Introduction

There are two main discussions that have taken place concerning the principles associated with subsidizing the housing costs of low-income tenants: is there a case for housing-specific subsidy; and if so, should that be directed at people or dwellings? There is a further question about whether subsidy should cover those in owner occupation. None of the issues are straightforward.

Within the housing literature there is general acceptance that housing-specific subsidies are necessary; in other words, we cannot solve the problem simply by modifying the income distribution or by regulation. Once this is accepted, a core element of the housing subsidy debate has been about whether it is better to use supply side subsidies to increase the provision of sub-market rental housing and to limit the rents charged or whether it is better to provide incomerelated demand side subsidies to help individual households pay for the housing they need. This debate has also been strongly linked to the more political question of how important the government's role (at national as well as local level) should be in providing the dwellings and setting the appropriate allocation principles. In other words, the debate is significantly a reflection of the post-war European experience of large-scale government ownership of housing.

Within the welfare literature, however, the discussion is more around how housing costs affect both the structure and cost of social security overall and therefore how they can impede more fundamental objectives. In the housing context, these objectives include how to ensure both an efficient market for housing and sufficient support so that households can afford adequate housing as well as the other necessities of life. As such the debate has tended to be more about affordability in the marketplace, although the issues are just as relevant in the context of mixed housing systems.

As noted in Chapter 11, the starting point in advanced economies has always been supply side subsidies because of the capacity to deliver to those in housing need. But as demand side subsides have become increasingly important, the issues become more intertwined with those of general welfare and income distribution as well as, more practically, the capacity to target assistance.