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Making the argument for social housing Matthew Warburton - 31/05/2013

osbo_300On 26 June, Chancellor George Osborne will announce the outcome of the Government's Spending Review, which will set the parameters for public spending for the remainder of the current Parliament. Organisations across the housing industry are lining up to persuade the Chancellor to provide for more social housing to help boost the economy, meet housing need and contain the future benefit bill.

Last week, the Local Government Association's submission restated the case for removing council debt caps to allow councils to build more homes. This week, CIH, the National Housing Federation and the G15 group of London housing associations joined forced to press for an additional £2 billion in grant in 2015/15 to fund up to 65,000 additional social homes. CIH also added its voice to the call for removal of council debt caps. Inside Housing simultaneously launched its own Grant Britain Homes campaign to lobby for more social housing.

The Government is resistant to demand for additional spending - which implies extra Government borrowing - at a time when its overriding priority is reduction of Government borrowing. The housing industry's counter argument is that more investment now will be more than repaid by savings later.

Extra spending on grant, or allowing councils to borrow more in the short term, will not just help boost the economy but, by enabling more tenants needing benefit to be housed in social rather than private housing, yield substantial and lasting savings in spending on benefits.

A similar argument can be deployed to make the case for housing associations to be funded to provide housing at social rents rather than "affordable" rents up to 80% of market value. Research carried out by London & Quadrant and Price Waterhouse Coopers on costs in London shows that the Government could save £5 billion over 40 years by providing £60,000 grant per home to enable them to be let at social rents, compared with £22,000 grant for homes to be let at 80% of market rents.

Some in the housing industry may already feel that the case for more investment in social housing is overwhelming. Others may argue that the political dynamic makes it impossible for the current Chancellor to take any step that could be construed as a u-turn, no matter how compelling the arguments for it. But it would do no harm to the argument to explore in more detail the future savings to the taxpayer that could derive from allowing councils to expand provision at social rents.

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