The UK’s housing benefit bill is expected to reach a record £38.8 billion in 2026-27, according to estimates by the Department for Work and Pensions.
The figure represents an increase of £913m on the previous year and is the highest level in real terms since comparable records began in 1970. This is approximately 40% more than in 2018-19.
This increase comes with continued pressure in the housing market, with more households relying on support through housing benefit or the housing element of Universal Credit.
The latest official figures show that around 5.95 million people in England, Wales and Scotland are expected to receive housing support this year, 1.2 million more than in 2019-20.
The increase in spending is linked to rising rents and a shortage of housing supply. According to the Office for National Statistics, private rents have increased by almost 35% since the start of the pandemic.
The pace of house building has also slowed, with completions falling to a decade low last year and planning approvals falling by 27%, reaching levels not seen in the early 2010s.
Labor has previously promised to increase housing delivery, including a target of 1.5 million new homes in the current parliament, but construction figures have yet to recover.
Lord Best, co-chair of the All-Party Parliamentary Group on Housing and former chair of the Affordable Housing Commission, said supply constraints were contributing to higher rents and greater reliance on housing support. He said this risks increasing the number of people remaining on assistance in the long term, particularly where renters are unable to move into home ownership.
Lord Best said: “More people rent and fewer people buy their own homes.
“This is a very worrying long-term trend because by the time people reach retirement, their income has halved but their rent keeps going up. So before you know it, they’re on housing benefit.”
The DWP expects the national bill to rise even further to £40 billion by 2030–31.
More than a third (35 percent) of UK housing benefit spending goes to landlords in the private rented sector, filling a chronic national shortage of social housing.
A DWP spokesperson told the press: “We are fixing the broken system we inherited by tackling rising rents and the housing shortage with our commitment to build 1.5 million homes – the biggest boost to social and affordable housing in a generation.
“It comes alongside our wider welfare reforms which are set to save £1.9 billion by the end of 2030-31, ensuring the system supports those who really need it, while delivering fairness to taxpayers.”