About the IFS

The Institute for Fiscal Studies was founded in 1969. Established as an independent research institute, IFS was launched with the principal aim of better informing public debate on economics in order to promote the development of effective fiscal policy. Through the establishment of rigorous independent research, for example the IFS Green Budget and Post Budget analysis, IFS successfully opened up debate about public policy to a wider audience and influenced policy decision making.

Today, IFS is Britain’s leading independent microeconomic research institute. Its research remit is one of the broadest in public policy analysis, covering subjects from tax and benefits to education policy, from labour supply to corporate taxation. Our research not only has an impact on policy makers, think tanks and practitioners, it has also gained a worldwide reputation for academic rigour, and contributes to the development of academic scholarship. We communicate our research widely on a national and international scale, providing independent advice to policy makers in the UK, Europe and in developing countries; collaborating with world renowned academics on new economic theories and techniques; and disseminating our research globally through the press, media and the web.

IFS is host to the ESRC Centre for the Microeconomic Analysis of Public Policy which analyses fiscal policy to determine its effects on households and companies. The Centre’s work covers the full extent of policy impact, investigating the ways in which policies influence human capital investments, work and occupational choice, firm behaviour, saving and retirement decisions, consumer choices and the public finances.


The vast and growing housing benefit bill

At over £25 billion, housing benefit is one of the biggest and fastest-growing parts of the welfare bill. About half of people living in rented accommodation get some housing benefit. 

So what is housing benefit and why are we spending such vast sums on it?

Paul Johnson, director of the Institute for Fiscal Studies, recently presented an episode of BBC Radio 4's Analysis series that looked at exactly these questions. Broadcast on 21 September 2015, the programme examined the history of housing benefit and the reasons why it represents a substantial proportion of the welfare budget today.

An accompanying article on BBC News online gives further background and context. Paul Johnson explains that housing benefit is a means-tested benefit paid to people on low incomes. For tenants in council or housing association properties it will usually cover their whole rent if they have no other income. For many of those in the private sector it will not pay the whole rent even if they have no other income. Housing benefit is withdrawn as income rises, but an increasing number of people in work claim at least some housing benefit.

He looks at how the housing benefit bill has increased as private rents have gone up, and concludes: "In the end the problem is with the whole of housing policy, not just with the housing benefit system. We urgently need to build more houses, public and private. But we also need a radical overhaul of the way we tax housing and approach housing policy more generally."

An opinion piece by Paul Johnson in the The Times (£) gives more detail - the failure to build more houses, both public and private; the misallocation of housing and how the tax system encourages people to hold onto what they have; and the huge benefit of homeownership but the difficulty for young people to get onto the ladder.

"At root the spiralling bill is the result of failures elsewhere and can only be tackled by dealing with those failures. It is the price we are paying for making such a mess of the rest of housing policy," he says.

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