In July, Shelter published research by Savills on the financial impact of writing off the debt currently owed by council housing revenue accounts, which currently stands at £31.8 billion. Savills estimate that a full write-off could release the financial capacity to build 280,000 new social homes for rent.viously reported the results of research commissioned by Shelter from Savills, which shows that cancelling outstanding debt on council housing revenue accounts would release the financial capacity to build 284,000 new council homes.
Shelter have now released the findings of further research into the economic and fiscal impact of writing off this debt, carried out by Pragmatix Advisory. Pragmatix modelling confirms that cancelling HRA debt is broadly fiscally neutral; it is largely a series of inter-government transfers, involving cancelling debt that the public sector owes to itself. Combining this with the necessary public investment for councils to build 284,000 social rent homes over 10 years:
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Pays for itself within 20 years and generates a net benefit of £135.4 billion to the economy over 60 years.
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Delivers £411 billion of economic outputs over 60 years, supporting 2.5 million jobs.
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Government departments see savings of £64.7 billion, including £26.3 billion for the Department for Work and Pensions.
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Cuts the number of households in temporary accommodation (TA), currently at over 135,000 households, with savings to councils eventually hitting £672 million a year as households move out of TA.
Debt cancellation and delivering 284,000 social rent homes over the next decade – in addition to planned delivery under the current SAHP – is also compliant with the government’s ‘investment rule’, using around 56% of the current ‘headoom’. Shelter will argue in a forthcoming policy report that to make the necessary scale of social housing investment a more likely and attractive prospect, the government must change public borrowing rules to treat the loans and grants required to build social housing as an investment rather than as a financial burden.