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NHF: Mass house building programme can save the economy, says influential group

The Government should build its way out of recession by investing billions of pounds into building 100,000 new affordable homes over the next two years, according to a powerful group of leading housing organisations, unions and local authorities.

With British construction and manufacturing hard-hit by the financial downturn the newly formed 2020 Group says building more homes will give a desperately needed boost to the economy, save thousands of construction jobs, avoid serious skills shortages and help stimulate long term market stability.

The 2020 Group, chaired by Kate Barker, the Prime Minister's influential former housing adviser, says significant extra financial investment is needed to build to keep supply going, supporting private building and creating 100,000 new social homes over the next two years.

Along with Ms Barker, who sits on the Bank of England's Monetary Policy Committee, the group consists of the National Housing Federation (NHF), housing charity Shelter, the Local Government Association (LGA) and the TUC.

Despite Government pledges to build thousands of new homes, the credit crunch has meant a collapse in house prices and lending, a severe drop in housing building, and an estimated 450,000 job losses in the construction industry between 2008 and 2010.

Federation chief executive David Orr said: "The group's proposed house-building programme could kick start the economy, save jobs, and deliver new homes for more than 200,000 people. This is a one-off chance for the Government to stimulate the economy and help meet housing need in one fell swoop."

Mr Orr added: "Without radical action many people in construction will lose their jobs, and up to 5m people could find themselves on housing waiting lists by the end of 2010 - this is the Government's chance to help us to make sure that neither of these things happens."

The group says a major house building programme would help put the industry and the economy back on its feet, provide homes for some of the half a million households who are living in bad housing, help forestall a return to unsustainable house price inflation, and provide a lifeline to the 1.77 million households on council housing waiting lists.

The 2020 Group's call comes as PM Gordon Brown and Chancellor Alastair Darling work towards announcing a major financial stimulus package in April's budget. The group wants major investment in house building included in the Government's figures as the certain way of supporting the economy.

Ms Barker said: "Support for housing today offers excellent value in terms of sustaining economic activity, and reduces the risk of a very severe loss of capacity in the housing and related industries. There is real concern that the present fall in home building is sowing the seeds of the next boom."

She added: "Social housing waiting lists are rising. This package meets a real and urgent need."

The group says a fiscal stimulus into housing would:

. Support jobs: building 100,000 social rented homes over the next two years would save 30,000 jobs in the industry, as well as thousands who support the industry, including building materials, furniture and white goods
. Retain skills and drive innovation: Preserving construction jobs and apprenticeships will help prevent a loss of key skills that could take years to replace
. Promote long-term macroeconomic stability: Supporting the industry will enable house builders to continue to invest in housing supply and reducing the risk of a housing supply shortage once the upturn comes
. Sustain business activity: The proposed programme would improve cash flow and reduce risk for developers and suppliers currently experiencing severe financial pressure, and
. Increase labour market mobility: Worsening affordability and lack of affordable and social housing make it more difficult for households to move to take up new jobs and contribute to recruitment and retention difficulties, especially in the public sector.

The additional economic activity generated by the programme would also lead to higher taxation revenues for the Exchequer, including income tax, national insurance, VAT and corporation tax.

Adam Sampson, Shelter's chief executive, said: "This package points a clear way forward for the Government. As house building dries up and thousands of construction workers face the dole queue, building the homes this country needs can not only help the thousands of people living in poor housing, it can also give a real and much needed financial injection to the economy."

TUC General Secretary Brendan Barber said: "When the private sector stops spending, the public sector must fill the gap, otherwise the recession will be deeper and longer than it need be. With such obvious housing need, the case for more social and council housing is very strong. When such investment can ensure such an important sector as construction retain jobs, capacity and its skills base the case for a significant boost in the Budget becomes

LGA chair Margaret Eaton said: "Even when the economic good times were rolling, councils saw ever increased pressure on their social housing stock. Now that the recession is upon the country it appears that many thousands more people will be looking to councils to provide them with a permanent home as they either find it impossible to get on the housing ladder or see their home repossessed.

"With on average every year 90,000 more households joining the ever increasing social housing waiting list over the seven years, experience has taught us that demand will grow even faster. Social housing has to be a top priority because the harsh reality is that fewer people are getting on to the housing ladder."


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