A UK think tank has proposed reducing housing benefits for working-age individuals who are capable of employment but remain jobless, aiming to recover £2.5 billion annually for public finances by 2031-32. The recommendation is part of a broader plan to reform the country's social housing system, which the group says is currently unsustainable.

According to the report by Policy Exchange, housing benefit payments should be cut by 20% for those unemployed after two years and increased to a 40% reduction after four years without work. The think tank asserts that implementing this policy, alongside other suggested reforms, could generate total annual savings of £4.8 billion by 2031-32 and free up one million social homes over the course of a decade.

One notable proposal calls for the elimination of lifetime social housing tenancies, which constitute approximately 78% of all newly allocated social housing. Policy Exchange argues that such changes would address issues in a system burdened by long waiting lists and escalating costs.

Currently, the UK is projected to spend a record £39 billion on housing support in 2024-25, representing a 20% increase above inflation over the past ten years. Despite this spending, demand for social housing remains high, with 1.34 million households on waiting lists and just 263,000 new social lettings expected during the same period.

The report has received support from Helen Whately, the shadow work and pensions secretary, who has endorsed the call for reforms aimed at improving the social housing framework and reducing financial pressures on the public purse.

A government spokesperson responded by emphasizing the importance of lifetime tenancies in providing tenants with stability and security, stating that the government intends to maintain these protections and keep social rents affordable by repealing mandatory pay-to-stay rules. The spokesperson also highlighted ongoing welfare reforms designed to “end the culture of people being signed off and written off,” signaling a broader commitment to addressing employment and benefit issues.

As the debate continues, proponents of reform stress the need for measures that encourage employment and optimize housing allocation, while critics caution against changes that may undermine tenant protections and exacerbate housing insecurity.