Does it Stack Up? Andy Burnham’s Council House Initiative
New Prime Minister, Andy Burnham, has pledged to drive forward the largest scale building of council houses since the post war period, but do the numbers stack up? The Centre for Policy Studies thinks not.
Burnham has earmarked £39 billion over ten years to construct subsidised housing that will be available for social rent.
The Breakdown
According to Ben Hopkinson, Head of Housing and Infrastructure at the Centre for Policy Studies Think Tank, the figures do not add up.
- One average-sized, three-bedroom, semi-detached house currently costs approximately £251,700 to build
- one year’s £3.9 billion would therefore yield 15, 494 houses
- 15,494 is an optimistic figure: Sadiq Khan’s Affordable Homes initiative only managed 14,335 with similar funding.
But, this is just 5% of the government’s annual housing target for England, in total, some 6.5 million.
Shortfall between rent and costs
A second consideration: the average social rent is £5,942 per annum for a home in England of the sort pledged. Each ‘home, costs £6,280 per annum in maintenance and management.
In London, the social rent is £7,380 and the costs £8,720.
The bottom line is that there will be a significant shortfall to be subsidised by the Government, aka the taxpayer.
The Scale of the UK Social Housing Subsidy
The government currently subsidises housing in England to the tune of £32 billion in housing benefit and Universal Credit housing allowance.
Of this, £22 billion covers the rent of those in social housing where those benefiting already pay a subsidised rent.
According to the Centre for Policy Studies, the UK spend on housing allowances as a percentage of our GDP is higher than any OECD country.
Burnham has previously called for this percentage to be increased.
Furthermore, there are currently approximately 4.2 million social homes. With the average social home being rented for £10,250 less than the average privately rented property, this amounted to a subsidy of £43 billion in 2025.
£1m per Londoner for a Lifetime’s Social Housing
One final statistic based on these subsidies: a person living in London social housing from the age of 25 to 80 would, at current rates, cost the tax payer £1 million over that time span.
Conclusion
Hopkinson concludes ‘Once you add together the explicit and implicit subsidies for public housing, it is costing the country an astonishing £79 billion a year in England alone.’