Building 100,000 new homes would result in a £15 billion boost to the economy.
Councils have an important role in rebuilding the national economy after the covid lockdown through building new homes for social rent. A programme of building 100,000 new homes for social rent each year will help the covid economic recovery and deliver long-term fiscal benefits.
During the lockdown, direct government spending was needed to keep businesses afloat and workers in employment. Similar direct intervention will be needed to establish and sustain the economic recovery. In this economic emergency, effective fiscal loosening requires emphasis on increased government expenditure rather than tax cuts.
Building 100,000 new homes would result in a £15 billion boost to the economy."
Expenditure on new homes is a highly effective way to boost the domestic economy - with little money lost to importing foreign goods and services and beneffiting a large number of small and micro businesses right across the country.
Covid amplifies the need and demand for homes by families unable reasonably to afford market rents or to buy. As covid-related income support schemes wind down, unemployment rises, and the government ban on evictions is lifted, more families will be foreced to find cheaper accommodation.
Along with increased rough sleeping, homelessness and sofa surfing, the number of households on council waiting lists is expected to rise sharply. Both renters and homeowners will be at risk if they are no longer able to meet their housing costs.
Building new homes for social rent will provide work for the construction sector, much of which will be under-utilised, idle or redundant because of covid.
The sector will have lost 1.3 million worker years of construction by 2024.
Building new homes for social rent is an effective and efficient way to deliver fiscal stimulus. Building 100,000 homes for social rent would support 89,000 jobs and add £4.8 billion in gross value added to the construction sector.
Although councils could expect rental income of £346 million a year from 100,000 social rent homes, they cannot fund substantial homebuilding programmes from the rent receipts alone.
Investment in 100,000 council homes would yield a net present value public sector surplus of £7.8 billion over 25 years and real annual return to government of 3.8 per cent each year.
The full 'Building post-pandemic prosperity' report from Pragmatix Advisory Limited is available to download from National Federation of ALMOs website. This includes a detailed break down and summary of the findings.