important issue. Let’s pretend that the scale of the HB cuts really was as large as it is often portrayed to be. Conceivably, London would then become a socially and ethnically less heterogeneous place. Some would feel relieved about this, but others would feel aggrieved. Can there be a solution?
In an ideal world, yes: there would be a range of proprietary communities, with their owners deciding on access and composition as they see fit. Some of them would be very homogeneous; others would arrange cross-subsidisation schemes between wealthier and poorer residents, and reserve quotas for cherished minorities. If you want to cross-subsidise your neighbours on the basis of selected characteristics you consider morally desirable, and then boast about it, you should have every right to do so.
Obviously, we are very far away from such an arrangement, and we will not get there anytime soon. However, we would be several steps closer if the decision-making and funding of Housing Benefit and social housing was devolved to the local level. We could then have much more informed debates, because we could establish relationships like “an HB rate of X corresponds to a council tax rate, or local income tax rate, of Y”. As beneficial side-effects, we might then get a little less self-righteous journalism, and Boris Johnson would probably be a bit less keen on playing Arthur Scargill.