Potential for £320bn windfall from new generation of social housing

LGA urges Chancellor to go beyond lifting the council borrowing cap and deliver “once-in-a-lifetime change”.


Councils could generate £320bn for the country’s economy over the next 50 years if they were able to build a “new generation” of high-quality council housing, the LGA says.

Analysis examining four different future economic scenarios demonstrates how new social housing will deliver huge gains to tax payers.

Even the worst-case scenario referenced by the LGA still results in a £10bn return.

LGA chair Lord Porter said the findings offered the Chancellor the chance to go beyond lifting the borrowing cap and deliver “once-in-a-lifetime change” to benefit thousands across the country.

“Councils have been quietly getting on with building some outstanding new homes, they now need to be free to deliver them at scale.

“This is because the future of council housing will deliver high quality and innovative design, support local builders, create local jobs and training, and build where the market will not,” he said.

The research references Birmingham City Council as now the most productive house builder in the ‘second city’ and aiming to build approximately 1,200 council homes between 2018 and 2021 using nearly £140m from its HRA.

If the borrowing cap was lifted, the council could build a further 18,000 homes by 2031, the report says.

Unlike investments in most other public services and infrastructure, investment in social housing generates returned income through rents, while also creating savings in the huge annual housing benefit bill.

Investment would also create significant wider economic gains such as increased productivity, jobs, and increased tax returns, as such a large proportion of construction revenues remain in the domestic economy.

Council leaders want to see a national ambition to work towards delivering a new generation of 100,000 high quality social homes every year.

Research for the LGA and partners by Capital Economics found:

  • Every £1 invested in a new social home generates £2.84 in the wider economy
  • Every new social home would generate a saving of £780 per year in Housing Benefit
  • Every new social home would generate a fiscal surplus through rental income

“The last time we built enough homes councils built 40% of them. We need to get back to those levels if we’re to tackle our housing crisis, which is why we need to look towards delivering a new generation of 100,000 high quality social homes a year,” Lord Porter said.

“The gains are enormous. Investments in social housing could generate returns up to £320bn over 50 years, helping countless families along the way by creating local jobs and building homes people need and can afford.

“On Monday, the Chancellor has a real opportunity to deliver a once-in-a-lifetime change that could benefit thousands of people across the country – we encourage him to take it,” he said.

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