Friday, 06 March 2015

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.

Readers' comments (6)

  • Chris

    Some good ideas - why-ever did nobody ever think of a mass social house building programme as a) a route out of recession, b) a means to reduce the housing shortage, and c) how to make housing affordable again.

    Meanwhile the government is expected to make more announcements about their strategy, revised or otherwise - so no change there then, unless the government drops the deadweight Shapps and instead brings in a Housing Minister who actually understands and believes in housing.

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  • i would have thought say ten companies like TP could find the wherewithall to make this happen. that would be a novelty private companies bailing out private companies to the common good while making a fair return long term.
    as far as a housing minister with housing knowledge or even interest goes - does such an animal exist ??

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  • OOh Chris, do I detect the teeniest note of Sarcasm - or possibly irony in your tone? I do like the bit about not using PFI in their report- everyone and their dog has known this is a rip-off, frankly if they want to save money off the NHS budget my first choice would be to Compulsorily acquire all the PFI contracts and re-finice then through the Gilts market, thus at one stroke saving Billions and, AND putting out of business some of the worst bottom-feeding low life scum in the City. and outcome devoutly to be desired!

    With the coming re-shuffle this would get the new housing minister off with a bang, whilst Shapps goes on to save the planet by becoming minister for Airport expansion, thereby guaranteeing that no additional runways will ever be built and Britain will thus achieve its C02 emission reduction target.
    Perhaps David Cameron is secretly in thrall to the lovely Caroline Lucas and longs, like a good public schoolboy, for a touch of the cane?? or was he post Corporal Punishment?

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  • Chris

    Possibly Harry, possibly.

    Careful though, one man's bottom feeding low life scum is another party's financial backer - or would that be a double bonus!

    ?Post Corporal Punishment? - would that be the mail-order variety?

    Absolutely re PFI - who the hell is backing this when every Chancellor when in opposition has labled them correctly as a financial disaster and an expense we cannot afford - for instance Osborne is well on track to exceed the PFI totals of both his predecessors put together, yet apparently is commited to not using them!

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  • Are these the same experts who trotted out with cheque books waving to support Osborne's rolling out of Plan A - they could at least have the good manners to apologise before calling for it's demise.

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  • and in other news, a document leaked to the Guardian reveals 'sobering' Treasury plan to cut welfare budgets by another £10b.

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