Wednesday, 01 April 2015

Stating the obvious

I discovered recently that I had an elder brother. He was born in 1947 and died at birth. He is buried in an unmarked grave, the location of which was only known to my Dad. He had been born in a breeched position and those in attendance were not able to save him. I was born five years later and even though I was also a breeched birth I survived. There are many reasons for this. Maternity provision was much better under the newly established NHS and my parents were no longer sharing accommodation in a terraced slum. Benefitting from the ‘spirit of 1945’, I was born in the bedroom of a newly-built council home which was a product of the post-war housing boom. A boom that was based upon government investment in social housing and which led to the economic recovery that took place in the 1950s. In those days it was clear to politicians of both major parties that there were many social and financial reasons for investing in social housing. Today’s politicians seem to have forgotten this fact.

“Why is there no political support for investment in a housing led economic recovery, the benefits of which were so obvious to the politicians in the 1950s?”

On his last day at Inside Housing [on Friday] Gavriel Hollander mischievously tweeted the question, is it possible to build sub-market housing without some form of subsidy? I responded with something that is obvious to everyone working in housing, saying that the strange thing about subsidised housing is that it needs a subsidy. Ever since I can remember housing providers have been searching for the holy grail of how to develop real affordable homes with no subsidy. As far as I know no one has succeeded in doing this in any volume. The reduction in grant and the changing face of our business model has led to the pursuit of many diverse ways of producing new homes, most of which are in the private rented sector. This has increased risks, raised the spectre of more proscriptive regulation and initiated a debate about the values and purpose of the sector. In response to a question at a recent conference, 50 per cent of the audience said they were planning to do more private rented sector work. We are told this caused [Homes and Communities Agency regulatory committee chair] Julian Ashby to raise a worried look. I think a different question would have provoked a different answer. If the audience had been asked ‘would you do more PRS work if more grant was available?’, the answer would have been no. Most chief executives would rather use their resources to boost the number of truly affordable homes, if grant was available. 

So why is there no political support for investment in a housing-led economic recovery, the benefits of which were so obvious to the politicians in the 1950s? I think that one of the problems lies in the use of the word subsidy. If we replaced it with investment, it would be a more accurate and more acceptable description. We invest for a return and it is possible to show quite simply the real value of the return on this investment. Recent work by hact has shown the financial worth of the social value and well-being created by new housing. Other research has shown that truly affordable homes reduce benefit payments. New house building creates jobs both in the construction industry and beyond and would help kick-start a recovery. Building with grant reduces risk for housing providers and thus the cost of borrowing. Less risk would reduce the need for more regulation and allow the regulator to concentrate on more important issues. And most important of all, investment in affordable homes would reduce waiting lists and help those people in housing need find what most of us have – a decent home. The value of this to someone’s life is immeasurable. Recent reports by Shelter, the Joseph Rowntree Foundation and the National Housing Federation reveal the real cost of the lack of affordable homes and show how shortages increase costs in other services. By any definition it makes business sense to increase investment in social housing. If it is so bloody obvious why aren’t we doing it? I benefitted in so many ways from investment in social housing in the 1950s, surely it is right for this and the next generation to benefit in the same way.

Tom Murtha is former chief executive of Midland Heart and chair of Hact

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