Britain’s housing benefit bill is forecast to reach a record £38.8bn in 2026-27, according to Department for Work and Pensions projections.
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. It is also around 40% higher than in 2018-19.
The rise comes alongside continued pressure in the housing market, with more households relying on support through housing benefit or the housing element of Universal Credit.
Latest official data shows around 5.95 million people across England, Wales and Scotland are expected to receive housing support this year, up by 1.2 million compared with 2019-20.
The increase in spending has been linked to rising rents and a shortage of housing supply. Private rents have risen by around 35% since the start of the pandemic, according to the Office for National Statistics.
Housebuilding has also slowed, with completions falling to a decade low last year and planning approvals down by 27%, reaching levels last seen in the early 2010s.
Labour has previously pledged to increase housing delivery, including a target of 1.5 million new homes over 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 risked increasing the number of people remaining in receipt of assistance over the longer term, particularly where renters are unable to move into home ownership.
Lord Best said: “There are more people renting and fewer people buying their own homes.
“That is a very worrying long-term trend because by the time people get to retirement, their income halves but their rent keeps going up. So they’re on housing benefits before you know it.”
DWP expects the national bill will rise even higher to £40bn by 2030-31.
More than a third (35pc) of Britain’s housing benefits spend goes to landlords in the private rented sector, which makes up for the chronic national shortage of social housing.
A DWP spokesman 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.
“This comes alongside our wider welfare reforms which are set to save £1.9bn by the end of 2030-31, ensuring that the system supports people who genuinely need it, while delivering fairness to the taxpayer.”
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