Thursday, 25 May 2017

Writing on the wall

From: Inside edge

Put the Autumn Statement and the housing strategy together and we’re left with a mystery.

Put simply it’s this, if housing is so important that it merits a strategy of its own, why was there nothing more in George Osborne’s statement a week later than the end of the stamp duty holiday for first-time buyers?

Because, as the National Housing Federation points out, investment in housing is easily the best way to deliver the ‘biggest bang for the taxpayers’ buck’.

The NHF argues that a public investment of £1bn could be matched by £8bn from housing associations to build 66,000 shared ownership homes, create 400,000 jobs and save the taxpayer £700m in job seeker’s allowance into the bargain.

It might have added that housing schemes could be ‘shovel ready’ far quicker than the other infrastructure projects that the government wants pension funds to finance (they won’t be ready to start until 2013/14).

So you have something that’s ready to go quicker, is more labour-intensive (though a good case can be made that housing repair and maintenance or energy efficiency or empty homes work would create even more jobs) and yet does not merit anything beyond what was in the strategy last week. 

As I blogged earlier this month, the government could have been even more radical with a quantitative housing scheme funded by buying bonds in a public interest company that could fund construction of new homes for future sale to the social and private sectors.  Even a modest programme would deliver jobs and growth. 

But the government does not appear to see housing as ‘infrastructure’ and appears to be leaving growth to an untried arrangement with pension funds to deliver a list of big road and rail schemes that make handy soundbites.

Instead you can already see the writing on the wall for the next spending review. The detail of the Autumn Statement reveals that the squeeze on public sector gross investment will continue to fall into the next spending review period. Brian Green has more on the construction funding gap on his Brickonomics blog. 

Perhaps the solution to the mystery is that unspecified further spending cuts are looming to go with the two extra years or public sector real terms pay cuts because the recession is costing more than the Chancellor thought? 

To give just one example, the independent Office for Budget Responsibility says that a higher claimant count means that housing benefit will cost £1.9bn more over the next five years than it was forecasting in March this year (£200m this year rising to £600m by 2015/16).

What price more housing benefit cuts to come? And what price the next affordable homes programme - if there is one? 

Perhaps it’s not such a mystery after all. 


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