Labour considers biggest social housebuilding drive since 70s

Labour is considering backing a mass public housebuilding programme on a scale not seen since the mid-70s.

John Healey, the former Treasury minister appointed by Jeremy Corbyn as shadow housing minister, will say on Monday that the state could build 100,000 new council houses and housing association homes a year to drive down the UK’s spiralling housing benefit bill and tackle the affordability crisis.

It would involve almost quadrupling the current number of affordable homes being built. Healey, who has previously said his priority is the decline in home ownership, proposes the homes should be for sale as well as rent.

Corbyn made housing one of the totemic issues in his campaign for the Labour leadership and he has since said it is a top three policy priority. The proposal, which is not yet official Labour policy, represents a marked change from Ed Miliband’s stance. He campaigned with a pledge to build 200,000 homes a year, without saying how many of those would be for private sale.

“My own party has done too little to reshape the housing debate,” Healey says in a report to be launched at the party conference in Brighton. “In opposition, we were too timid about making these bigger arguments.”

He has calculated that government spending on housing benefit will be £120bn over the next five years, almost £50bn of which goes to private landlords. Meanwhile, investment funding in grants for building new affordable homes over the next five years will be little more than £5bn.

The number of working families claiming housing benefit more than doubled between 2009-10 and 2014-15 and now stands at more than 1.1 million.

Healey writes: “Public investment in building low-rent homes could reduce the housing benefits bill and produce a profit in the long run for the taxpayer. We could be building 100,000 new council and housing association homes each year by 2020, and the investment cost would be covered in full by savings to housing benefit.”

Healey was housing minister in Gordon Brown’s government and has said his priority is home ownership “because we have to recognise that is the type of housing most people most want”.

Brandon Lewis, the Conservative housing minister, said last week that the government wanted to built 1m homes of all types by 2020. It has promised to deliver 200,000 discount properties for first-time buyers and 275,000 affordable homes during this parliament.

But Healey accuses David Cameron of “rebooting Thatcher” with his housing policies, including extending right to buy. “The country is going backwards: home ownership has fallen every year since 2010, homelessness is rising, rents are up, 63,000 social rented homes have been lost in the last five years and only 144,500 new homes were built in England, half the number we need.”

In his report for the leftwing Smith Institute thinktank and with the accountancy firm PricewaterhouseCoopers, Healey estimates that 100,000 homes a year could be built by 2020, costing the government £13.5bn. He says this would lead to a net £5.8bn saving because of reduced housing benefit costs.

Among the funding measures are £1.8bn a year in grants to enable 30,000 homes a year, looser restrictions on councils borrowing against their assets, delivering 60,000 homes, and forcing private developers to build another 16,000 homes a year as part of planning deals.

“It is time to think bigger and speak bolder about how we fix the chronic housing problems in this country,” he says. “For as the post-war health and housing minister Nye Bevan said of the NHS, so it is for public housing: it ‘will only last as long as there are folk left with the faith to fight for it’.”