CBI Director General has written to the Chancellor urging him to boost the economy through housing construction.
Pointing out that for every £1 invested in construction, £2.84 is generated in the wider economy, and that housebuilding does not have the long lead-in times that can affect major infrastructure projects, the CBI wants the current underinvestment in housing reversed. It calls for seven short-term steps:
- extending NewBuy to ‘second steppers’ with limited or negative equity to free up housing at the bottom end of the market
- introducing an ISA specifically aimed at saving for a deposit to support demand and overcome the perception that deposits are out of reach
- committing to fund 50,000 more affordable homes to boost the supply of housing, by injecting £1.25 billion of capital investment through the Homes and Communities Agency (HCA)’s Affordable Homes Programme. The CBI claims this would ensure the delivery of approximately 50,000 additional affordable homes, generating £18 billion within the wider economy and creating 75,000 jobs.
- supporting house builders by extending the housing guarantee scheme to cover all housing tenures
- accelerating land release by moving all responsibility for releasing public sector land to the HCA
- continuing to push towards a more pro-growth planning system that encourages the supply of housing
- encouraging the refurbishment of existing housing stock through either subsidising refurbishment work or through a VAT cut on all renovation and repair work on existing homes. The CBI estimates this has the potential to create 80,000 jobs at a cost of no more than £500m, as well as helping to increase housing supply by bringing empty homes back into use.
Over the longer term, the CBI wants government to explore measures aimed at harnessing the interest of institutional investors to deliver more housing, starting with a review of measures to increase institutional investment in the private rented sector. It also calls for a review of the current system of stamp duty, with a move towards a simpler, progressive structure