Cuts to social rent will benefit Whitehall more than tenants, says IFS

Reductions to social rents will be of ‘little or no benefit’ to tenants and instead benefit the exchequer, according to a new report.

The report, published by the Institute for Fiscal Studies (IFS), found that the one per cent annual reduction in social rents over the next four years, announced in the July Budget, would save money for Whitehall while not helping the tenants it was designed to support.

The IFS also found that social landlords, local authorities and housing associations will lose money under the new plans.

The reason the exchequer will benefit is because the reduction in social rent will automatically trigger an offsetting fall in housing benefit entitlement of £1.7 billion.

Additionally, the report also suggests that by reducing the annual rental income of social landlords by £2.3 billion, these cuts in social rents could reduce the amount of new housing supply, citing the Office for Budget Responsibility’s estimation of 14,000 fewer homes being built by 2020-21.

However, the report did also find that cuts to social rents will, on average, strengthen the financial work incentives of social tenants, as tenants will have less means-tested housing benefit to lose if they move into work or increase their earnings.

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