Three million new social homes key to solving housing crisis
Posted 14 Jan 2019
A landmark report by Shelter’s social housing commission published today calls for an ambitious 3.1 million new homes, extending the offer of social housing to many more people.
After the Grenfell Tower fire, the charity brought together 16 independent commissioners with diverse backgrounds from across the political spectrum to examine the housing crisis in England as it exists today.
Among others they include, Ed Miliband MP, Baroness Sayeeda Warsi, Baroness Doreen Lawrence, TV architect George Clarke, Lord Jim O’Neill and Grenfell survivor Ed Daffarn.
Having spent a year listening to the views of hundreds of social tenants, 31,000 members of the public and a range of housing experts, the commissioners put forward a bold vision for social housing, and who should have the opportunity to live in it.
Building for our future: a vision for social housing recommends the government invests in a major 20-year housebuilding programme, which would offer a social home to millions who fail to qualify under the current system. It includes:
1.27 million homes for those in greatest housing need – homeless households, those living with a disability or long-term illness, or living in very poor conditions.
1.17 million homes for ‘trapped renters’ - younger families who cannot afford to buy and face a lifetime in expensive and insecure private renting.
690,000 homes for older private renters – people over 55 struggling with high housing costs and insecurity beyond retirement.
The commissioners argue politicians cannot remain idle at a time when half of young people have no chance of ever buying a home, private renters on lower incomes spend an average of 67% of their earnings on rent, and almost 280,000 people in England are homeless.
Commissioner Baroness Sayeeda Warsi said: “Social mobility has been decimated by decades of political failure to address our worsening housing crisis. Half of young people cannot buy, and thousands face the horror of homelessness. Our vision for social housing presents a vital political opportunity to reverse this decay. It offers the chance of a stable home to millions of people, providing much needed security and a step up for young families trying to get on in life and save for their future. We simply cannot afford not to act.”
Analysis carried out for the commission by Capital Economics suggests the economic benefits of social housebuilding would ultimately outweigh the initial costs. The programme would require an average yearly investment of £10.7 billion during the construction phase, but Capital Economics estimate that up to two-thirds of this could be recouped through housing benefit savings and increased tax revenue each year. On this basis the true net additional cost to the government, if the benefits were fully realised, would be just £3.8 billion on average per year over the 20-year period. And after 39 years the investment will have fully paid for itself.
The Capital Economics research also shows that existing products such as Help-to-Buy are a less effective use of tax-payers money. The commission goes on to conclude that building social homes is the only way for the government to reach its 300,000 homes a year target.
Commissioner Lord Jim O’Neill said: “There needs to be a profound shift to see social housing as a national asset like any other infrastructure. A home is the foundation of individual success in life, and public housebuilding can be the foundation of national success. It is the only hope the government has of hitting its 300,000 homes a year target.
“The government’s budget for capital expenditure is £62 billion a year - our housebuilding programme would cost only a fraction and is well within its financial reach. With current spending on housing benefit shockingly inefficient, it’s not hard to see what an investment in bricks and mortar could do to help solve the housing crisis and boost our economy.”
While a historic renewal of social housing is essential, the report makes clear this must go together with a series of reforms to improve social housing, such as:
A new Ofsted-style consumer regulator to protect residents and to enforce common standards across social and private renting.
A new national tenants’ voice organisation to represent the views of tenants in social housing to national and local government.
A new national standard to ensure enough investment in maintaining social homes and their surrounding neighbourhoods.
Commissioner Ed Miliband MP said: “The time for the government to act is now. We have never felt so divided as a nation, but building social homes is a priority for people right across our country. This is a moment for political boldness on social housing investment that we have not seen for a generation. It is the way to restore hope, build strong communities, and fix the broken housing market so that we meet both the needs and the aspirations of millions of people.”
Case study: Lucie is 30 and works full-time as a welfare case officer for a charity. She rents privately along with her two children aged eleven and six. Lucie and her family have had to move eight times since her daughter was born in 2007.
Lucie said: “I really feel that if I’d been offered social housing and I’d been able to live somewhere affordable for the last ten years, I think I’d probably be in a position now where I could buy my own property, and that social home could then go back to someone else who needs it. But because I’ve had to move so many times, and rents are so high - the financial implications have been devastating. It simply hasn’t been possible for me to save the money. Just that little bit of stability for me and my children would have made a big difference.”
The commission recommendations will be presented to the Prime Minister and to Labour leader Jeremy Corbyn later today. To find out more about Shelter’s social housing commission visit: shelter.org.uk/socialhousing
Notes to editors:
To estimate the number of new social homes required (3.1m) to support those in greatest housing difficulty, ‘trapped renters’ who cannot afford to buy, and older private renters struggling with affordability, Shelter used ONS and government data on: existing housing need, housing statistics and population projections. This is in addition to using research from Herriot-Watt University and the Resolution Foundation. Full details of Shelter’s analysis is available on request and will be published alongside the commissioners’ report.
The three household groups who would benefit from social housing as identified by the commission have all been estimated as follows:
The figure for those in ‘greatest housing need’ utilises MHCLG data on recorded homelessness and Herriot-Watt University’s estimates of homelessness, figures from the English Housing Survey (EHS) on households living in poor or overcrowded conditions, and households living with a disability or long-term illness.
The figure for ‘trapped renters’ is derived from official government population projections and the Resolution Foundation’s Home Affront Report on the deterioration of home ownership rates among young people.
The figure for ‘older private renters’ is generated by combining estimates of older households in the PRS on below average incomes with official MHCLG data on household projections in England.
The number of homeless people in England (277,000) is compiled by combining figures on different forms of recorded homelessness. Most of these are from official sources (MHCLG figures on temporary accommodation and rough sleeping), plus figures from Social Services via an FOI, and single homeless hostel bed spaces from Homeless Link.
The average amount spent on rent by lower earners is calculated using 2016-17 EHS data on private renters with household incomes in the lowest 20% of the population. They spend an average of 67% of their income on rent payments.
The statistic that ‘half of young people cannot buy a home’ comes from analysis carried out by Shelter using data from the Resolution Foundation’s Home Affront Report. The Resolution Foundation estimates younger people are now less likely to own than earlier generations based on modelling the future of the housing market and incomes for different age cohorts. Using their model of ownership rates for the most complete and most relevant age cohort for our analysis (those born in 1986) we combined their ‘pessimistic’ and ‘optimistic’ projections to arrive at a mid-point for ownership levels among this group.
Capital Economics have profiled the year on year costs and benefits of the proposed 3.1 million social housebuilding programme and compared it with what could happen in the future if the government continued with its Affordable Homes Programme in the current format. Full details of the analysis will be published alongside the commissioners’ report and is available on request.
The Capital Economics analysis of Help-to-Buy will be published alongside the commissioners’ report and is available on request.
In the 2018 Budget the government reported that they expected to spend £62 billion on capital investment (departmental expenditure limit) in 2018-19.
The full list of commissioners is below. Photos and bios are available on request:
Reverend Dr Mike Long – Notting Hill Methodist Church (Chair)
Baroness Doreen Lawrence – Peer and social justice campaigner
Baroness Sayeeda Warsi – Conservative Peer and first Muslim cabinet member
Edward Daffarn – Grenfell survivor and representative of Grenfell United
Rt. Hon Ed Miliband – Former Secretary of State and leader of the Labour Party
Lord Jim O’Neill – Former Conservative Treasury Minister
George Clarke – Architect and Television Presenter
Gavin Kelly – CEO of Resolution Trust, and Chair of Living Wage Commission
Ryan Shorthouse – Director of Bright Blue and former adviser to the Conservatives
Miatta Fahnbulleh – Director of New Economics Foundation
Dr Faiza Shaheen – Director of Centre for Labour and Social Studies (CLASS)
Rob Gershon – social housing resident and activist, and Associate Lead for Housing Quality Network’s Residents’ Network
Samia Badani – Co-Chair of the Notting Dale Residents Advisory Board
David Tovey – Artist, educator and activist. Founder, One Festival of Homeless Arts
Jo Miller – CEO Doncaster Council, and President of Society of Local Authority Chief Executives (SOLACE)
Raji Hunjan – Chief Executive of Zacchaeus 2000 Trust