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.”

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

  1. Robert

    Yes real New Labour, affordable homes but not social housing, affordable homes are homes which will make a bigger profit for the banks who will give out mortgages for these houses, yet will give nothing to the people who need a home over their head, the poorest how about 6 billion for social housing, remember those? Council housing, which Labour did so little with.

  2. Ellie Gellard

    RT @leftfootfwd: £6bn extra should be invested to build 100,000 more affordable homes, says @EdBallsMP: //bit.ly/cs05CM

  3. Shamik Das

    RT @leftfootfwd: £6bn extra should be invested to build 100,000 more affordable homes, says @EdBallsMP: //bit.ly/cs05CM

  4. James Mills

    RT @leftfootfwd: £6bn extra should be invested to build 100,000 more affordable homes, says @EdBallsMP: //bit.ly/cs05CM

  5. James Mills

    £6bn extra should be invested to build 100,000 more affordable homes, says @EdBallsMP: //bit.ly/cs05CM <<<<< great Keynesian policy!!!!

  6. Hitchin England

    6bn extra should be invested to build 100,000 more affordable homes, says @EdBallsMP: //bit.ly/cs05CM via @leftfootfwd

  7. Ash

    I can’t work out if Balls is an asset or a liability. He has a distinctive, non-consensus view on the economy and deficit reduction, and in that sense he’s well-placed to challenge Osborne & co. head on over spending cuts; but he’s also very much personally and economically associated with Gordon Brown, and most people seem to have swallowed the Tory line that the deficit is largely the result of excessive spending by Brown (rather than largely the result of damage done to the economy by the banking crisis).

    And this sort of talk obviously makes him an easy target for attacks of the ‘Look! Now Labour want to spend *even more* money we don’t have!’ type.

    Even I hear alarm bells when Balls suggests that because the deficit is £155 billion rather that £167 billion, we have a £12 billion windfall of ‘extra money’ to spend on new government initiatives. More plausibly, surely, we either have an opportunity to bring the deficit down further and faster than we’d previously planned, or an opportunity to revise downward by £12 billion the scale of cuts to *existing* government spending needed in order to hit our original targets for deficit reduction.

    The second of those options looks right to me; if we decided to stick to Darling’s budget target, say, we could take the line that while we thought we’d have to cut spending by £40 billion in order to get there, in fact we only need to cut it by £28 billion. But even if we went much more slowly, it seems a bit of a stretch to think there wouldn’t be at least £12 billion of worthwhile, existing government spending in need of protection from cuts.

  8. John Lees

    Borrowing down from £175 billion to £155 billion – obviously we should spend the £20 billion. Borrow Borrow Borrow – Spend Spend Spend.

    What is the definition of an affordable house? Is it a very small house, one badly built or a subsidised house? If it is subsidised can the owner then sell it at a profit? It is also obvious that if you and your family live in social housing and feel overcrowded you should have more children and then the council will give you a bigger house. No need to fit the size of your family to your earnings.

  9. Ash

    Maybe worth adding to my already lengthy comment that my point is to some extent about ‘spin’ rather than substance. If Balls thinks there’s a strong case for borrowing £6 or £12 billion to invest in housing this year, he should make his case in those terms – not suggest that there’s a ‘windfall’ of free money available to pay for it.

  10. Anon E Mouse

    Ash – To say I’m far from a fan of Ed Balls is an understatement but recently he does seem to have been coming out with actual arguments about issues rather than the “we need to renew” hog-wash from the other candidates.

    I think he’s wrong in his analysis of the economy but at least he’s making the case, correctly or incorrectly, which is more than the others are.

    Since 1997 Labour has lost 5 million voters – catastrophic in electoral terms but I really only know his opinions and perhaps Burnham’s to a degree.

    These candidates should have put their cases forward more vocally, in the way Balls has and they may have had more interest from the general public.

    The only statesman is David Miliband but that offers no alternative to other centre parties. At least with Ed Balls or Ed Miliband a left leaning alternative is offered since the Lib Dem’s are sidelined for 5 years…

    It’s going to be David Miliband.

  11. John Lees

    I agree it will be David Milibanana – but lets hope Ed Balls is not the shadow Chancellor as he is another GB in the making.

  12. Anon E Mouse

    John Lees – Milibanana – LOL!!!! :-} Very good dude!

  13. Noise

    In other news, student maxes out credit card and is appalled by the capitalist system when asked to pay it back.

  14. Michael Burke

    This is a very welcome development- addressing an acute economic and social need and providing a genuine alernative to the programme of cuts and more cuts.

    Ash, maybe Ed Balls should have spelt it out, but investment of this type can reduce the deficit. The government can borrow currently at below 3% interest rates for 10 years. So any housing created by the government, let’s call it council housing, with a yield of, say, 4%, would reduce the deficit over the long-term. 1% of £6bn is £60mn per annum. Over 20 years that’s a saving 0f £1.2bn.

    The rent on the housing would be just £4,000 per annum, in that scenario, or £77 per week, while the current avge. rental for a 3 bedroom house is £263 per week. //www.rentright.co.uk/00_00_00_3_00_rrpi.aspx

    As for the capital outlay, based on the employment multipliers specified by the NHF, that makes a positive return almost immediately (as the 750,000 new workers pay taxes on their incomes and consumption). Finally, there is too the saving made by government from reduced welfare payments as some of those 300,000 building workers are taken off the dole.

  15. Chris

    @Ash

    While I prefer EdM, I believe EdB has turned into a real asset during this campaign; he is the only one putting a coherent argument for the alternatives to economic masochism, while he probably won’t win the leadership he must be first on the list as shadow chancellor. The open nature of this election, with no late night deals in trendy restaurants means the Blair-Brown wars won’t be repeated. According to the guardian even the Blairites are impressed with Balls and I’d love to watch him ripping into that clueless, braying twat Osborne.

  16. Anon E Mouse

    Chris – Completely agree. Right from the off Balls had been vocal on policies – look how he got Gove in to the commons to apologise over the schools losing their capital – when none of the others seemed up for the job.

    I’m surprised he has come across so well and he must be in line as the next shadow chancellor.

    I have some reservations about his financial abilities but who else would do it?

  17. Ash

    @Chris

    Yeah, a large part of me feels the same way and would view the two Eds as a dream team… but I do worry that Balls plays into the Tories’ hands in some ways. Obviously they’re wanting to paint themselves as the ‘responsible’ party who want the UK to start living within its means, and Labour as reckless spending addicts who refuse to acknowledge that the deficit is a problem – and Balls fits that caricature better than any other prominent Labour figure.

    That’s not to say Balls isn’t right in what he’s saying; maybe he is. But his position is so different from the consensus view (that we can and should use a combination of tax rises and spending cuts to bring the structural deficit down below 3% of GDP in this parliament) that I worry it’ll be all to easy for the Tories to paint him and his party as crackpots. What we need is someone who can make it clear that it’s the *Tories* who are crackpots for thinking that it’s desirable or possible wholly to eliminate the structural deficit (and indeed to replace it with a 0.8% surplus!) in this parliament.

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