Council housing dwarfed by London's financial district. Photo: Oxfam.

Building 100,000 government-funded social rented homes a year over the last two decades would have wiped billions off the housing benefit bill and given renters an estimated £1.8bn in disposable income, according to new analysis.

Research published today by the Local Government Association (LGA) highlights the genuine need for more social housing to tackle the growing housing shortage and reduce homelessness.

The number of new social homes built year on year since 1997 has fallen by 40,000, driven by government policies such as right to buy, forcing more low-income families to rent privately and resulting in a doubling of the housing benefit bill.

Photo Credit: Lars Plougmann/Flickr

Social rent, which provides secure tenancies on low rents for low income families and vulnerable people, is currently at an historic low and far cheaper than renting privately.

LGA’s research shows that building 100,000 social rent homes each year for the past 20 years would have enabled all housing benefit claimants living in the private rented sector to move to social rent homes by 2016.

The tenants themselves would have benefited to the tune of £1.8 billion in extra disposable income over the same period, due to lower housing costs.

According to the LGA, “the Government would have had to borrow an additional £152 billion in 2017 prices to build the homes over the 20 year period.

“With every pound spent on building homes generating £2.84 in return, the cost of investing in social housing would have been offset by additional tax revenues generated by the construction industry as well as welfare savings from moving housing benefit claimants to lower cost social rent homes.

“The rising proportion of housing benefit caseloads in the private rented sector has cost an extra £7 billion in real terms over the last decade.”

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Commenting on the findings of the research, LGA Housing spokesman Cllr Martin Tett called for a “renaissance in council housebuilding”.

“Every penny spent on building new social housing is an investment that has the potential to bring significant economic and social returns”, he said.

“Now is the time to reverse the decline in council housing over the past few decades.

“This is the only way to help families struggling to meet housing costs, provide homes to rent and reduce homelessness while also providing economic growth and lowering the housing benefit bill.

“The last time this country built homes at the scale that we need now was in the 1970s when councils built more than 40 per cent of them.

“With millions of people on social housing waiting lists, councils want to get on with the job of building the new homes that people in their areas desperately need.

“By scrapping the housing borrowing cap, the Government showed it had heard our argument that councils must be part of the solution to our chronic housing shortage.

“Allowing councils to keep 100 per cent of their Right to Buy receipts is the next step to deliver the renaissance in council housebuilding we need as a nation.”

Polly Neate, chief executive of the housing charity Shelter, added: As well as cutting the benefit bill and driving down homelessness, a stable supply of social housing would be a national asset.

“It would give a step up to families struggling in expensive and unstable rented accommodation, enabling them to put down roots and plan for the future.

“Children could stay in the same school, support networks and communities could flourish and society as a whole would be better off.”

The LGA has called on Chancellor Philip Hammond to set out sustainable long-term funding and a commitment to social housing in the Spending Review.

John Healey MP, Labour’s Shadow Housing Secretary, said: “This research shows the huge cost of Conservative Ministers’ disastrous decision to slash funding for new social housing.

“Deep cuts to investment mean the country is now building 30,000 fewer social rented homes each year than we were with Labour, with higher rents for households and a higher housing benefit bill as a result.

“Labour will build a million low-cost homes over ten years, including the biggest council housebuilding programme for nearly 40 years.”

Correction: This article originally stated that building 100,000 social homes over the past two decades would have wiped billions off the housing benefit bill. This is incorrect. The actual number quoted by the LGA is 100,000 homes a year over the last two decades.