New research jointly commissioned by ARCH, the Local Government
Association (LGA) and the National Federation of ALMOs (NFA) finds
that a post-pandemic building boom of 100,000 new social homes for
rent each year would not only meet demand for affordable homes but
deliver a £14.5 billion boost to the economy - the equivalent to
over half of the entire annual economic performance of Birmingham -
new research reveals today.
The report, "Building Post-Pandemic Prosperity", warns
that rough sleeping, homelessness and sofa surfing is only likely
to increase in the coming months.
It estimates that spiralling council housing waiting
lists could be set to nearly double to 2 million
households next year as a result of the economic impact of COVID-19
with a large-scale social house-building programme by councils
offering a cheaper, safe and high-quality accommodation for
struggling families priced out of the private housing
As well as going a long way to meeting the Government's target
of 300,000 homes a year, the report says this would also help to
realise its ambition of levelling-up the country.
The pandemic has had a disproportionate health and financial
impact on already disadvantaged groups, with the most deprived
areas of England seeing mortality rates for COVID-19 double that of
the least deprived, while ethnic minorities have seen their
household incomes reduce by a larger percentage than those of white
The report says that social home building will enable the
Government's levelling-up agenda to target those communities in
greatest need, by providing low-cost quality housing.
It would also help rescue the country's ailing construction
industry, which is forecast to have lost 1.3 million worker-years
of construction by 2024, as a result of lockdown closing many
building sites, and social distancing impacting on those that have
been able to reopen.
The Government would save money, as every new council home built
would help to reduce the housing benefit/universal credit bill as a
result of taking the most vulnerable and in need families out of
expensive private sector and temporary accommodation and into
social rent housing.
ARCH has submitted the report to HM Treasury as part of our
submission to the Chancellor's Comprehensive Spending Review and we
will continue to work with the LGA and NFA to make the case for
Councils have an important role in rebuilding the national
economy after the Covid pandemic through building new homes for
social rent and the research shows that a programme of building
100,000 new homes for social rent each year will help the Covid
economic recovery and deliver long-term fiscal benefits.
During the lockdown, direct government spending was needed to
keep businesses afloat and workers in employment. Similar direct
intervention will be needed to establish and sustain the economic
recovery. In this economic emergency, effective fiscal loosening
requires emphasis on increased government expenditure rather than
Expenditure on new homes is a highly effective way to boost the
domestic economy - with little money lost to importing foreign
goods and services and benefiting a large number of small and micro
businesses right across the country.
Covid amplifies the need and demand for homes by families unable
reasonably to afford market rents or to buy. As Covid-related
income support schemes wind down, unemployment rises, and the
government ban on evictions is lifted, more families will be forced
to find cheaper accommodation.
Along with increased rough sleeping, homelessness and sofa
surfing, the number of households on council waiting lists is
expected to rise sharply. Both renters and homeowners will be at
risk if they are no longer able to meet their housing costs.
Building new homes for social rent will provide work for the
construction sector, much of which will be under-utilised, idle or
redundant because of Covid.
Building new homes for social rent is an effective and efficient
way to deliver fiscal stimulus. Building 100,000 homes for social
rent would support 89,000 jobs and add £4.8 billion in gross value
added to the construction sector.
Although councils could expect rental income of £346 million a
year from 100,000 social rent homes, they cannot fund substantial
homebuilding programmes from the rent receipts alone.
Investment in 100,000 council homes would yield a net present
value public sector surplus of £7.8 billion over 25 years and real
annual return to government of 3.8 per cent each year.
The full report 'Building post-pandemic prosperity' from
Pragmatix Advisory Limited is available together with a
summary of the findings.
Matthew Warburton, ARCH Policy Adviser,
"In helping the economy recover from the effects of the
coronavirus pandemic, it is essential that the Government targets
public investment where it will do most good. This research
provides compelling evidence that investment in council housing
should be given the highest priority."
The LGA is also urging the Government to use the Spending Review
to introduce measures that allow councils to resume their historic
role as major builders of affordable homes.
This should include reforming Right to Buy, so councils keep
receipts of homes sold under the scheme in full, as well as being
given the powers to set discount levels locally.
Cllr David Renard, LGA housing spokesperson,
"With the number of people on council housing waiting lists
set to double, it is absolutely vital that we build more housing
for social rent.
"Building 100,000 social homes for rent a year would bring
significant social and economic benefits, from tackling our housing
crisis and reducing rising levels of homelessness to wiping
millions off welfare bills and improving people's health and
wellbeing while alleviating the pressure on health and social
"We are urging government in the Spending Review to give
councils the powers to get building at scale again and deliver a
housing programme that can play a central role in the national
recovery from coronavirus."
National Federation of ALMOs Policy Director Chloe
"We can't stress enough the social and economic value
communities get from well-managed publicly owned
"All the evidence shows that councils and those who have
ALMO partners are perfectly placed to deliver the wrap-around help
- with finances, debt, health support, employment and
retraining - that so many will desperately need, alongside
sufficient good housing, as we recover from the pandemic
"This is why building more social housing will deliver such
outstanding value for public money."