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Build new homes – boost economic growth Matthew Warburton - 15/06/2012

red houses 300Of the many interesting things I learned at the CIH Conference this week, three have stuck in my mind. The first is the claim made both by Housing Minister Grant Shapps and Sir Bob Kerslake, now apparently Head of the Civil Service as well as DCLG, that the Prime Minister and Chancellor are now both focused on the potential of housing to make a major contribution to lifting Britain out of recession.

If so, it is the first time in a generation that the housing industry is pushing at an open door for a hearing. The second was Grant Shapps' answer when asked to say how he would put the case for housing in the forthcoming CSR: building 100,000 new homes, he said, adds 1 per cent to GDP.

The third appeared on a slide presented by Steve Partridge of CIH in a session on the future of council housing; the headroom made available to councils in the self-financing settlement would enable them, if they chose, to build over 20,000 new homes, with the potential for many more if debt ceilings were lifted and councils allowed to borrow within prudential limits.

Taken together these point to the conclusion that councils with housing could play a really important role in reviving the national economy, both by building new homes to relieve housing need, and by improving the existing stock. Government could enable them to do more by lifting debt caps and in other ways, but there is no lever that central government can pull to require councils to invest and build.

Quite rightly, that is now a matter for local discussion and decision involving councils, their tenants and local people. Realising the full potential of self-financing for new development would require 167 separate decisions by individual councils.

Steve Partridge, in the conference session mentioned above, described the current situation as a pause for breath, almost like the months between the declaration of war against Germany in 1939 and the invasion of France in 1940.

Not quite the analogy needed here, but you can see what he meant. The self-financing settlement was successfully signed off in March - a declaration of peace rather than war perhaps. Many councils found themselves better off than they had been expecting given the borrowing deals available at PWLB.

But firm decisions have not yet been made everywhere about how to use the new resources made available. To those councils which have not yet firmed up their investment plans I have this message - think hard about the economic impact.

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