Alex Diner, senior researcher at NEF, said: “Everybody should have an affordable, warm and secure home to live in, yet the government is spending billions subsidising a broken system which too often fails to deliver this.
“It is extremely inefficient for the government to be paying this money to private landlords when it should be building more new genuinely affordable homes and improving the quality and security of tenure for the homes we already have.
“To overcome this mess, the government must build more social homes to meet the rising demand for affordable housing, reverse its U-turn to loosen energy efficiency standards in the private rented sector and improve its plans to regulate private renting.”
£70bn is certainly a huge amount of money but how could it be better spent?
New social housing and help asylum seekers
To deal with the obvious answer first, building social housing.
Shelter and the National Housing Federation both say 90,000 social homes a year are needed in England to start making a dent in the housing crisis. Last year, around 9,000 were built.
And let’s not forget that the Department for Levelling Up, Housing and Communities reportedly handed back £2bn to the Treasury last year after struggling to spend it.
Building a typical three-bedroom home can cost between £242,250 and £363,375, according to analysis from Urbanist Architecture, although construction costs have been rising sharply for some time.
At the cheaper end, £70bn could build 288,957 homes while the higher estimate would yield 192,638 brand-new properties for families to live in.
The best thing about building new social housing – if it is protected from being sold off to the private sector under Right to Buy – is that it should reduce the demand for housing benefit as homes are more affordable.
Estimates from a University College London-led study last year found building more social housing could save £1.5bn a year in costs related to homelessness, partly by reducing the benefit bill.
Meanwhile, building 90,000 social-rent homes each year could reduce the £70bn bill by £3bn within five years or £30bn over a 30-year period, the Joseph Rowntree Foundation found in 2020.
The extra £70bn could also come in handy for home secretary James Cleverly to cover the unforeseen £2.6bn cost of hotels for asylum seekers and perhaps halt actions that could lead to some ending up homeless on the streets.
Away from housing, there are plenty of other things the government could do with £70bn.
Green for green
That cash could be used to turbocharge efforts to reach net-zero and tackle climate change.
Assuming the next government is going to be Labour, as the polls suggest, an injection of cash would certainly be welcome.
Keir Starmer and his party have recently been distancing themselves from earlier pledges to spend £28bn a year on green investment if they came into power.
Labour will keep up the core mission of investing in green infrastructure, such as creating a publicly-owned clean energy company and launching a mass home insulation drive, according to The Guardian.
But reining in the £28bn figure after being accused of plotting tax rises would see them effectively slash green investment by two-thirds.
Having an extra £70bn to play with could enable Starmer and co to meet that £28bn figure for two and a half years at least and avoid the risk of the UK falling further behind its climate commitments.
£70bn could also have a big say in renationalising water companies.
With water bills set to rise 6% in April and plenty of anger at failing firms like Thames Water, talk of renationalising remains on the agenda.
That could cost £14.7bn, according to analysis from the University of Greenwich in 2017, reaching an estimated £19bn when inflation is taken into account and easily covered with the £70bn.
Throw in water companies’ debts and it’s a more difficult proposition, although £70bn would certainly help.
The Social Market Foundation found the cost of renationalising including debts was £90bn in 2018, now around £112bn factoring in inflation, although it’s likely bringing water companies into public ownership would cost even more in 2024.
1,627 Lewis Hamiltons
Meanwhile, Ferrari’s Formula 1 team stunned the world when it announced the signing of Lewis Hamilton recently.
According to Forbes, Hamilton raked in around £43m in 2023 while the top 10 highest-paid F1 drivers collectively earned £202m.
While Hamilton has no doubt bolstered his pay packet with his switch to F1’s oldest and most illustrious team, £70bn could pay for 1,627 Lewis Hamiltons.
Or it could cover the top 10 drivers’ pay 346 times over. Having them all on track would be quite the race.
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