City firm calls for £10bn house building programme
Financial firm Tullett Prebon has urged the government to put £4 billion of capital investment into getting local authorities and housing associations to build more homes.
The interdealer broker has published a report arguing a national house building programme is ‘one of the very few viable policy options available to the government’ to kick-start the ailing economy.
The paper, written by Tullett Prebon’s global head of research Dr Tim Morgan, cites a recent report from think tank Policy Exchange that argued the government should encourage landlords to sell off the most expensive social housing to create a £6 billion house building fund. The broker says £4 billion of capital investment should be added to this to create £10 billion of annual funding.
It says the investment should be undertaken through local authorities and housing associations ‘not through public private gimmicks like PFI’ and the private sector should be involved as contractors to build the homes.
‘Longer term, a house building programme will pay for itself, both through enhanced economic growth (and hence higher revenues) and through a reduced housing benefit burden,’ the report states.
‘Nearer term, the divestment of the highest-cost social housing, and additional levies on second homes, can make significant contributions to defraying the cost.’
It notes house building is primarily a domestic industry, meaning there would be widespread economic benefits of increased work.
The broker also argues the government should ‘reform and streamline’ the planning system to ensure local opposition cannot prevent a house building-led economic recovery.
The government is expected to announce a revised strategy to boost house building next month, but this is unlikely to include any significant capital investment. Instead it is likely to focus on changes to planning rules and using government guarantees to reduce the cost of borrowing for housing associations.