Northern economy threatened by housing changes

One of the most consistent themes on Red Brick has been to highlight the economic benefits of housing investment.  The strong multiplier effect means that there are much wider benefits than just the original investment.  And in terms of deficit reduction, housing investment tends to pay for itself by creating employment and reducing benefit requirements.

These lessons are well rehearsed in a report published by the Northern Housing Consortium, researched and written by Sheffield Hallam University, which analyses in detail the impact that housing organisations (housing associations, councils and ALMOs) have on the economy of the north, both in terms of their day to day activities and their investment activity.

Based on surveys of organisations managing over 1 million dwellings (over 90% of the north’s social housing), who built more than 8,000 homes in 2011/12, the report estimates that they had net income (mainly rents and fees) of over £6,000 million, spent over £121 million on community investment, £1,373 million on refurbishment, £1,227 million on repairs and maintenance, and £834 million on direct employment of staff.  About two-thirds of construction spending was retained in the north.  Sheffield Hallam estimate that the organisations supported a total output of £10,269 million in the north and 116,900 full time jobs.

The report assesses the future outlook for the organisations and the beneficial economic impact they have, and highlights a number of major risks:

  • Welfare reform – especially the bedroom tax, which will affect 240,000 tenant households in the north, and direct payments, which could increase rent arrears from 3% to 7% of the total rent roll.
  • The ‘affordable rent’ programme, which is reducing grant input to development in the north, requiring a higher level of borrowing to fund schemes and raising rents (the relationship between social rents, affordable rents, and market rents is a major issue in the north).
  • Concerns over Supporting People funding which is estimated to provide 2% of organisations’ income and which is used directly to support tenant services.
  • More positively, council housing finance reform is making more money available for investment although some authorities with a ‘decent homes’ backlog face serious risks.
  • And the Localism Act 2012 may provide new opportunities for organisations to deliver public services.

As the number of people employed by housing organisations in the north is as high as the number employed in car manufacturing and call centres combined, the report demonstrates that the Government’s stated policy that it wants to balance growth throughout the economy and encourage more activity in the north could be seriously undermined by its policies towards the housing sector.

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2 Responses to Northern economy threatened by housing changes

  1. Pingback: You can’t borrow your way out of a debt crisis. Well, yes we can. | Red Brick

  2. Thomas Dean says:

    So called affordable housing ain’t affordable. Above inflation rent rises have pushed rent levels up and up and up. Affordable rents up 26%, NMW up just 8%.

    And when rent takes up a greater proportion of legitimate earned income, one is inclined to live on the dole. So dole it is.

    And if they cut they dole, get ready to up it. Although new prisons are halving prison costs. £20k/year is still more than £6.5k a year in dole. So start providing 19k/year jobs and let people benefit from working an enrich society, or expect tactics of Duraz youth movement to be employed over here, where the aim will be – to be caught and jailed.

    Income tax should be abolished, and the fruits of a man’s labour should be his own.

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