Do the maths

The portrayal of the UK as verging on bankruptcy with the world’s largest debt doesn’t bear scrutiny. The UK’s public debt to gross domestic product ratio is actually much lower than the trend average since 1692, according to Treasury figures. The ratio fell from 42 to 36 per cent between 1997 and 2008 - hardly profligate economic management - rising to 61 per cent in 2011 only after the deepest financial crisis since the 1930s. The UK’s debt is below the G20 average and behind the US, Japan, India, Germany and France.

Framing debt reduction within an unwarranted ‘crisis’ context consequently crowds out policy alternatives to public spending cuts. Debt reduction solutions that emphasise growth through investment are branded unaffordable.

Social housing investment is a case in point; it is a ‘natural’ driver of growth in hard economic times - something governments of all political stripes once understood.

Such investment supports construction and supply chain jobs, boosts skills, protects tax revenue, reduces redundancy costs and keeps the unemployment bill down. It also provides a national asset for the long term, contributing to the UK’s balance sheet while tackling growing waiting lists and homelessness.

Realising an asset-owning democracy irrespective of tenure could be an attendant goal by setting up a social investment bank, controlled by a tenants’ mutual, to fund social housing and community infrastructure investment. The bank would hold asset accounts for tenants, operating like the Children’s Mutual.

The strategy not only provides new homes and regenerated neighbourhoods but encourages saving among disadvantaged communities, narrows the wealth divide between homeowners and tenants, helps create the ‘big society’ and aids national economic recovery.

Kevin Gulliver is director of the Human City Institute