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Council housebuilding renaissance would save post-Brexit Britain billions 03/10/2016

Building 100,000 social rent homes a year would save the country billions whatever happens to the economy post-Brexit according to new research published today.

 

ARCH has come together with the National Federation of ALMOs (NFA), The Local Government Association (LGA) and SHOUT (the campaign for social housing) to commission research by City consultancy Capital Economics to assess the impact of future investment in social rented housing on the UK economy in the light of Brexit.

 

Analysing potential future direction for borrowing costs and economic growth, the new analysis Building New Social Rent Homes An Updated Economic Appraisal presents four scenarios for the economy post-Brexit ("Britain becomes Japan"; "Back to the 1970s", "Strong Economic Growth" and "Capacity Constraints"). The research finds that in each of the scenarios funding new social housing would deliver long term savings to the Government of up to £300 billion.

 

BuildingNewSocialRentHomes-infographic

 

Among its findings:


  • Investing in genuinely affordable new homes for rent will reduce the massive bill the taxpayer currently picks up in housing benefit - paying the rents of low-income households in the private sector. Over a 50 year period the saving would be between £100 billion and £300 billion;
  • The upfront cost to the Exchequer of building 100,000 new social rented homes a year would cost no more than two weeks' worth of current spending on the NHS;
  • Borrowing for investment in valuable physical assets is good for the economy and would be welcomed by the financial sector.

 

ARCH and the NFA, whose members manage more than one million council homes in England and Wales, and SHOUT's campaigners are calling on Theresa May's new government to invest in 100,000 new homes per year at genuinely affordable rents in the new economic environment following Brexit.

 

At a time when the LGA has warned that four million working people will no longer be able to find somewhere affordable to live by 2024, Hugh Broadbent, Chair NFA points out that:

 

"To complete a 100,000 new homes per annum housebuilding programme would only cost £7bn - the equivalent of two weeks' worth of spending in the NHS. But, in the long-run the return on this borrowing would deliver greater savings to the taxpayer and the economy. Critically the investment needed would be paid for through rental income and not from general taxation".

 

The experts at Capital Economics add:

 

"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."

 

Martin Wheatley, a leading member of the SHOUT housing campaign 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."

 

And Councillor Paul Ellis, Chair 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 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. Councils and ALMOs are up for the challenge, and are ready to play our part."

 

The findings of the report by Capital Economics follows the release of a report by the Housing Finance Institute (HFi) calling for regional local councils to be exempted from the High Value Asset Levy to be introduced under the Housing Act 2016.

 

ARCH will be raising the findings of the report with the Housing Minister when we meet on 12 October and will form part of the ARCH submission to the government in advance of the upcoming Autumn Statement. 

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