When are our politicians (of both sides) going to address one of the real issues around housing supply?
If we go back to 1975 (which was about 10 years after the peak of house building in the UK), 80% of the public money which was spent on housing went on capital works projects which increased the actual supply of homes. The current 5 year programme of public expenditure has allocated only £5 billion to build new homes, but £95 billion is to go on housing benefit – that is, now only 5% of £100 billion is to be spent on increasing the housing supply and 95% is to go on subsidising rents.
So, Government policy is to subsidise rents – which will have to be subsidised year after year – whereas it makes more sense to subsidise the actual building of new homes which is a one-off subsidy. So, we have to ask ‘Why are vast sums of tax payers’ money going to rent-takers rather than into production?’.
If we are to sort out our shortage of homes one of the things we must do is to turn this position around. Get back to subsidising house building and move away from subsidising rents in order to get more from the same expenditure.