Spending power should be directed to new homes, says Mike Bruce
Well, the dogs have barked and the caravans have moved on. And with that, attention in Scotland turns from the heady days prior to the referendum result to the anticipation of new powers to the Scottish Government and the new forms of governance on offer to the rest of the UK.
A fresh start then and, as a starter for ten, I’d like to nominate a unifying proposition that, whatever forms our new powers or government take, we allocate a higher priority to the business of housing our population.
It’s not just the fundamental premise that a home is a basic need for all and the government should through subsidies, both capital and revenue, facilitate its provision. We do that now. We need to do it better and waken up to the economic and social spin-offs which are by-products of investment in housing. We must recognise at the heart of government and across political divides that the benefits will be more widespread than the comparatively narrow goal of housing provision. There is an abundance of research which demonstrates the positive effects of good housing provision on the general economy, through job creation which increases individual spending power and reduces the welfare bill, on health where the provision of warm dry housing naturally reduces the strain on the national health service and on education, where our children benefit from having space to study and learn outwith the school environment. We have sophisticated tools out there which can more accurately than ever before measure the impact of investment in terms of benefits to other sectors of society. We need to be applying these to create the powerful economic case for investment in housing.
We already know that every £1 spent on housing generates around £2.50 in economic activity. We already know that the building of 100,000 new homes will directly create 228,000 jobs, with a similar number created in other sectors. The creation of local neighbourhoods creates local economic development – that much should be self evident. In its 2013 publication Investing in Britain’s Future HM Treasury (Ch 6 Housing) states “Housing is an integral part of the UK’s economic and social infrastructure, supporting labour mobility and providing a direct benefit to growth and jobs as new homes are built”. Housing as part of the infrastructure? Of course – why should we not consider this socially imperative commodity on the same level as utilities, roads, transport and schools, the other significant factors in the national planning model? So why are we building fewer houses than five years ago? Ten years ago? It’s not as if demand is dropping – in fact not only is it rising, but access is becoming restricted. In its recent report Broken Market, Broken Dreams, the National Housing Federation (England and Wales actually) stated that home ownership had become an exclusive members club. Backing this up it showed that first-time buyers have to put down an average of £30,000 deposit and borrow 3.4 times their annual income compared (in real terms) to their predecessors in 1979 who saved £3,000 and borrowed 1.7 times their income. As a result home ownership is disappearing out of sight of the average earner. This dismal situation is replicated in Scotland where there is increasing pressure on the rented market with rents rising faster than inflation. We’re slowly coming out of the great recession, so why don’t we cement the recovery by building houses to meet the increasing demand. Developers and housing associations are ready and willing to build but need the government to create the right fiscal and planning environment to make it viable. Let’s invest in the building of housing, not just to meet housing need but to create jobs, economic stability and a better quality of life.
• Mike Bruce is chief executive at Weslo Housing Management www.weslo-housing.org