Roads or housing? Which is your priority?

According to the Institute of Public Policy Research we need to build 230,000 new homes a year. Take a look at housing waiting lists and we need many more. In fact a board member of one provincial housing association told me recently that, ‘If every one of our 5,000 tenants moved out tomorrow, we could fill our homes straight away from people on the waiting list!’

Yet government investment in new social housing remains too low, at just £4.5bn in the current year. Contrast that with the £95bn being spent on housing benefits, and you wonder if the balance needs adjusting. Yes of course many social housing tenants claim housing benefit, but too much of it ends up in the deep pockets of private landlords. And as demand pushes up rents so understandably they take advantage.

The so called ‘bedroom tax’ has highlighted the fact that we also have the wrong mix of social housing. Not enough for downsizing older folk, or youngsters starting out. That’s as much about demographic change as a criticism of past policy. But we all know what’s needed, so why the delay?

Of course in a time of recession there’s a need to improve infrastructure too. That’s why the government is heading towards a multi-billion pound investment in road improvements. But as Maslow recognised long ago, without somewhere you can call home, little else seems important. In other words, if we built houses instead of roads, we’d find people would become more motivated to work hard. After all, a good night’s sleep must do more for productivity than shaving 20 minutes of your drive to work.

So why the focus on roads rather than houses? Well I suspect the choice is driven more by investor pressure for rapid returns, than market need for shorter journey times. Of course I find traffic jams annoying, but I’d find living in squalor whilst languishing on a housing waiting list rather more inconvenient. Perhaps one problem is that all of those involved in the decision are drivers, but I doubt if any are on a housing waiting list.

Let’s take a closer look at who these investors might be. My money is on the local government pension schemes. Between them they have more than £150bn to play with and, I am reliably informed by someone in the know, they like to invest in chunks of at least £150m a time.

So you’d think that they would be the ideal place to go for investment in social housing, but you’d be wrong. I’m also told that they prefer projects with a shorter payback period, such as, wait for it, yes, toll roads! And whilst the rules have changed to allow them to invest more in infrastructure, the housing sector, it seems, has yet to win its pitch. Toll roads pay better than social housing and so that’s where the money looks to be going.

As is often the case, the solution to the conundrum is already there. Community land trusts are widely recognised and understood. Because they own the land, social housing built on that land can be more affordable. But pop along to the former St Clement’s Hospital and you’ll see a bold plan that blends developer return with social housing provision.

East London CLT is working with a commercial developer to convert the former hospital. The freehold was transferred to the trust, which means that income from the homes that are sold funds the conversion of those to rent. Moreover, many will be sold on a shared equity basis, affordable now, and because of the way the trust is set up, in the future too.

Surely others could follow this example, sit down with investors such as the local government pension schemes and work out blended developments that work for both. The pension schemes need to invest competitively and see their return. We all need to see them investing in social housing.

Let’s get creative, see opportunities not problems and make this happen.