David Cameron and George Osborne are panicking. Fixing the economy is the Coalition’s top priority. But growth has slumped and the Treasury is borrowing an unsustainable £290m every day.
Mr Osborne has been slated for his lack of a growth strategy. With yesterday’s announcement of the housing stimulus package, the Westminster Government has taken an important first step in getting the economy back on track.
Ministers have recognised the overwhelming evidence that investment in housing is as effective a way as any to kick-start growth, due to a ‘multiplier effect’ that creates jobs in the wider economy.
Oxford Economics estimate that every £1 invested in social housing generates a multiplier effect of £1.40 of additional activity in the wider economy.
University of Ulster research shows that, for every 10 jobs created through the social housing development programme here, at least a further seven jobs are sustained elsewhere in the economy.
The Number 10 website boasts of ‘Plans to boost UK housebuilding, jobs and the economy’. But it’s unclear what benefit this part of the UK will gain from the stimulus package.
Much of it centres on easing planning restrictions in England. However, there are also major financial commitments.
These include guarantees to underwrite £10bn in cheaper loans to fund new housebuilding. A proportional share of the package for Northern Ireland would deliver £290m in loan guarantees, £9m in capital funding for the construction of new social and affordable homes and an additional £8m to help first-time buyers take their first step onto the housing ladder.
Investment on this scale would provide a major boost to our hard-pressed construction sector and broader economy.
Northern Ireland’s housing market remains in the doldrums and we must avoid creating another housing bubble.
However, with 21,000 families in severe housing stress and many young adults priced out of the market, more social and affordable homes are definitely needed.
That is why our new Secretary of State, Theresa Villiers, must ensure we get our fair share of the housing stimulus package and why we are seeking confirmation from the Stormont Executive that it will be used for its intended purpose.
In the last five years, Northern Ireland’s housing associations have secured £300m in private borrowing to match government funding to build new homes.
Our members are committed to delivering the Programme for Government target of 8,000 new homes by 2015, but with recent cuts to government grants, this will be very difficult to achieve. Cheaper borrowing and modest extra grant funding can ensure we don’t just meet those targets, but go further.
Social development minister Nelson McCausland’s housing strategy is imminent. Housing associations are keen to work with the minister in delivering his vision — including increasing housing’s role in regenerating our towns and cities, bringing empty homes back in to use and ensuring value for money for tenants and taxpayers.
With many empty homes blighting Belfast and other areas of housing need, some of this stimulus package might usefully be allocated to buy up hundreds of ‘empties’ and bring them back into use, either as social, or affordable rented, homes, or through co-ownership.
As with the broader economy, there are no quick fixes for Northern Ireland’s housing market.
Housing associations want to innovate in partnership with Government and private developers to meet the housing needs of vulnerable people, as well as providing better housing options to people.
Nelson McCausland’s strategy will hopefully set out the vision we need for the future of housing.
Cameron Watt is chief executive of the Northern Ireland Federation of Housing Associations