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Building post-pandemic prosperity – the case for council housing 16/11/2020 Labelled as Development, Scrutiny, Finance

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 market. 

 

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 citizens. 

 

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 council housing.

 

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 tax cuts.

 

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, comments:   


"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, said: 


"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 care. 


"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 Fletcher said:  


"We can't stress enough the social and economic value communities get from well-managed publicly owned housing. 


"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 fall-out.  


"This is why building more social housing will deliver such outstanding value for public money." 

 

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