Building an economic recovery

Give the builders a chance

The bankers had their billions, in 2009 a coalition called the Coalition Group argued it was the turn of the builders; only they could save the economy, it was argued. By Mark Cantrell

First published in Northern Housing

SPARE a few billion quid for a beleaguered banker? Before reaching for the chequebook, stop and think. It’s worth considering how many construction jobs and brand new affordable housing units the taxpayers’ ‘ragged trousered philanthropy’ could buy - with all this entails for the national economy.

Certainly, that’s something Gordon Brown’s government is being asked to consider by the new 2020 Group, a coalition of the National Housing Federation (NHF), the housing charity Shelter, the Local Government Association (LGA), and the Trades Union Congress (TUC).

Chaired by Kate Barker, a member of the Bank of England’s monetary policy committee and Gordon Brown’s former housing adviser, the 2020 Group wants to see a massive investment package included in April’s Budget, so that a mass programme of housebuilding can get underway without delay.

The group has challenged the Government to invest billions of pounds to build 100,000 new affordable homes in the next two years alone, to ultimately fulfill its 2007 Green Paper vision of three million new homes by 2020.

The stakes are high given the heavy demands already placed on the Government’s coffers. In its report, ‘Housing and the Credit Crunch’ published at the end of February the Communities & Local
Government Select Committee expressed concern that the Government did not know how its borrowing was going to be paid off.

“We are particularly concerned that the Government is borrowing from future budgets now with apparently no idea how it is going to restore that money at a later date,” said Dr Phyllis Starkey MP, the select committee’s chair. Even so, the committee urged the Government to stick to its targets to build more homes.

Starkey added: “The credit crunch has not reduced the numbers of households needing new housing, nor does it affect the need to address years of under-supply. The message we have received from witnesses during our inquiry was clear: the steps the Government is taking are welcome, but further action is needed if the Government is to have any chance of meeting its targets for home building and achieving the goal of a decent home for all.”

The 2020 Group’s fiscal stimulus package is not calling for money borrowed from tomorrow’s budget, but a massive shot of new investment into housebuilding that will help the country build
its way out of recession - and solve some of the historic housing problems in the process.

“Support for housing today offers excellent value in terms of sustaining economic activity,” Barker said. “And it 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 home building is sowing the seeds of the next boom.”

The idea of the boom might not sound so bad, until we remember the stratospheric rise in house prices of the old boom, spiralling out of control until the entire bubble burst and dumped the country into ‘credit crunch’ bust. The 2020 Group warns that without action now, by 2020 things might be so much worse.

“For years housing output has failed to keep pace with demand,” it said in its launch statement. “By 2020 on present household projections, if policymakers fail to act, the supply shortage will worsen markedly, with devastating consequential impact on affordability and the social and economic health of the nation.”

In other words, without massive investment to build new affordable homes in the here and now, today’s economic problems will prove but a ‘dress rehearsal’ for those of tomorrow.

“Without radical action many people in construction will lose their jobs and up to five million could find themselves on housing lists by the end of 2010 - this is the Government’s chance to help us make sure that neither of these things happen,” said David Orr, chief executive of the NHF.

“The group’s proposed house building programme could kick start the economy, save jobs, and deliver new homes for more than 200,000 people. This is a one-off chance for the Government to stimulate the economy and help housing need in one fell swoop.”

Adam Sampson, chief executive of Shelter, agreed: “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.”

TUC general secretary Brendan Barber said: “When the private sector stops spending, the public sector must fill the gap, otherwise the recession will be deeper and longer than it need be. With such obvious housing need, the case for more social and council housing is very strong. When such investment can ensure such an important sector as construction retain jobs, capacity and its skills base then the case for a significant boost in the Budget becomes overwhelming.”

Margaret Eaton, chair of the LGA, added: “Even when the economic good times were rolling, councils saw ever-increased pressure on their social housing stock. Now that the recession is upon the country it appears that many thousands more people will be looking to councils to provide them with a permanent home as they either find it impossible to get on the housing ladder or see their home repossessed.”

So, a new clarion call is sounding, one might say: not ‘billions for the bankers’ but rather ‘billions for the builders’.

Nowadays, there’s a lot of demand for the Government to open its wallet and sub the economy through the harsh times. The car industry and the retail pub sector have both cried help too. In the case of house building and the construction industry, however, the 2020 Group’s fiscal stimulus package is less an up held begging bowl - rather it’s a call to arms.

Now, it’s up to the Government to answer the call by filling the war chest.

This article was written for Northern Housing magazine (circa March 2009) and was subsequently re-published on the Housing Excellence website, 3 June 2009.

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