The Local Government Association has claimed that councils could generate £320 billion into the economy over the next 50 years if they were able to build a ‘new generation’ of high-quality council housing.
Research for the LGA by Capital Economics has found that every £1 invested in a new social home generates £2.84 in the wider economy, every new social home would generate a saving of £780 per year in Housing Benefit and that every new social home would generate a fiscal surplus through rental income.
The LGA’s analysis, which looks at four different future economic scenarios, demonstrates how new social housing will deliver huge gains to tax payers, with the worst-case economic scenario still resulting in a £102 billion return.
Prime Minister Theresa May announced in September plans to remove the borrowing cap which has prevented councils from building at scale. The LGA is urging Chancellor Philip Hammond to go further and fulfil that pledge and set out plans for the borrowing cap to be removed entirely as part of the Budget.
Lord Porter, chairman of the LGA, said: “The last time we built enough homes councils built 40 per cent of them. We need to get back to those levels if we’re to tackle our housing crisis, which is why we need to look towards delivering a new generation of 100,000 high quality social homes a year. The gains are enormous. Investments in social housing could generate returns up to £320 billion over 50 years, helping countless families along the way by creating local jobs and building homes people need and can afford.
“Councils have been quietly getting on with building some outstanding new homes, they now need to be free to deliver them at scale. This is because the future of council housing will deliver high quality and innovative design, support local builders, create local jobs and training, and build where the market will not. The Chancellor has a real opportunity to deliver a once-in-a-lifetime change that could benefit thousands of people across the country. We encourage him to take it.”
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