Cable hints at state guarantee plan for housing
Business secretary Vince Cable has said the government could offer guarantees to housing associations to trigger a new house building boom.
Under the plan, the guarantees would be used to attract investors into housing, including social housing, without showing up as liabilities on the government balance sheet. In turn, social housing providers would deliver mixed-tenure developments at no extra cost to the public purse.
‘There is large unmet demand for social housing which may be self-financing if built in conjunction with private housing,’ said Mr Cable in a speech to think tank the Centre Forum.
Mr Cable compared the current economic crisis to that of the early 1930s, when recovery was sparked by a surge in house building. He said investment in the sector today could produce the same results.
He said there were a number of builders already using guarantees to access long-term funding, adding that ‘activity could be multiplied’.
He continued: ‘There are now some interesting ideas out there for government guarantees could trigger a significant volume of housing investment, replicating the recovery model of the 1930s and leading hopefully to a virtuous circle of new building lending to increased affordability and also increased private demand.’
Mr Cable compared the idea to the enterprise finance guarantee, which helps small and medium-sized business, but warned that ‘the conservatism of the banks’ could prevent the guarantees from being effective.
The new plan echoes a speech made last month by David Cameron when the prime minister said the Treasury was looking at how state guarantees could help infrastructure and house building.
Details of the plan are expected to emerge in the autumn.