Balls: £6bn extra should be invested to build 100,000 more affordable homes

Labour leadership candidate Ed Balls will call for an additional £6 billion to be invested to build 100,000 more affordable homes, arguing that the government should use half of the £12bn windfall to the public finances in recent months to fund the rapid expansion in house building.

Labour leadership candidate Ed Balls will today call for an additional £6 billion to be invested to build 100,000 more affordable homes, arguing that the government should use half of the £12bn windfall to the public finances in recent months to fund the rapid expansion in house building. Mr Balls will say the plan will create hundreds of thousands of private sector jobs, boost economic growth and tackle the urgent shortage of decent affordable housing.

Treasury figures (July 2010) show actual borrowing in 2009/10 of £155bn – £12bn lower than Alistair Darling’s March Budget forecast of £167bn and £20bn lower than the 2009 forecast of £175bn. Together with matched funding from housing associations, National Housing Federation figures suggest £6bn will see an additional 100,000 homes built – generating up to 750,000 jobs.

Mr Balls will unveil his plan alongside former Mayor of London Ken Livingstone, shadow housing minister John Healey and shadow employment minister at an event in central London tonight on ‘How Labour should respond to the housing crisis’.

He will argue that instead of raising VAT on the repair, maintenance and improvement of housing to 20 per cent from January, a temporary rate of 5 per cent should be created, cutting costs for households and creating thousands more jobs, insisting that in the short term this could be paid for by part of the remaining £6 billion windfall.

In an article for Labour List yesterday evening, Mr Balls wrote:

“There can be no doubt that the extra homes are needed. With four and a half million on housing waiting lists and two and a half million in overcrowded accommodation, more affordable homes would meet an acute social need.

“Since Alistair Darling’s March Budget – thanks to our economic recovery plan – tax revenues have been higher and spending on welfare and unemployment lower than predicted. The public finances are around £12 billion healthier than forecast at the time of the Budget.

“The coalition wants to use that extra money to pay down the deficit faster. I think that at a time when the economy is still so fragile and other countries are already tipping back into recession, we should instead use that money to boost construction jobs and build new homes.”

Ken Livingstone, meanwhile, has said:

“I very much welcome the proposals Ed Balls has set out to invest in house-building both to build much-need more affordable homes and to stimulate the economy so that we invest our way through this difficult economic situation rather than slashing services and endangering growth.

“In London we need to break the back of the housing shortage but Boris Johnson has watered down measures to guarantee more affordable homes and has been inactive and uninspiring in the face of London’s housing challenge. Government cuts will make this even worse.

“Ed Balls is right to challenge the lazy and damaging consensus the government is seeking to create that we have no choice but to cut services to the bone. Ed’s proposals to stimulate house-building and boost the economy indicate a Labour alternative to the government’s assault on jobs, pay and services is both possible and necessary.”

And commenting about the government’s plans, which were plastered all over Sunday’s papers, for ‘locals’ to be given priority over immigrants when it comes to council housing, former housing minister John Healey said:

“This is pure spin, not fresh policy. Grant Shapps describes the new freedoms I gave councils last year, so they can already choose to give greater priority to people with local family links and those who have waited longest or who need to move to get work.

“There’s a big gap between what this Government says and what it does. Ministers talk of action to deal with housing pressures but they’ve cut investment in new council housing and changed planning rules to make building badly needed new homes much harder.”

Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.