IT will cost Government £12.8 billion a year for the next decade to fix the housing crisis, claims new research; the cost of doing nothing is insurmountable and may even tear the country apart.
That almost apocalyptic note came from Terrie Alafat CBE, chief executive of the Chartered Institute of Housing (CIH), as she gave her welcoming address, officially opening the organisation’s conference and exhibition in Manchester this morning.
Britain – and England in particular – is a nation fractured by divisions, some exacerbated by Brexit, others that have long bubbled under the surface – age, class, race, gender, region – but a worsening housing crisis threatens to widen these cracks, she suggested in her speech. However, housing can go a long way to heal the country’s divisions.
“Our housing system is failing all of us,” she said. “Housing has the power to heal the divisions that risk breaking our whole nation apart. Brexit has so dominated the political agenda that there is a real risk of housing, along with other crucial issues, being squeezed out – we cannot allow that to happen.”
The research Alafat introduced this morning was put together by a coalition of organisations, including CIH but also taking in the National Housing Federation (NHF), Shelter, Crisis and the Campaign to Protect Rural England (CPRE). It is claimed to offer the keys to resolving the housing crisis in England – but only if ministers are prepared to invest in delivering social housing at scale.
That means investing £12.8 billion a year for the next decade, according to the research. This will kickstart a nationwide housebuilding programme delivering around 1.5 million social homes for rent and shared ownership properties to buy. In turn, this would stimulate the economy and help more buyers get on the housing ladder, while also providing homes that are genuinely affordable for people to rent. As such, millions of people would no longer be stuck in inappropriate homes or on the streets.
“Our national housing crisis is spiralling out of control and demands urgent attention,” said Alafat. “It creates a terrible cost in terms of both social instability and wasted money. But this research shows it doesn’t have to be like this. There is a solution; a solution that would add billions to our national economy and help millions of our fellow-citizens build stable lives and strong families in sustainable communities.”
Ministers – the Chancellor of the Exchequer especially – may baulk at the multi-billion pound sum but the organisations behind the research claim the investment will bring significant social and economic benefits for the country. And such high levels of spending on genuinely affordable housing is hardly anything new, historically speaking.
By investing £12.8 billion per year, in today’s prices, the coalition argues that the Government would take spending levels back to those last seen under Churchill’s government in the early 1950s, when enough homes were being built to meet the country’s needs.
The coalition further argues that a stimulus from the Government is the only way to solve the housing crisis, since the private market alone cannot build the quantities or types of homes the country needs.
Over the course of 10 years, this Government investment would amount to £146 billion, including inflation. This would cover about 44% of the total cost of this construction boom, unlocking the rest of the money which can then be raised from other sources.
The research also finds that investing in new homes would add £120 billion to the economy each year, through the creation of local jobs in construction and other industries across the country. Effectively, every pound spent by the Government would generate at least £5, boosting the economy in a “balanced and sustainable” way.
It would also reduce the Government’s benefit bill over the course of the decade. Last year, the Government paid £22.3 billion in housing benefit, a significant amount of which went to private landlords to help cover rent for millions of low-income tenants. By moving many of these tenants into social housing, it is argued, the Government would need to spend less on housing benefit over time, and so could save taxpayers tens of millions of pounds every year. This would also allow more people to build a solid foundation for their lives in social housing, aiding social mobility.
“The steep decline in social housing is at the core of the housing emergency that now effects so many. Social homes are what this country wants and what it needs – they are the best solution to the problems we face and an opportunity to unite the country,” said Polly Neate, chief executive of Shelter.
“Successive governments have failed to build social housing — while homelessness spirals and half of young people will never be able to buy. Now is the time to act for the millions of people trapped in housing poverty, and invest real resources where it matters most.
“Charting a course to build a new generation of social homes must be a key test for whoever walks through the doors of Number 10. The race to eradicate homelessness and provide millions with a stable home, is a race that every politician should be trying to win.”
Jon Sparkes, chief executive of Crisis, added: “Right now, thousands of people across England are finding themselves on the brink of homelessness or are already experiencing it, in large part because of our huge shortage of social housing.
“The good news is we know it doesn’t have to be this way – and we know why this situation must change urgently. Homelessness has devastating effects on people’s mental and physical wellbeing that no one should have to experience. This can’t go on.
“Ultimately Government must invest in the number of social homes we need. Not only will this save the country millions of pounds in the long term, it will help us end homelessness once and for all – something we can’t afford to put off any longer.”
Last year the Government spent £1.27 billion on affordable housing, making housing one of the smallest government budgets, down 70% on 2010 levels. As a result, far fewer social rented homes are being built. In 2017/18, just 5,400 were built, compared to almost 36,000 in 2010/11 before funding was cut.
According to the coalition, the “chronic under-investment” in housing has led to a 169% increase in rough sleeping, while the number of households in temporary accommodation is at a 10-year high. What’s more, 1.3 million children are currently living in poverty in expensive privately rented accommodation, while many young people are stuck at home with their parents, unable to build an independent life and start families of their own.
“Everyone needs a secure, stable and affordable place to live, but right now there are more than 170,000 families in rural communities, who are on social housing waiting lists. At the current rate of building, it would take 130 years just to meet this backlog,” said Crispin Truman, chief executive of the CPRE.
“Just like our towns and cities, communities in the countryside need a healthy mix of homes in order to prosper, including homes for social rent. These offer long term stability to families on lower incomes in rural areas, where life is more expensive, and work can often be insecure and seasonal. They allow people to put down roots and plan for the future.
“Councils and housing associations can play a key role in building the homes the nation needs, but only if they are properly funded. This investment in homes for social rent and other low-cost tenures would help to guarantee the future prosperity of our rural communities, and society as a whole.”
Kate Henderson, chief executive of the NHF, said: “The housing crisis is an economic, social and human catastrophe,” said. “But it can be solved. And now, for the first time, we know exactly how much it will cost. By investing £12.8bn in affordable housing every year for the next decade, the Government can ensure millions of people have a stable and affordable place to live, at the same time as strengthening the economy across the country.
“By investing this money in affordable housing at the upcoming spending review, the Government can help families all across the country to flourish. They can help children get out of poverty, give young voters a foot up on the housing ladder and help out private renters who have to empty their bank account every month.
“As well as being the right thing to do, investing to end the housing crisis also carries huge economic benefits. It will advance the country’s productivity, boost its economic growth and lower the benefit bill over time.”