Ben Hopkinson, Head of Housing and Infrastructure at the Centre for Policy Studies recently published a report titled England’s £79 Billion Housing Subsidy, a report that breaks down the cost of England’s social housing subsidy and urges Andy Burnham to pivot away from his focus on expanding council housebuilding.
The report claims that Britain does not in fact have a shortage of social housing, but rather a shortage of housing in general. The report argues that measures such as speeding up planning, removing regulation and allowing more land to be developed on will increase housing supply, and have a more beneficial effect on all-around affordability. This is reliant on the logic that additional housing stock will stimulate movement from potential buyers, bringing down prices as wealthier buyers move into new build homes and demand eases. This trickle-down housing philosophy has been attacked previously by housing charity Shelter, who claim that meeting demand alone and not need is exactly what has fuelled the housing crisis in the first place.
Much of the report focuses on tallying up the cost to the state of building and maintaining social housing. The report makes no mention of the 1.5M households on social housing waiting lists today, or the historic amounts of people living in temporary accommodation- nearly 200,000 of which are children.
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One of the opening claims of the report is that the UK is not actually experiencing a social housing shortage at all. The evidence for this is a graph comparing the percentage of social housing in OECD countries, of which the UK is the fourth highest. There is little further context on the history of social housing in the UK, notably omitting the fact that since the 1980’s we have sold off roughly half of it, and that real living wages have largely stagnated and fallen since 2008.
The report then delves into the potential costs of Burnham’s social housing priority. The report does acknowledge that operational costs are all but recouped through rent throughout the life of a social home, and that the damage to the states pockets instead comes by the way of construction costs. To judge these construction costs, the report uses an example of a three-bedroom, semi-detached house, estimated to cost £251,700 for construction alone, a figure it compares with the current £3.9Bn per year of SAHP funding. This funding would only cover the construction of 15,494 houses a year, amounting to only 5% of the Government’s annual housing target for England. The report does however acknowledge that “there is huge variability in the cost of constructing different kinds of housing”, and only provides estimations based on this specific cost.
The report also includes the UK’s spending on housing benefit and the Universal Credit Housing Element in order to reach it’s £79bn headline figure. Another table is presented comparing the spending on housing benefit as a % of GDP of OECD countries, of which the UK is the highest by 0.50%. The report denounces Burnham’s past calls for a rise in LHA rates, and instead points to how much money could be saved if we cut housing benefit by 0.7%.
The report also then includes an “implicit” subsidy in it’s calculations- the difference between rents recouped through social rent and if the same homes were rented on the open market. This figure comes to £43bn per year, and is the single largest subsidy that makes up the reports £79bn headline figure. This subsidy however is not a cost- it is a hypothetical figure of how much more money could be made if social housing tenants were suddenly charged open market prices.
The report summarises it’s £79bn subsidy in its conclusion; £43bn in “implicit” subsidies, £32bn on housing benefit, and £3.9bn per year on SAHP funding. This expense is made all the more politically contentious, the report states, by the fact that many of these properties are occupied by those who were not born here. This is, in fact, not a fact, and has been repeatedly debunked.
The report’s final thoughts: “tinkering around with pots of money for social housing or housing allowances will not help resolve the problem”. Instead, the report argues, Burnham should focus on boosting housebuilding for all tenures. The full report can be found here.
