A report by the Local Government Association has found that building 100,000 government funded social rent homes a year would have saved the government billions on housing benefit while reducing rents for tenants and generating wider economic returns.
Analysis found that in the 20 year period tenants would have seen a disposable income increase of £1.8 billion.
To build the homes over the 20 years the government would have had to borrow £152 billion in 2017 prices but for every pound borrowed the government would get a £2.84 return. This would be in the form of additional tax revenue from the building industry as well as savings in housing benefit. This is a long term profit of £280 billion.
Many have accused the current government of doing nothing to solve the housing crisis. Affordable house-building is at a 24-year low. Labour have committed to building at least 100,000 council and housing association homes a year for genuinely affordable rent or sale.
The government did finally listen to the local government association by
scrapping the housing borrowing limits, that hampered the ability of councils to invest in new and existing homes, in the latest budget but further flexibility could lead to increased house building.
Cllr Martin Tett, LGA Housing spokesman, said:
Every penny spent on building new social housing is an investment that has the potential to bring significant economic and social returns.
“Now is the time to reverse the decline in council housing over the past few decades. This is the only way to help families struggling to meet housing costs, provide homes to rent and reduce homelessness while also providing economic growth and lowering the housing benefit bill.
Talking about the report, Labour’s Shadow Housing Secretary John Healey, said it “showed the huge cost of Conservative Ministers’ disastrous decision to slash funding for new social housing”.
“Deep cuts to investment mean the country is now building 30,000 fewer social rented homes each year than we were with Labour, with higher rents for households and a higher housing benefit bill as a result.
He said a Labour government would build a million low-cost homes over ten years, including the biggest council housebuilding programme for nearly 40 years.
Problems with housing stem back long before the current Conservative administration but both Cameron and May have done nothing to solve the housing crisis.
1 in 10 live in a council house today, this is compared to over 1 in 3 in 1997.
The number of homes built for social rent each year has fallen from over 40,000 in 1997 to 6,000 in 2017. When viewing these statistics we should bear in mind New Labour did not have the best record on housing policy. Many would argue you would have to go back to the government of Harold Wilson to see a government with a real commitment to building social housing.
The loss of social housing has been partly responsible for the rampant rise in house prices and has led to more and more individuals and families finding themselves pushed into an often more expensive and less secure private rented sector to find housing.
More social housing would also help reduce the number of homeless citizens.
Polly Neate, chief executive at Shelter, said:
As well as cutting the benefit bill and driving down homelessness, a stable supply of social housing would be a national asset. It would give a step up to families struggling in expensive and unstable rented accommodation, enabling them to put down roots and plan for the future. Children could stay in the same school, support networks and communities could flourish and society as a whole would be better off.