Budget 2010: Housing investment must continue

Despite the £38bn spent on decent homes which improved hundreds of thousands of council homes, many of the worst estates continue to be untackled.

Our guest writer is Jon Cruddas, Labour MP for Dagenham

The last 13 years has seen an unprecedented level of investment from this Government in housing. This has taken the form of funding to councils for decent homes work to their existing housing stock and grant to housing associations (and latterly and most welcomely, councils) for new affordable homes.

And yet, despite the £38bn spent on decent homes which improved hundreds of thousands of council homes, many of the worst estates continue to be untackled, condemning families to conditions which blight their lives. Even though increased investment went to new affordable homes, waiting lists have lengthened. The moral as well as social and economic case needs to be made now for maintaining public investment in housing throughout the next Parliament.

In doing so we need to understand the lessons from successes won to avoid repeating the mistakes of the sixties and seventies in building mono tenure estates, concentrating poverty and lack of aspiration that has contributed to the residualisation of council housing. We also don’t want to see gated private developments that mushroomed in the nineties. The ethos set out by John Prescott of wanting to see thriving mixed tenure communities was surely right and seems to work in practice.

The approach and policy positions adopted by John Healey have been welcomed throughout local government and must be sustained. His proposals to reform the Byzantine Housing Revenue Account system are long overdue and it must be hoped that these will come to fruition as soon as possible. The other initiative, to allow councils to be able to access from the Homes & Communities Agency National Affordable Housing Programme grant and the LA new build programme money means that councils have started to be able to resume house building programmes alongside housing associations on an equal footing.

In the run up to the General Election there has been lots of talk about localism – even from a party that abolished democratically elected regional councils such as the GLC, introduced rate capping and foisted the Poll Tax on us all. We should trust councils to continue and step up their programmes to build new homes. This would give a real fillip to strengthening local accountability for services. Many have developable land which can be used and most certainly have the local needs to be met. They will also have begun to build the skills base to design and plan development.

In terms of value for money it makes sense for councils to take this role as there would be no land cost involved and they can borrow at lower rates than housing associations and private developers. With much lower levels of grant from HCA than has been funding affordable housing programmes over the past decade and more, new council house building would be financially sustainable. Mixed tenure schemes could be produced with new council social rented housing alongside market and intermediate tenure homes.

As well as the social benefits there are significant economic arguments in favour of sustaining home building programmes. Every £1 spent on construction generates £2.84 in total economic activity and also produces 56p in tax and benefit savings.

The case needs to be made vigorously now because the pressure to cut the public expenditure programmes will surely be intense post the General Election and to date no one has said that housing investment will be protected.

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14 Responses to “Budget 2010: Housing investment must continue”

  1. House Of Twits

    RT @leftfootfwd Despite Labour's huge council housing investment, many estates remain untackled: http://cli.gs/NWWaS

  2. topsy_top20k_en

    Despite Labour's huge council housing investment, many estates remain untackled: http://cli.gs/NWWaS

  3. Ellie Gellard

    RT @wdjstraw Jon Cruddas writes for @leftfootfwd: Housing investment must continue http://cli.gs/NWWaS

  4. Clifford Singer

    RT @leftfootfwd Budget 2010: Housing investment must continue http://cli.gs/NWWaS

  5. Ben Folley

    Jon Cruddas says more council housing will stimulate growth, increase tax revenue and save benefits http://bit.ly/cxrHHN via @leftfootfwd

  6. uberVU - social comments

    Social comments and analytics for this post…

    This post was mentioned on Twitter by leftfootfwd: Despite Labour’s huge council housing investment, many estates remain untackled: http://cli.gs/NWWaS

  7. House Of Twits

    RT @leftfootfwd Budget 2010: Housing investment must continue: http://cli.gs/NWWaS says Jon Cruddas

  8. Graeme Kemp

    We desperately need more housing – and that means building more homes. The only problem is the NIMBY tendency in ‘nice’ areas.

  9. Mellie Agon

    The only thing standing in the way of more housing is ideology. The solution is obvious – we need more social housing, so the government should invest and build it. The only reason they don’t is this Thatcherite crap about private ownership and against state spending. Given that neo-liberalism, which has also been pursued by New Labour, has dumped us in the worst crisis since 1929, it is high time this dogma is abandoned in favour of rational, social solutions.

  10. Nelson Pang

    Nelson Pang read, Budget 2010: Housing investment must continue | Left Foot Forward http://bit.ly/9x0Dvt

  11. Mash Bonigala

    Budget 2010: Housing investment must continue | Left Foot Forward http://bit.ly/abVhWH

  12. Tribune

    RT @leftfootfwd: Budget 2010: Housing investment must continue: http://cli.gs/NWWaS says Jon Cruddas

  13. Michael Burke

    There have been 329,000 construction jobs lost in the recession, and brickmaking capacity has been closed down. It amkes sense for the public sector to stop thi huge waste; and it can generate a surplu in the process.

    The private sector can’t or won’t invest in housing now. Normally, the aim wold be, say to build a house costing £100,0000 and would be sold at £120,000. But the developer cannot be sure of the £20,000 profit, so won’t invest currently. Renting likewise; interest costs of around £10,000 (at 10%) exceed the likely rent, say £6,000. But governemnt, through LAs or directly, can build the same quality house for far less as it would get around £30,000 back in income taxes from the builders a well as the VAT back on the materials. Total net cost to government is therefore closer to £66,000. It could then sell that for £100,000 and use the surplus to reinvestment or pay down debt. Better yet, its costs of borrowing are currently below 4%, so the interest payable on the £66,000 net cost is just £2,640. It could rent out the property at £5,000 and still make a positive return way in excess of its borrowing costs. Again, this surplus could either be used or further investment or paying down the debt. It would also save money a large sum, as builders come off the dole.

    Action on housing is urgently required.

  14. Budget 2010: What progressives want | Left Foot Forward

    […] Jon Cruddas MP called for investment in housing to continue including trusting “councils to continue and step up their programmes to build new […]

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