The Department for Work and Pensions (DWP) is facing mounting pressure to control the rapidly escalating Housing Benefit expenditure, which has ballooned to an astounding £39 billion under the current Labour government. Projected figures indicate that DWP spending on housing support for benefit claimants will rise by £913 million to reach £38.8 billion in 2026-27—representing a staggering 40 percent increase since 2018-19.
In response to these soaring costs, Labour has pledged to build 1.5 million new homes over the course of this parliamentary term, aiming to alleviate the housing shortage that has been a key driver of benefit claims. As of February, there were 1.5 million active Housing Benefit claims.
Lord Best, co-chairman of the All-Party Parliamentary Group on Housing and and former chairman of the Affordable Housing Commission, highlighted the long-term implications of current trends. “More people are renting rather than buying their own homes,” he said. “This trend is alarming because as people reach retirement, their incomes typically halve while rents continue to rise—pushing many onto housing benefits.”
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The DWP forecasts that the national housing benefit bill will continue to climb, potentially hitting £40 billion by 2030-31. In light of this, Lord Best urges the government to prioritize increasing housing supply to reduce dependence on benefits and trim welfare spending. He stressed, “The root issue is the insufficient quantity of homes, primarily a result of inadequate housebuilding.”
Lord Best remains cautious about reaching the target of 300,000 new homes annually without significant policy shifts, describing the outlook as “pretty gloomy.” The high costs associated with land acquisition and construction often exceed what developers can recoup through sales, contributing to a stagnation in new housing projects.
A DWP spokesperson responded, stating: “We are fixing the broken system we inherited by tackling rising rents and the housing shortage through our commitment to build 1.5 million homes—the most significant investment in social and affordable housing in a generation. Alongside these measures, our wider welfare reforms are projected to save £1.9 billion by 2030-31, ensuring the system supports those who genuinely need it while maintaining fairness for taxpayers.”