Comment: Time to end housing sector austerity

1st September 2016

The last two years have been some of the most uncertain times I’ve known in the housing industry.

What seemed like a never ending election campaign in the latter part of 2014 and early 2015 was followed not by the usual post-election clarity, but by another period of political and economic ambiguity thanks to the EU referendum.

The British people have voted, but, strangely, we are no closer to the lucidity we crave.

As new prime minister Teresa May returns to her desk this week after her summer holiday, we can only hope that the government will soon reveal its strategy for formally exiting the EU and, more importantly, unveil a clear policy response to the problems in the housing sector.

In my opinion, nothing short of a root and branch review of housing policy is needed following two years in which the UK has seen a decline in new affordable housing development and agonising financial uncertainty over funding for residential care schemes.

In this post-Brexit cloud, one would imagine private housebuilders are going to have far less appetite than normal. Housing associations, already with their hands tied by government funding cuts, could be further hampered by a lack of finance for their new-build programmes.

The National Housing Federation has called on the government to be more flexible in the use of money it has already allocated for housing, with money being redirected from products such as shared ownership and starter homes, towards building more homes for rent.

This is welcome given that new-build affordable and social rent schemes have fallen off a cliff thanks to the rental cap. But the answer isn’t just using the money already in the pot more wisely.

The housing sector is in desperate need of a major cash injection if we are to meet affordable housing targets. But recent history has also shown that an increase in housing spending can also sustain our economy in times of economic turmoil.

While former housing minister John Healey was keen to trumpet his own successes as housing minister in a recent opinion piece in Inside Housing, it’s hard to argue with the point he’s making.

He states that a £1.5bn increase in housing spending after the 2008 financial crisis enabled government to hit almost 54,000 affordable housing starts in 2009/10, of which 40,000 were for social rent. According to the former Labour minister’s figures, this has now dropped to less than 1,000 starts for social rented schemes.

With interest rates at historic low levels, Mr Healey’s call for housing spending to be increased makes sense, though I doubt it would get back to pre-austerity levels like he suggests.

Yes, we need more money. But we also need a focused and coherent housing strategy. To this end, I’m very keen to hear what our new housing minister Gavin Barwell has to say.

As parliament gets back into full swing after the summer recess, and with an Autumn Statement on the horizon, I await fresh policy announcements with baited breath. Let’s hope we’re not left disappointed.

Greg Mulligan is a director of Mulbury