We need a sea change for appraising housing investment

Secondly, investing in genuinely affordable homes generates better life outcomes for residents, and that means better physical and mental health, resulting in less demand on health and care services.

Producing the right mix of homes includes supported housing for older and other vulnerable people that promotes and extends independent living. Not only does this contribute to cutting social care costs, but it also increases well-being and reduces levels of isolation and loneliness.

“A great part of that taxpayer subsidy is going straight into the pockets of private sector landlords, in some instances for poor-quality homes”

The third point relates to curbing the nation’s welfare benefit bill in a positive way that produces wins all round, except perhaps for some private landlords. New build homes let at social rent levels are substantially cheaper than private market properties. In my Dagenham and Rainham constituency the figure is under 50% of what you would pay for a private rented property of a similar size.

That means much lower housing benefit bills nationally. Currently, the combined cost to central and local government of housing benefit and other top-up subsidies paid by councils is running at almost £35bn a year.

Let’s remember that a great part of that taxpayer subsidy is going straight into the pockets of private sector landlords, in some instances for poor-quality homes that do nothing to promote good health outcomes.

If you needed to see where and how we have gone so wrong, just consider that in the post-war decades leading up to the mid-1970s, about 90% of all public spending on housing was devoted to bricks and mortar subsidy – that is, building new social rented council housing. Just 10% went on equivalents of housing benefit and the former mortgage tax relief system. 

Fast forward to the early 2020s and the position has totally reversed. Only about 10% of all public expenditure on housing is to subsidise new build affordable homes, the vast bulk goes on housing benefit. This is short-term thinking and flies in the face of our mission to bring down spending and promote economic growth.

“I want to see that this spending on ‘affordable housing’ is focused on building social rented homes, homes that are truly affordable”

It is fair to say that the Labour government has made a start on redressing the balance. The Comprehensive Spending Review released £39bn over the next 10 years for the Social and Affordable Homes Programme. That doubles the previous commitment and is really welcome. The recent announcement that the Public Works Loan Board will continue to discount the interest charge to councils for building homes is another good move in the right direction.

For all the reasons I set out above, I want to see that this spending on “affordable housing” is focused on building social rented homes, homes that are truly affordable for households, not unaffordable “affordable” properties with rents up to 80% of local private rented levels.

If we really want to get a sea change in social housing delivery, the way HM Treasury views investment in housing must shift. The term ‘invest to save’ comes to mind.

Margaret Mullane, MP, Dagenham and Rainham