New research for SHOUT, the campaign for social housing, and a *coalition of agencies, shows that the case for investing in social housing remains very strong despite the decision to leave the European Union.
Last year, SHOUT and others* commissioned analysis from economic researchers Capital Economics to show what would happen to the economy if the Government invested in 100,000 new social rented homes each year. The research showed much better value outcomes for taxpayers in the long term as well as improved living standards for so many households.
The new analysis looks at the outcomes if we have an economically ‘good’ or ‘bad’ Brexit, assessing four different scenarios for what might happen to growth and interest rates. In the initial years of such a programme the incremental housing benefit savings and new tax receipts will be less than that needed to fund the government’s contribution to the new homes – so additional borrowing will be required. But over 50 years it would generate material savings to the Exchequer, ranging from £102 billion to £319 billion (in today’s prices).
Building 100,000 new homes for social rent each year would boost employment and domestic demand at a time when the economy is likely to be weaker. Of the alternative ways of boosting infrastructure investment, housing has the clear advantage of generating income through the rents tenants pay, which at the least cover the costs of management and maintenance of the new assets. In addition to having the direct benefit of 4 million new homes over the next 50 years, the programme would benefit all age groups and lead to significant improvements in wellbeing, health, educational attainment and ability to access work.
The short term increase in borrowing that would be required to fund the programme is estimated to be between £6.5 and £7 billion. This is equivalent to two weeks’ spending on the NHS (or less than a month’s worth of the supposed savings from leaving the EU claimed by the Brexit campaign).
Capital Economics commented:
“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.”
SHOUT campaigner Martin Wheatley 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 house-building 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.”
*The research has been commissioned by ARCH (which represents Councils that have retained their council housing stock), the Local Government Association, the National Federation of ALMOs, and SHOUT.
Follow SHOUT at @4socialhousing