Nick Clegg is right to push for a massive investment in housing and infrastructure. But Whitehall needs to allow local government to take the lead in reducing waiting lists and boosting economic recovery
When Athens was rebuilt after being destroyed in 480 BC, Greek tragedies became a popular expression of Greek localism – civic pride and Athenian culture – celebrated in a twice-yearly competition.
We have a government that says it is into localism – that is, it appears, as long as it is not public sector led. But is it time for central government to back out and leave those closer to the public to get on with the job?
Take housing as an example. The perceived wisdom is that housing can lead the country back into recovery. The building trade has been hit particularly hard by the recession with skilled ‘trades people’ finding work extremely difficult to come by, particular away from the magnet of London and the Olympics. New housing starts have reduced by 11% in that last quarter with social housing down by nearly twice that amount.
There seems, at last, to have been some recognition of this as some are hoping for a boost to the housing sector owing to the deputy prime minister suggesting last week that the government could be planning a ‘massive’ investment in housing and infrastructure. After all the quantitative easing to date, mainly aimed at the banks, does not seem to have done the trick. Could this belated recognition of the opportunities that housing offers be the opening for part of local government to show that it can be relied on to deliver the goods?
Local housing authorities are just coming to terms with the freedoms being offered within the self-financed Housing Revenue Account. True, they have a cap on the maximum housing debt that they can hold; they have seen the model threatened by attempts to revive Right to Buy; and welfare reforms mean that income streams are less certain. However, there is scope for many to think about how, over the medium term, they can provide some much needed new accommodation to meet the ever-increasing housing waiting lists.
Now if only the dogma that ‘public is bad and private is good’ could be forgotten for a short while and the shackle of the debt cap adjusted or removed completely, Local government could provide assistance where others seemed to have failed.
Think how all that future capacity in self-financing could be used now to stimulate the economy and ease the growing homeless burden. The resource is in the system – the government’s own figures are in agreement on that. We just need to move it forward from years 15 to 30 to years one to 15. Use of ratios such as interest covered by income, as suggested by CIPFA during the development of self financing, would ensure that the borrowing (which clearly is within the Prudential Code) would not become excessive.
Of course, the real answer would be for us to move to the European definition of public expenditure, which excludes social housing borrowing. All the funds for the Housing Revenue Account come from the tenants – especially when Universal Credit is up and running.
So come on Grant Shapps. Here is your chance to deal with the housing shortfall and save the economy. Not to do so has the makings of a Greek tragedy and surely one of them this year is enough.
Ken Lee is chair of the CIPFA Local Authority Housing Panel and director of resources at Wigan and Leigh Housing Company
