Research: The financial and economic case for removing Housing Revenue Account debt

This research was commissioned by Shelter from Pragmatix Advisory to explore the financial and economic impacts of removing Housing Revenue Account (HRA) debt. It builds on the previous work we commissioned from Savills, which found that cancelling HRA debt could release the capacity for 284,000 council-built social rent homes.

Pragmatix modelling finds that cancelling HRA debt is broadly fiscally neutral; it is largely a series of inter-government transfers, involving cancelling debt that the public sector owes to itself. Combining this with the necessary public investment for councils to build 284,000 social rent homes over 10 years:

• Pays for itself within 20 years and generates a net benefit of £141.5 billion to the economy over 60 years.

• Delivers £411 billion of economic outputs over 60 years, supporting 2.5 million jobs.

• Cuts the number of households in temporary accommodation (TA), currently at over 135,000 households, with savings to councils eventually hitting £672 million a year as households move out of TA.

• Government departments see savings of £64.7 billion, including £26.3 billion for the DWP.