Social Housing plan to beat credit crunch

Gordon Brown must increase social housing spending by billions of pounds or miss his ambitious house building targets, a chorus of MPs, housing associations and councils has warned.

The newly-formed 2020 Group, chaired by Mr Brown’s former housing advisor Kate Barker, this week called for the 2008/11 affordable housing budget to be ratcheted from £8.4 billion to £14.75 billion.

The extra cash would guarantee the building of 100,000 social homes by 2011, providing a Barack Obama-style ‘financial stimulus’ to the flagging economy, the group said.

The 2020 Group wants social housing to form a key part of the major programme of Keynesian spending it anticipates will be unveiled in April’s Budget.

Ms Barker, who sits on the Bank of England’s monetary policy committee, said: ‘Support for housing today offers excellent value in terms of sustaining economic activity and reduces the risk of a severe loss of capacity in the housing and related industries.

‘There is a real concern that the present fall in home building is sowing the seeds of the next boom.’

The group, which includes the National Housing Federation, the Local Government Association, housing charity Shelter and the Trades Union Congress, estimated that housing associations would need an extra £2.6 billion to build the 80,000 homes they are due to deliver by 2011.

This is to meet the gap left by the collapsing property market and the rising cost of private finance.

It is calling for another £3 billion to build an extra 20,000 homes. These would be 75 per cent public funded - compared with a pre-recession
average of 40 per cent.

The final leg of the proposal is a £750 million infrastructure fund.

The day after the group’s announcement, a cross-party committee of MPs agreed that the government would miss its housing targets without more money for social homes.

On Tuesday the Communities and Local Government committee warned that the government had borrowed £975 million from its 2010/11 housing budget to increase spending now, but had promised 45,000 social homes would be built that year.

This target would now not be met without additional funding, the committee concluded.
Status report

Also this week the Communities and Local Government committee published its report, Housing and the credit crunch. The report concludes that:

    * Unsold family homes should be bought from private individuals to use as social housing.
    * The offer should be limited to suitable homes which have been on the market for a year or more.
    * The government should stick to its overall house building targets, but within those it should increase the proportion of social homes. The targets for new socially rented homes were inadequate even in the more prosperous times in which they were set - and the recession is likely to increase demand for social homes.
    * The Homes and Communities Agency’s budget should be increased. Without this it will be impossible for housing associations to meet even the government’s social housing targets, let alone higher targets advocated by the committee.
    * The government should scale back its targets for new low-cost homeownership schemes and focus on building new social housing, until the mortgage markets improve.

Source from INSIDE HOUSING