Why do ministers refuse to invest in a housing boost that would be great for the economy?

Housing boost would be great for the economy, so why are the government refusing to invest?

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Housing minister Grant Shapps is under fire yet again for muddling his figures, as highlighted by shadow housing minister Jack Dromey and Channel 4’s Fact Check.

shappsThe accusations coincide with the Chartered Institute of Housing’s annual conference, currently being held in Manchester.

In particular, Shapps has been charged by many with misrepresenting figures about housing construction, the costs of self-build and the extent of rough sleeping.

These contested statistics provide a backdrop to the conference and illustrate how difficult the social housing sector finds it to elevate the country’s deepening housing crisis – which did not begin in May 2012 with the election of the coalition government, but has worsened since – to the top of the political agenda.

Unfortunately, focus can sometimes be disrupted by other issues like ministerial disputes over statistics, the economy or ‘troubled families’ a la Pickles.

Yet beyond Shapps and Pickles, it is widely accepted that a publically-funded social house building programme would be in the country’s economic interest and provide exceptional value for money in terms of jobs created, supporting supply chains and stimulating economic growth, while catering for growing housing needs.

How to increase the rate of social house building within the context of a struggling economy and the government’s austerity programme has dominated the first day of the conference.

While troubling economic news, including the double-dip recession and further public spending cuts to come, is shaping the housing debate in Manchester, there is palpable frustration from many housing managers that the 3 per cent fall in construction sector output over the first quarter of the year, the primary reason for the 0.2 per cent contraction in the economy over all, has not spurred the government to action.

House building is the easiest and quickest way to stimulate the construction sector and provides greater multiplier effects than investment in other infrastructure projects. Yet still there is no announcement on new capital subsidy for housing even where the rate of return on such investment offers such a good rate of economic return.

This depressing picture was underlined by Peter Schofield, director general of neighbourhoods at CLG and keynote speaker on the conference’s first morning, when he reiterated that social landlords will need to develop even more “imaginative” models to attract private finance since greater public subsidy will not be forthcoming.

See also:

Pickles’ Plan to deal with “120,000 trouble families” in a tailspin 11 Jun 2012

Social housing and immigration: the need for transparency and fairness 20 Apr 2012

Tackling homelessness in London 8 Apr 2012

Such approaches are a false economy since they have to be underpinned by the housing benefit system – currently running at £27 billion annually – to reassure institutional investors. So the housing system we have created can afford, per annum, almost the amount spent on the UK’s armed forces, yet can afford less than £2 billion each year for social house building.

Schofield recommended that social landlords make their case to government ahead of the next comprehensive spending review in terms that show housing’s contribution to other policy areas. There is widespread recognition of the importance of housing to our health and well-being, to our sense of security, to our ability to plan for the future and to our desire to belong to a geographical community.

Hardly a week goes by without the publication of a report on housing’s role in aiding other policy objectives to be achieved (since appeals to this government in purely housing terms go unheard). So where has Schofield been hiding? Even so, housing managers at the conference are upbeat and believe that they are making a major contribution to the economy and communities.

They are frustrated, however, at successive governments’ inability to create a balanced housing system that meets the country’s needs in terms of quality, affordability, flexibility and sustainability. The long-run housing crisis in a rich country like the UK is one of the most woeful examples of social policy failures over the last thirty years. But even by these standards, the coalition government has plumbed new depths.

The government’s failure to tackle the nation’s housing crisis through sufficient supply of affordable housing (the last two years have seen the lowest number of housing completions since the end of WWII), their punitive welfare reforms, social cleansing of London and constant sniping at social housing tenants are all major concerns to housing managers.

Yet Shapps and co. plough on regardless, using the international financial crisis as an excuse rather than a reason to take action. Even with 5 million waiting list applicants, people living in garden sheds, some tenants relying on soup kitchens, rising homelessness, greater levels of overcrowding, a deteriorating private rented stock at the bottom end, escalating private rents, home ownership virtually unaffordable to potential new buyers, we have not worryingly touched bottom.

The CIH conference is a forum for discussing how these problems might be tackled. But without greater government commitment to a rejuvenated social housing sector within a more coherent housing system and higher levels of public investment it is difficult to see how things might get better.


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53 Responses to “Why do ministers refuse to invest in a housing boost that would be great for the economy?”

  1. Jill

    Why do ministers refuse to invest in a housing boost that would be great for the economy? – http://t.co/wGZX4gUI

  2. Inna Mood

    Why do ministers refuse to invest in a housing boost that would be great for the economy? – http://t.co/wGZX4gUI

  3. Gary Francis

    I hope the building advocated is for brown-field sites. We need to protect our green-belt and forests jealously, because, once they’re gone, they’re gone for ever. Carbon footprints, anyone? The coalition boasted that it would be the greenest government ever. We also need to consider the fact that England (Shapps’ remit covers only England) is vastly overcrowded, and should never have been allowed to become overcrowded in the first place. We’re seeing the result of British governments sabotaging England for almost the entire post-WWII period.

  4. JC

    The best thing the government can do is to relax the planning laws. This would reduce the cost of building new houses and increase the number available. Why should planning permission cost £1M per acre? It only helps the landowners, not the ordinary people.

  5. Anonymous

    The reason the housing market is in crisis is because prices are 40% too high in relation to wages.

    The banks would all go bust if this was allowed to correct, therefore through lobbying and promises of future directorships they coerce the government of the day to restrict the quality and quantity of new supply, and allow inflation to gradually erode the debt. The market will correct, but it will take a generation.

    No other policy is available and whoever is in government will be forced to obfuscate and manipulate statistics to keep it going, to prevent the general population to observe the explicit wholesale theft that is taking place.

    This will only be resolved once demographics have shifted to the extent that the priced out generation rent are in the ascendency, and the policy can be reversed and then it will be the boomers turn to have their assets and pensions stripped by the state because they won’t be able to do anything about it.

    Welcome to 21st Century politics.

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