We finally know the cost of ending the housing crisis
New modelling from the National Housing Federation reveals the government needs to spend around £146bn over the next 10 years to deliver the homes the UK needs. It is a huge sum but, says head of policy James Prestwich, social housing is crucial infrastructure and investing in it will benefit the wider economy
This year, we mark the centenary of a landmark piece of legislation, which has fundamentally shaped the housing system in this country – perhaps more than any other. The end of the First World War created huge demand for affordable homes across the country, which led to the passage of the Housing & Planning Act of 1919. Now better known as the Addison Act – after Dr Christopher Addison, the then-minister of health and the bill’s author – it set in motion the whole system of social housing we know today.
It made housing a public responsibility for the first time, establishing the principle that the government must ensure there are enough decent, affordable homes to go around. It’s a noble vision, and it’s vital that we don’t lose sight of it.
Now, 100 years on, what does our housing system – especially social housing – look like? For many of us, the cracks are clear to see: rough sleeping is up 165% on 2010 levels, while temporary accommodation is full to bursting. The amount of social housing has fallen, leaving expensive and insecure private renting as the only real alternative for millions of people. This is having dire consequences – 1.3m children are now growing up in poverty in the private rented sector.
Why has this happened, a century on from a landmark law that made the government responsible for ensuring everyone had a decent home? The answer is that, for decades, successive governments of all parties have failed to invest enough in affordable housing. In 1953, the government spent £11.3bn in today’s prices on building new social housing – by last year, this figure had fallen to just £1.27bn.
Ultimately, this is a problem that has been caused by lack of investment. It means that the solution lies in renewed investment, targeted to deliver the social housing the country desperately needs.
Now, for the first time, we can put a price on how much money is required. Over the next 10 years, the government should invest £146bn in building social housing. Per year, this works out at an average of around £12.8bn, in today’s prices.
Of course, this feels like a vast sum of money – and it is. The housing crisis is deeply entrenched, and can’t be solved easily. It will take political will and a significant long-term investment to finally bring it to an end.
However, it’s important to put this figure in perspective. The government already spends about £10bn every year just on roads. The logic is simple: they’re a vital part of our infrastructure and we need a functioning road system to keep the country moving, so the government invests in it. That same logic should also apply to housing.
As well as providing the social homes the country desperately needs, this investment would have wider benefits for everyone. By spending £12.8bn each year, the government could create an economic boom. It would add £120bn to the economy annually, supporting businesses and new jobs, and helping to boost the economy.
Meanwhile, this investment would also save the government money. By building new social housing, more and more people could move out of expensive temporary accommodation or privately rented homes, and into social housing where they can afford the rent and put down roots. This would, in turn, bring down the colossal housing benefit bill, which reached the dizzying heights of £22.3bn last year.
Of course, spending this money won’t fix the problem overnight – the housing crisis requires a long-term perspective and long-term certainty. This would allow the funding to be ramped up, with less money in initial years of the programme as new jobs are created. Then, when additional capacity is in place, more money can be spent in later years.
What’s important is that the government invests the desperately needed money that is required to end the housing crisis. Underfunding is the biggest cause of this crisis, so it must be part of the solution. For the first time, we know exactly what it will take to end this economic, social and human catastrophe. We can also reap the economic rewards of this spending programme, creating new jobs and supporting businesses across the country.
Now that we know what needs to be done, it’s up to the government to take the lead and make it happen.