Labour housing minister floats public sector housebuilding ideas

28 Sep 15

New shadow housing minister John Healey has today set out a series of financial reforms that could help the public sector build 100,000 homes a year.

Healey, who was appointed to Labour’s shadow cabinet by party leader Jeremy Corbyn earlier this month, said a large public sector housebuilding programme was needed to lower Housing Benefit payments.

The discussion paper is not Labour policy, but sets out a number of proposals to tackle what Healey called the “intensifying” housing crisis.

It argues that, if central government, councils and housing associations were to play a bigger role in providing homes to rent and buy, initial investments could be repaid within 26 years through lower Housing Benefit payments.

“In the first year of a new five year Parliament it is time for a serious conversation about the problems millions of people face with little hope of a decent, affordable home to buy or rent,” Healey said.

“The truth is the cost of the housing crisis is big enough for every part of the public and private sector to play a much bigger part. This report shows that public investment in building low rent homes could reduce the housing benefits bill, and produce a profit in the long-run for the taxpayer.”

Among the proposals is a call to give councils greater financial freedom by changing prudential borrowing rules on town halls by allowing them to borrow against existing assets.

This would allow town halls to be run as enterprising public institutions, Healey said.

“We model 60,000 additional homes over five years as a result of this policy change, half of which would require grant funding.”

The High aspirations, sound foundations report also called on the Treasury to commit to allowing Housing Benefit savings to be transferred directly to the Homes and Communities Agency, at least for a limited period, to finance additional affordable house-building.

Other proposals include the creation of a new joint minister across the Department for Communities and Local Government and the Department for Work and Pensions in order to ensure housebuilding is focused in a way that will cut Housing Benefit payments.

“In my year as housing minister [in the last Labour government from June 2009], I didn’t have a single bilateral meeting with any [DWP] minister despite the close interplay between housing and Housing Benefit,” Healey highlighted.

“That has to change. Administrative changes such as shared departmental priorities, a new Cabinet sub-committee or appointing a minister to sit jointly in the DCLG and DWP teams to take responsibility for this area all have merit, but the best guarantor of joint-working is an explicit and substantial commitment to a new financial relationship between the departments.”

This could include DCLG changing the remit of the Homes and Communities Agency so it takes account the impact on Housing Benefit when allocating social housing grants. In practice, this could mean a bias towards lower rents, and to those regions of the country – principally London, the South East and East of England – where the potential Housing Benefit saving is greatest.

Healey also floated extending the current government guarantees programme for housing associations to lower borrowing costs for the sector.

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