Social housing must be at the heart of the Budget
Published: by Alastair Harper
Many of the newspapers have been speculating as to whether the recent change of Chancellor will see a bigger commitment in the March Budget to embracing the Prime Minister’s enthusiasm for upgrading our country’s infrastructure.
The Prime Minister has said that he wants to see our country become one ‘where high-speed trains glide between our great cities, where electric buses convey us cleanly around our towns.’ The PM that likes to paint buses wants us all to share his enthusiasm.
The ambitious vision he’s outlined includes not just remaking our transport, but also our energy and communications infrastructure. Doing so could bring huge changes to our country, but the reality is there will be little point in investing in all of it, if at the same time the government don’t also deliver the homes that they are meant to connect to. Specifically the decent, affordable homes that have been lost over the last few decades.
The lack of housing has become a national emergency
We are currently building fewer social homes than we have for 70 years, less than 3% of all the houses built in England last year – despite 1.1 million people being on waiting lists for these homes. Over the past 22 years we’ve seen a net loss of nearly 400,000 social rent homes, as those sold or demolished have not been replaced at an adequate rate.
There is not doubt that this lack of social housing is having a severe impact on our society. Firstly, we’re seeing hardship in the stretched private rented sector. Due to a long freeze on the rate for Local Housing Allowance (LHA), housing benefit does not currently cover the cost of the bottom third of rents in 97% of areas in England.
We are in a situation where insufficient secure, affordable social housing combined with a lack of support and security in the private rented sector is forcing people into homelessness. As a result, tonight more than 280,000 families will be homeless. This includes 130,000 children. Councils are current spending a billion pounds a year on temporary accommodation.
Having 5G on our trains will not fix that. But the new Chancellor could ensure his next Budget does.
How the Budget can build more social homes
What are the practical steps that could be taken on 11 March when that Budget happens?
First of all, they could build on actions already started to reinvest in grants for social housing. In 2018, Theresa May’s government made some capital grant available for building social rent homes in some parts of the country. Many areas weren’t eligible and the pot was small – intended to deliver only 12,500 homes. But it was a start.
The Chancellor should channel the government’s new willingness to renew the structure of country and commit to growing this pot for delivering social housing in its next Affordable Homes Programme, expected to be announced later this year as part of a Spending Review.
Next, the Chancellor could help out councils wanting to borrow in order to build. Again, it means taking the next steps on what has been started. The government lifted the cap on councils’ borrowing for housebuilding under their Housing Revenue Accounts in October 2018. However, councils are now facing higher borrowing rates following a surprise decision to increase the cost of finance from a government-run loans body.
There is a discounted rate for local infrastructure that currently doesn’t include housing – the Chancellor could use his Budget to change this. Giving councils a better rate would unlock more of the social housing we need.
Doing this, combined with lifting the rate of LHA would mean the government has a Budget on its hands that would start turning round the long decline of housing in this country. It would mean that the big investment in fancy tech and transport will not be done at the expense of those families just looking for a warm home. It would help pull this country together around a plan to makes things better.