The Government is well short of its target of eradicating child poverty. The Budget Statement included some limited Tax Credit measures to improve the chances of reaching the target. But for many years successive governments have been effectively profiting from local authority Housing Revenue Accounts by paying less in allowances than has been coming to the Treasury in rents. In 2009/10 the national rental income was £6.2 billion while the allowances to councils totalled only £4.5 billion – in effect a negative subsidy of £1.7 billion had been applied.

Given that almost by definition the poorer households in society are concentrated in local authority housing the negative subsidy arrangements are increasing rents and actively increasing poverty – or forcing an increased reliance on housing benefit with all its administrative errors and harmful impediments to entering the labour market.
 

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