03.10.16
Social homes investment urged as Javid promises ‘moral duty’ funding
Building 100,000 social homes a year would save up to £320bn, new research says as Philip Hammond and Sajid Javid are due to announce more investment for housing at the Conservative party conference today.
The research, conducted by City consultancy Capital Economics for the National Federation of ALMOs (NFA), the Association of Retained Council Housing (ARCH) and campaign group Social Housing Under Threat (SHOUT), urges the government to commit to a “steady build-up” to 100,000 new social rent homes annually by 2022-23.
The chancellor and the communities and local government secretary will promise a £5bn fund for building new homes today, but with no commitment on social housing.
Cllr Paul Ellis, chair of ARCH, said: “For some time large parts of the country have experienced a housing crisis, and it is increasingly obvious that positive action needs to be taken sooner rather than later. Innovative ideas from several councils and their partner ALMOs [arm’s length management organisations, which manage council housing for councils] have already shown we are more than capable of being part of the solution, and we want to do more.
“In addition to increasing Britain’s housing stock by more than four million homes over 50 years, a council led house-building programme would go a long way to help families who are being priced out of the market. 2024 will be here before we know it – councils and ALMOs are up for the challenge, and are ready to play our part.”
The LGA said recently that a ‘renaissance’ in council housebuilding is the only way to meet the growing demand, with up to 5.4 million people thought to be in need of affordable housing by 2024.
A recent report by the Resolution Foundation found that home ownership has dropped by 14.5 percentage points in Greater Manchester and 13.5 in Greater London.
Hammond and Javid are planning to announce a £3bn Home Building Fund to help small firms build 25,000 new homes by 2020 and up to 225,000 in the longer term.
Hammond will say: “There has been a housing shortage in this country for decades, and this government is determined to take action to tackle it.”
Moral duty
Javid is expected to state that tackling the housing crisis is “a moral duty” in which central and local government, businesses and communities should all play their part.
The ministers will also announce a £2bn loan fund to pay for a further 15,000 new homes by 2020 on surplus public sector land with extra cash.
A recent National Audit Office report found that a scheme to release public sector land has freed just 5-8% of the land needed to meet its goals by 2020.
Earlier this year, a PSE Freedom of Information request found that the Right to Contest, a scheme designed to allow members of the public to request that surplus government-owned land be put up for sale, had led to just six sales since it was introduced in January 2014.
The Capital Economics research urged the government to fund the new social housing by borrowing between £6.6 and £7bn.
Hugh Broadbent, chair of the NFA, pointed out that this was “the equivalent of two weeks’ worth of spending in the NHS”.
Capital Economics said: “Not all borrowing is the same. It would be quite right to be concerned about an increase in public debt in order to fund the day-to-day costs of public services. Borrowing to invest or save, as for this policy, is prudent however and would likely be welcomed rather than met with alarm.”
Hammond has already indicated he will not set a new date for eliminating the deficit after his predecessor, George Osborne, abandoned the commitment to do so by 2020.
There will be more information about the government’s planned investments in the Autumn Statement, which will take place on 23 November.
Prime minister Theresa May has pledged to trigger article 50 by March 2017, meaning the UK will leave the EU by March 2019.
She has also said the government will repeal the 1972 European Communities Act, which makes EU law binding in Britain, and transpose EU legislation into British law which future governments could then repeal.
The Capital Economics research tested the social housing investment against a number of scenarios following a UK exit in 2019.
In a low-growth scenario, where there is a recession in 2019-20 and new trade deals do not begin until 2031-32, the new housing would deliver £102bn savings over 50 years. With high growth, where new trade deals are negotiated quickly, it could save £319bn.
Martin Wheatley, a SHOUT campaigner, said: “This research shows that public investment in lower rent rental housing can and should be central to Theresa May’s ambition to help those families who are ‘just getting by.’
“As well as providing a secure home at a rent households can afford, such investment would save the taxpayer billions in the long term. Support for a council housebuilding renaissance, alongside development by other social landlords and the private sector is critical if the Government is to achieve its ambitions for 200,000 or more new homes per year.”
Separately, the Institute for Government (IfG), Institute for Fiscal Studies (IFS) and Chartered Institute of Taxation (CIOT) have written to Hammond urging him to use the Autumn Statement to “establish clear guiding principles and priorities” for tax reforms to avoid “forced U-turns”.
(Image c. Foreign Office)
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