THE neglect and decline of social housing these last 20 years has not just fuelled a societal crisis – it has had a damaging effect on the UK’s economy, suggests new research.
The Local Government Association (LGA), which represents councils in England and Wales, commissioned research firm Cambridge Economics to play ‘what if?’ on social housing investment. The point was to assess where we’d be if the Government had funded 100,000 social homes a year over the last two decades.
In short, the analysis concluded we’d be in a much better state: not only would Government have saved billions from the housing benefit bill, but tenants would have enjoyed a higher disposable income to spend in the wider local economy, and investment in social housing would have generated significant economic returns.
Instead, the UK faces a continuing decline in the availability of social housing, both council-owned and housing association stock, while investment in new homes has fallen to historic lows. Despite recent shifts in Government attitudes towards the tenure, it remains the case that much of the decline in social housing is the outcome of deliberate policy, as the LGA pointed out.
In 1997, over a third of households lived in council housing, compared with just one in 10 today. The number of homes built for social rent each year has fallen from over 40,000 in 1997 to 6,000 in 2017.
This decline has resulted from the policies of successive governments, such as rules and restrictions hampering the ability of councils to replace homes sold through Right to Buy and central government control of rental income and borrowing limits.
This loss of social housing has led to more and more individuals and families finding themselves pushed into an often more expensive and less secure private rented sector. As a result, the housing benefit bill paid to private landlords has more than doubled since the early 2000s. Today, private renting has become the second largest tenure.
We’re paying for this now, the LGA’s research suggests. Cambridge Economics’ analysis found that:
- Building 100,000 social rent homes each year for the past 20 years would have enabled all housing benefit claimants living in the private rented sector to move to social rent homes by 2016
- The housing benefit claimants that would have moved from the private rented sector to social rent homes would have benefited to the tune of £1.8 billion in extra disposable income over the period
- Overall, the Government would have had to borrow an additional £152 billion in 2017 prices to build the homes over the 20-year period. With every pound spent on building homes generating £2.84 in return, the cost of investing in social housing would have been offset by additional tax revenues generated by the construction industry, as well as welfare savings from moving housing benefit claimants to lower cost social rent homes. The rising proportion of housing benefit caseloads in the private rented sector has cost an extra £7 billion in real terms over the last decade
“Every penny spent on building new social housing is an investment that has the potential to bring significant economic and social returns,” said Councillor Martin Tett, the LGA’s housing spokesperson.
“Now is the time to reverse the decline in council housing over the past few decades. This is the only way to help families struggling to meet housing costs, provide homes to rent and reduce homelessness while also providing economic growth and lowering the housing benefit bill.”
The LGA is urging the Government to heed its report as more evidence of why it should be working with councils to usher in a “genuine renaissance” in council housebuilding and urged that next month’s Spending Review take steps to make this happen.
According to the organisation, if councils are to “truly fulfil their historic role” as major housebuilders then the Government needs to allow councils to keep 100% of Right to Buy receipts and set discounts locally to replace every home sold, as well as setting out sustainable long-term funding and a commitment to social housing in the Spending Review.
“The last time this country built homes at the scale that we need now was in the 1970s when councils built more than 40% of them. With millions of people on social housing waiting lists, councils want to get on with the job of building the new homes that people in their areas desperately need,” Tett added.
“By scrapping the housing borrowing cap, the Government showed it had heard our argument that councils must be part of the solution to our chronic housing shortage. Allowing councils to keep 100% of their Right to Buy receipts is the next step to deliver the renaissance in council housebuilding we need as a nation.”
Polly Neate, chief executive at Shelter, said: “As well as cutting the benefit bill and driving down homelessness, a stable supply of social housing would be a national asset. It would give a step up to families struggling in expensive and unstable rented accommodation, enabling them to put down roots and plan for the future. Children could stay in the same school, support networks and communities could flourish and society as a whole would be better off.”