Introduction

This chapter focuses on two topics related to the role of the private rented sector (PRS) in providing accommodation for low-income households. The first topic is the way in which the social security system, and the housing benefit scheme in particular, has provided assistance with the housing costs of low-income households over the decade since the 1989 deregulation of the sector. The second, related, topic is the relationship between government policies on housing benefit and the government view of the respective roles of the PRS and the social housing sector in meeting the housing costs of low-income households.

Benefit policy before 1989

However, before addressing those topics, it is useful to begin by briefly outlining some of the key developments in the evolution of the housing benefit scheme in the years before 1989, and the fundamental characteristics of the current housing benefit scheme, which have remained unchanged since the major social security reforms of 1988.

The current social security system in the UK has evolved from the national assistance and national insurance schemes introduced in 1948. While various important reforms over the ensuing half century were accompanied by changes in nomenclature (so national assistance became supplementary benefit and then income support and now, for pensioners, the minimum income guarantee) the current relationship between the contribution-based insurance scheme and the welfare safety net scheme still reflects the original relationship established in 1948.

One central factor is that the basic scales for the national insurance scheme were never set very much higher than those for welfare. While the national insurance benefits are not mean tested they have never been set to provide a sufficient income to cover household housing costs, and thus from the very beginning even households qualifying for national insurance benefits have usually had to rely on welfare benefits to top up their incomes to help with housing costs.

National help with the housing costs of low-income households was, until 1972, restricted to the unemployed, retired and other households that qualified for the basic welfare scheme. The actual housing costs for households, subject to maximum limits, were met by additions to the basic welfare scale rates, for households in all tenures.