Councils could
generate £320 billion into the country’s economy over the next 50 years if they
were able to build a “new generation” of high-quality council housing, the
Local Government Association says.
The analysis, which
looks at four different future economic scenarios, demonstrates how new social
housing will deliver huge gains to tax payers. The worst-case economic scenario
still results in a £102 billion return.
Unlike investments
in most other public services and infrastructure, investment in social housing
generates returned income through rents, while also creating savings in the
huge annual housing benefit bill.
Investment would
also create significant wider economic gains such as increased productivity,
jobs, and increased tax returns, as such a large proportion of construction
revenues remain in the domestic economy.
Town hall leaders
want to see a national ambition to work towards delivering a new generation of
100,000 high quality social homes every year.
Research for the LGA
and partners by Capital Economics has found:
- Every £1 invested in a new
social home generates £2.84 in the wider economy
- Every new social home would
generate a saving of £780 per year in Housing Benefit.
- Every new social home would
generate a fiscal surplus through rental income.
Last month, the
Prime Minister responded to calls from the LGA to remove the borrowing cap
which has prevented councils from building at scale. The LGA is urging the
Chancellor to fulfil that pledge and set out plans for the borrowing cap to be
removed entirely as part of the Budget.
The LGA has also
launched a report showcasing how councils are building new homes. It reveals
councils’ focus on high standards, supporting local small builders, creating
jobs and training for local people, and building on sites and for people that
others are not.
Lord Porter,
Chairman of the Local Government Association, said: “The LGA had been in
conversations with the Chancellor Philip Hammond, Housing Secretary James
Brokenshire, and the housing team at No 10, to secure the lifting of the
housing borrowing cap and it was great to finally get it over the line last
month.
“There was rightly
universal acclaim of the decision by Theresa May to lift the cap which has been
severely hampering the ability of councils to play a leading role in tackling
our chronic housing shortage – it is the right thing to do, and everybody knows
it.
“The last time we
built enough homes councils built 40 per cent of them. We need to get back to
those levels if we’re to tackle our housing crisis, which is why we need to
look towards delivering a new generation of 100,000 high quality social homes a
year.
“The gains are
enormous. Investments in social housing could generate returns up to £320
billion over 50 years, helping countless families along the way by creating
local jobs and building homes people need and can afford.
“Councils have been
quietly getting on with building some outstanding new homes, they now need to
be free to deliver them at scale. This is because the future of council housing
will deliver high quality and innovative design, support local builders, create
local jobs and training, and build where the market will not.
“On Monday, the
Chancellor has a real opportunity to deliver a once-in-a-lifetime change that
could benefit thousands of people across the country. We encourage him to take
it.”
