Making the case for housing

A recurring theme of the International Housing Summit held recently in Rotterdam, was a recognition that the problems housing providers face in the UK trying to match dwindling supply with increasing demand are not unique – if anything, our challenges are insignificant when compared to those of India, South Africa and even Australia.

For these countries, the scale of the problem is mind-boggling. Not only are providers faced with the demands of exploding populations, responses are required to floods, earthquakes, a lack of basic infrastructure, extreme poverty and displacement. In many ways, there is much to applaud in the UK if measured against this backdrop.

Delegates attending the conference agreed that a more sophisticated case needs to be made to acknowledge and measure the positive effect housing investment has on the wider economy. The current government appeared to acknowledge the importance of this debate in preparing for the comprehensive spending review, which was published in October 2010. A series of Treasury ‘tests’ were devised that sought to establish, amongst other things, the economic case for housing (and other areas of spend) and would, we were told, inform the evaluation process. The signals appeared to suggest that if investment generated a positive effect elsewhere (health, education etc.), it would attract, if not a firm tick in the box from the chancellor, at least a nod in the right direction.

Regrettably, despite these good intentions, the ink was barely dry on the directive before communities secretary Eric Pickles marched into the Treasury declaring that the Communities and Local Government department would be able to stump up savings of 30 per cent. It is not clear how the wider benefit was assessed, but one might assume this was not at the forefront of the debate.

To an extent this is understandable. A combination of poor information that directly establishes ‘cause and effect’ (more convincing to the Treasury than the butterfly wings of Chaos Theory), a government advisory structure where cross-departmental working and analysis is still unnatural, compounded by the pressure to extract savings quickly, does not create an environment dedicated to a sober and considered evaluation of cross-government costs. The financial relationship between social policy, health, education and investment is complex and at present there are few pegs on which those in favour of reform can hang an argument that change is not only desirable but essential.

Those readers who follow closely the debate on mobility may recall a report from Human City, Counting the costs, that identified the financial effect on the wider economy of a lack of social mobility within the housing sector. The report estimated that an inability on the part of social tenants to move home easily costs £542 million each year (£2.5 billion over the life of a parliament), with the costs to social care (the state providing for elderly relatives, for example) especially significant.

At micro level, for instance, I recall a study that established that by fitting stair gates in new homes for families with young children, the potential savings to the local health economy was 2 per cent of accident and emergency spend.

The Rotterdam conference recognised that this was not easy territory. But in a world where unconditional funding is scarce and unlikely to satisfy demand, all acknowledged the need to work harder to demonstrate the wider economic advantage investment in housing can generate. Without it, housing may continue to be the poor relation, and only the recipient of investment when the economic cycle is favourable.

David Williams is a senior associate consultant with Campbell Tickell

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