Kevin Gulliver reports on the housing crisis in the UK, and its role in yesterday’s negative growth figures, dragged down by the construction contraction.
Kevin Gulliver is the director of Birmingham-based research charity the Human City Institute and chair of the Centre for Community Research but writes in a personal capacity; his interests are social and economic policy, especially relating to housing, health, communities and inequalities
This week’s revelation London councils are shipping out housing benefit claimants to the English regions to meet their housing needs and the news yesterday that the UK is officially back in recession are surprisingly closely linked.
The inability of the coalition government to cater for the nation’s housing requirements through sufficient supply of affordable housing – the last two years have seen the lowest number of housing completions since the end of World War Two – is reflected in the 3 per cent fall in construction sector output over the first quarter of the year.
This construction slump is the primary reason for the 0.2 per cent contraction in the economy overall.
Since there is a lack of social housing for waiting list applicants, Labour Newham and Tory-led Hillingdon, Croydon and Westminster admitted contacting social landlords, mainly in the Midlands, to move applicants out of the capital since they cannot afford to refer them to private landlords because of rapidly rising rents and biting benefit caps introduced by the government.
Many are calling this a social cleansing of London’s poor from more expensive areas.
Shelter research reveals the depth of London’s housing crisis with private sector rents rising at double the rate of the average London wage. At the same time there are 370,000 households on the housing waiting lists of London boroughs: 1 in 9 of the population.
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In Newham, which sought to move 500 families to Stoke-on-Trent, 1 in 3 households are waiting list applicants.
Yet the answer cannot be to move sometimes desperate and needy people from their communities to other parts of the country which have their own housing crises.
The region where the Human City Institute operates – the West Midlands – has 184,000 on housing waiting lists and has seen the largest growth in homeless – at 14 per cent – of any English region over the last 12 months. But this is where Newham sought to relocate its 500 needy families.
Even so, the blame should be laid solely at the door of the government whose short-sighted housing and welfare policies have deepened an already grim outlook for those seeking affordable housing.
A more economically rational and ethical solution to the housing crisis and to move the UK out of recession would be to engineer a construction boom using public borrowing to provide social and affordable housing. This would help meet growing demand, create a long-term national asset on the national accounts, boost GDP and provide much-needed work for redundant construction workers.
For those sceptical of pushing up public borrowing, consider what Osborne’s £10 billion loan to the IMF could buy in housing and economic terms: 150,000 new homes, 300,000 construction jobs and stimulation of the supply chain.
Such an investment, taking into account multiplier effects, could add at least 1 per cent to economic growth over the next two years. It would also represent a return to bricks-and-mortar investment rather than lining the pockets of private landlords for extortionate rents.