The stated intention of Andy Burnham to get the largest building of council housing at social rents since the post war period is a positive and welcome commitment that could progress the Labour policy to build 1.5 million homes.
Last year’s Comprehensive Spending Review put much more money into building social housing than for many years and also gave opportunities for borrowing from the Public Works Loan Board at lower rates of interest.
However, it was not surprising that a hoped for a kickstart to getting the new homes built has been painfully slow. A firmer focus on building council social housing, with money to back it up, will make a real difference, but as well as putting in more grant investment a few other things need to be done.
Firstly, it has to be recognised that building housing is very different to other government expenditure. It is still seen as part of public debt under the Public Sector Net Financial Liabilities (PSNFL) measure – as if it is like education or the health service – but this is wrong because there is a return on investment in housing. Yes, it is a more gradual return if it is at social rent, but if it is properly built and well managed, there is a return and in reality, it does not take that much longer to get that return if it is social rent housing as opposed to higher rent forms.
The irony is that spending by Housing Associations on housing is not part of the PSNFL, but it is for councils, and fundamentally there is no real difference. It is a quirk of public accounting that if tweaked can open up great housing possibilities. Just remove this false accounting system and the criticism of, “But Andy, where is the money coming from?” disappears.
The second thing is to take another lesson from the post-war Labour Government and reduce further and more substantially the interest rates from the Public Works Loan Board – if it is for social rent housing. This will provide a further kick-start that councils can benefit from.
The third thing to recognise – and Andy already mentioned that he understands this – is that housebuilding at social rent levels will bring great savings on the welfare bill. The saving takes time to filter through, but housing at social council rents will save billions on housing benefit – and will be better for people struggling to survive on market rents and on so-called ‘Affordable Rents’ that can be 80% of market rents. The housing benefit cost is set to be around £34 billion this year. The benefits bill can be reduced substantially while making people happier and leaving more money in their pockets.
The other point that should not be forgotten is that we need to start building the family housing that people need. Too often, targets are met by building one- and two-bedroom housing and ignoring the need for family housing.
Finally, there has to be a new focus on small and medium size companies filling the gaps in housebuilding. There has been too much reliance on big builders, and they can use that to make excess profits and be picky about what they do and do not do. Along with this, there needs to be a strengthening of the supply chain, including with better apprenticeship schemes and help and encouragement for the smaller companies to be part of such schemes.
In all these ways, Andy’s commitment to council housing can transform the country across a wide range of fronts, from health and education to economic growth.
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