The 2016 Autumn Statement

On 23 November, Philip Hammond will deliver the Government’s Autumn Statement setting out the Government’s spending plans for the next few years. The government has signalled that it will be something of a “reset” of George Osborne’s plans; Theresa May has said that she wants the Government to help families who are “just managing”; and Ministers have signalled that they want the housing investment programme to support a range of tenures. A Housing White Paper is promised for the end of the year also.

The Government only has a narrow majority, and it is vulnerable to pressure from the considerable numbers of MPs on its backbenches who are concerned about the impact of welfare and housing policies on people on lower to middle incomes. Currently, the focus is on benefits for disabled people, with cnsiderable numbers of backbenchers apparently prepared to join forces with the SNP to bring about a shift in policy

We believe there is scope to encourage a similar movement of opinion towards housing policies which will get the homes Britain needs built, including truly affordable rental homes which are a vital part of tackling homelessness, and bring down the Welfare Bill. Such policies should be of equal appeal right across the political spectrum. Recent research carried out for a coalition of housing organisations by City economics consultants Capital Economics confirms that, whatever the future holds after Brexit, the case they made in their fuller report last year for a big increase in government investment in truly affordable rental housing holds good. Conservative peer Lord Porter, who chairs the Local Government Association, has always supported the SHOUT case, and spoke eloquently at this year’s Conservative Party Conference in favour of allowing councils to build rental housing at scale. There are MPs sympathetic to our case too, for example Kevin Hollinrake, Heidi Allen and Mark Field. There is also a growing media consensus in favour of the policies SHOUT advocates.

So we think it is well worth dropping your local MP an email, especially if they are a Conservative, making the case for investment in social and affordable housing, and encouraging them to make their views known to Philip Hammond, Communities Secretary Sajid Javid, and Housing Minister Gavin Barwell. Feel free to draw on the suggested text below, but if you have time to personalise it, so much the better, it won’t then feel like a deluge of stock emails, to which MPs are constantly exposed!

"I am writing to encourage you to make the Chancellor and other Ministers aware, ahead of the Autumn Statement, about the need for a big increase in government investment in homes for rent which people can really afford.

When the Prime Minister spoke on taking office about the pressures faced by families who are “just managing”, housing was one of the things she picked out. She actually talked about families struggling to pay their mortgage, but the bigger challenge for families like that now now is paying the rent. Recent figures published by the Resolution Foundation show that 20 years ago 60% of low-middle income families owned their home, it’s half that now. On average housing costs for that group over the same period have increased from 18% to over 24% of their income and have carried on rising since 2010, while they have gone down for better off households. A typical household in this group would need to save for 22 years to afford a deposit on a house, compared with just three years in the 1990s. Tenure options like shared ownership and starter homes may give a leg up to people who are “nearly there” in terms of home ownership, but for far more of the group the PM was talking about, what they need in the first instance is property to rent at a price they can afford. That would give them breathing space to build up some capital and access home ownership.

Making work pay and bringing down the cost of welfare simply won’t happen if the state has to carry on helping many lower income households pay high rents to private landlords. Build lower rent housing and you would significantly increase the extent to which work pays, remove the need for many households to claim welfare benefit, and reduce the costs of welfare for others. Last year, a coalition of housing organisations published research by City advisers Capital Economics taking a look at the business case for housing investment to drive down the welfare bill. It found that carrying on as we are, housing ever more low income households in ever more expensive private sector housing, risks adding £70bn a year to the welfare bill by the mid century. In contrast, investing in 100,000 new rental units a year is an excellent business proposition for the country, with savings mounting to half a per cent of GDP. No wonder Capital described current policy as “fiscal myopia” and said there was an “unanswerable case” for public investment in new development. A post-referendum update on this research published last month shows that the sums still add up. This policy would save hundreds of billions of public spending over the next 50 years.

One thing there is an almost total consensus about across the political spectrum is that we need to get total housebuilding in England up to 200-250,000 a year. Since large scale government investment ceased in the late 1970s, we’ve been waiting for the private sector to pick up the slack. It hasn’t happened. Indeed, private sector output has been consistently lower than in the 1950s and 60s when the government was investing massively in housing. There’s a strong tradition in Conservative politics of using well-targeted, well-managed public investment to tackle evident market failures, and we’d suggest that’s what’s needed in housing now.

It is great that Bob Blackman’s Homelessness Reduction Bill is now proceeding with support from the Government and all parties. However, the measures in the Bill won’t work if councils don’t have access to a lot more rental housing which lower income households can afford. As a council homelessness manager said in a recent BBC documentary programme “I’m trying to run an options service without options.” The Autumn Statement is an opportunity for the Government to show its real understanding and commitment to end homelessness by starting a programme to build such housing at scale.

I hope very much the Government will include the following measures in the Autumn Statement: 

  • not proceeding with proposals in the Housing and Planning Act to force councils to sell housing, when they already have far too little to meet local needs;
  • letting councils decide, on the basis of local needs, what is the sensible mix of affordable options for rent and purchase to include in the contributions they require from commercial housing developers;
  • allowing councils who own housing stock to borrow against their very considerable asset base to build more homes people can afford;
  • reshaping government investment in housing, as Ministers have already signalled, so it includes housing for rent in place of home ownership options which are out of reach for most middle to low income households;
  • increasing investment to support housing associations and councils to develop homes at rents people can afford."

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    UPDATED October 2016 Capital Economics report: Building Social Rent homes
    SHOUT Supports ending the Housing Crisis in a Generation