The case for short and long-term investment in social housing

The case for short and long-term investment in social housing

In summer 2020, we – and many others – welcomed the commitments from the prime minister and chancellor to invest in building back better and in levelling up. Now, as economic storm clouds gather, the need for action and investment has only become more acute – especially investment in social housing. 

It is vital to protect the housing market in the coming months and years – and to build strong foundations so everyone, wherever they may live, can benefit from the government’s levelling up agenda. This is truer now than it has ever been, because as well as being morally right, a combination of short and long-term investment in social housing right now is economically necessary. That is why we recently launched a new report entitled ‘Building our way out’ – calling on the government to: 

  • invest now in a New Homes Rescue Fund to save jobs and secure our recovery 
  • announce a Level Up Housing Programme to follow on; providing the certainty needed to end the housing emergency and level up the nation 

This dual investment is vital to achieve the twin aims of building back better and levelling-up.  

Invest now to save jobs and build our way out 

In July, Savills published new research (commissioned by us) that highlights the danger a post-pandemic recession poses to our housebuilding industry. The research showed that unless the government acts: 

  • as many as 300,000 homes that would have been built over the course of this period will not materialise, as major developers reduce their output in the face of uncertainty 
  • £29.6 billion could be lost from the UK economy 
  • as many as 244,000 jobs could be lost in the construction sector and the extended supply chain 

Despite this bleak outlook, the government has so far failed to step up. It continues to place trust in major private developers and in market sale housebuilding, supported by investment directed primarily at marginal homeownership products. 

This is a mistake. History shows us that when a recession bites, major housebuilders reduce output. And this reduction in output not only means fewer homes – it means job losses, loss of vital technical skills, and an inevitable continuation of our housing crisis. Instead of blaming the developers, though – who are merely making sound business choices – we should look to government to step in to keep the wheels of our housebuilding system turning. That is something best done via investment in social housing. 

The reason for this is a simple one: social housing is not built to a fluctuating private market and demand for it is virtually limitless. Put simply: the government can invest in social housing confident it is needed, and confident it will be built

Therefore, we are calling for a New Homes Rescue Fund to invest £12.2 billion pounds over the next two years – with a focus on the delivery of social rent housing. However, this rescue package cannot be seen in isolation. Solving the housing emergency will take time and that is why we also need government to provide long-term certainty as well.  

We know this will work. We know that from the experience of recessions in 2008 or the early-1990s, where long-term investment in housing was a central part of how the nation responded. 

Long-term certainty to level up and solve the emergency  

Two years of emergency investment can only ever be a start if we want to solve a housing emergency that developed over decades, which is why we are also calling for a new 10-year Level Up Housing Programme to follow on from the rescue package. 

This would provide a long-term pipeline of investment and focus more strongly on delivering social rent homes, rather than marginal homeownership products. One of the reasons for this alternative focus is to truly enable the fund to do what it is named for and deliver on one of the government’s main objectives: level up. 

In places like Manchester, we have seen the result of growth without housing investment. As the has grown in recent decades, so too has the housing situation worsened – with rising rents and rising homelessness. Despite this, between 2014 – 2015, just 71 homes for social rent were built in the city, despite thousands being delivered for other tenures. 

Manchester is now reacting to this situation, and last year started more than 200 new social home. But playing catch-up can be avoided if investment in social housing comes ahead of other investments designed to deliver growth. Without it, the opportunities created via growth simply will not be shared with many existing communities who will find themselves priced out. 

Combine the now with the next 

For too long, housing investment has come in short-term waves and without a long-term plan. Our proposal is to change that, as well as reacting to the pressures of the immediate situation. 

By announcing both a New Homes Rescue Fund and a Level Up housing programme, the government can demonstrate its sincerity about saving jobs, delivering the homes people need, and building the country back better. 

This is our opportunity to build a better future, and enable everyone to thrive and seize opportunity without being held back by their housing.  

You can help us achieve our goals of ensuring everyone has somewhere to call home. Call on your MP to build our way out of the housing emergency.