Shifting subsidy from bricks and mortar to people: Experiences in Britain and West Germany

Since the early 1970s there has been a very similar shift in the balance of public spending on housing in Britain and Germany from general supply subsidies to demand subsidies (income related housing allowances and tax expenditures). This paper compares and contrasts the structures of those subsidy systems, the problems associated with them and current directions of change. Although there are close parallels in the shift of policy in both countries towards ‘targeting’ of explicit subsidies and in favour of greater profit‐making private provision, the environments in which this has occurred are very different. In particular, the lack of a functioning market for private rental housing in Britain—itself in part a function of tax and subsidy arrangements—severely limits the freedom of manoeuvre of British policy makers compared with their German counterparts.