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New homes can save economy, says influential group

The 2020 Group, chaired by Kate Barker, the Prime Minister’s influential former housing adviser, said significant extra financial investment was needed to build to keep supply going, supporting private building and creating 100,000 new social homes over the next two years.

Along with Ms Barker, the group consists of the Local Government Association (LGA), National Housing Federation (NHF), housing charity Shelter, and the TUC.

Despite Government pledges to build thousands of new homes, the credit crunch has meant a collapse in house prices and lending, a severe drop in housing building, and an estimated 450,000 job losses in the construction industry between 2008 and 2010.

Ms Barker said: “Support for housing today offers excellent value in terms of sustaining economic activity, and reduces the risk of a very severe loss of capacity in the housing and related industries. There is real concern that the present fall in homebuilding is sowing the seeds of the next boom.”

The group said a major house building programme would help put the industry and the economy back on its feet, provide homes for some of the half a million households who are living in bad housing, help forestall a return to unsustainable house price inflation, and provide a lifeline to the 1.77 million households on council housing waiting lists.

The 2020 Group’s call comes as PM Gordon Brown and Chancellor Alastair Darling work towards announcing a major financial stimulus package in April’s budget. The group wants major investment in housebuilding included in the Government’s figures as the certain way of supporting the economy.

Ms Barker said: “Social housing waiting lists are rising. This package meets a real and urgent need.”

The group said a fiscal stimulus into housing would:

Support jobs: building 100,000 social rented homes over the next two years would save 30,000 jobs in the industry, as well as thousands who support the industry, including building materials, furniture and white goods;

Retain skills and drive innovation: Preserving construction jobs and apprenticeships will help prevent a loss of key skills that could take years to replace;

Promote long-term macroeconomic stability: Supporting the industry will enable housebuilders to continue to invest in housing supply and reducing the risk of a housing supply shortage once the upturn comes;

Sustain business activity: The proposed programme would improve cash flow and reduce risk for developers and suppliers currently experiencing severe financial pressure, and;

Increase labour market mobility: Worsening affordability and lack of affordable and social housing make it more difficult for households to move to take up new jobs and contribute to recruitment and retention difficulties, especially in the public sector.

The additional economic activity generated by the programme would also lead to higher taxation revenues for the Exchequer, including income tax, national insurance, VAT and corporation tax.

Adam Sampson, Shelter’s chief executive, said: “This package points a clear way forward for the Government. As housebuilding dries up and thousands of construction workers face the dole queue, building the homes this country needs can not only help the thousands of people living in poor housing, it can also give a real and much needed financial injection to the economy.”

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