Government must tap pensions to tackle crisis
The government should look for investment from local authority pension funds if it is to tackle the growing housing shortage, according to a new report.
The Institute for Public Policy Research said that next month’s housing strategy must focus on accessing new funding sources in order to build 250,000 new homes every year.
It called for the release of government-held land and reforms of the housing benefit system to free up investment in new housing.
IPPR further called on the Chancellor to set up a national investment bank in order to increase competition in the development industry, remove barriers to new entrants and force developers to make use of landbanks.
The report – called ‘Build now or pay later’ - found that England will have a 750,000-home shortfall by 2025.
It said that the government ‘will struggle to solve the housing crisis’ unless it can tap into some of the £150 billion of council pension funds and free up government-held land for development.
Commenting on the report, Andy Hull, a senior research fellow at IPPR, said: ‘We are facing a housing crisis, with a huge gap between the supply of new houses and our demand for more homes.
‘The forthcoming housing strategy will be a serious test of whether the government appreciates the depth of our housing crisis and is smart enough to unlock the funding to build new homes. We also need government action to get developers developing.’
On the subject of housing benefit, the report promoted the introduction of a new ‘stepped’ system, which would see some rents covered in part by housing benefit but where the level at which rent was 100 per cent covered would be lowered.
It said that housing benefit should also have a fixed limit so that extra funds could be used for development.
According to the report, the gap between housing supply and demand in the coming years will be most keenly felt in London, where demand will outstrip supply by 325,000 homes by 2025.
In Yorkshire and Humberside, the gap will be 151,000 homes, while the east of England faces a 132,000-home shortfall.