Homes for low-income families are desperately needed, but housebuilding is also a surefire way to promote growth.
Peter Hetherington
When the City attacks the shameful housing record of a Conservative-led government that promised so much, senior ministers should sit up and take notice.
Big on slogans, pitifully short on delivery, they are now running out of excuses as housebuilding stumbles from recession to crisis, denied any significant stimulus up to now. Whether the latest ploy will work - ostensibly underwriting up to £10bn for housing associations and the private sector to build more homes - remains to be to be seen. Once-loyal Tory supporters shake their heads in disbelief as the number of annual housing starts (homes under construction) falls to below 100,000 for the first time most people can remember - and waiting lists for social housing double in 10 years to almost 2 million.
The problem is that social housing has become such a pejorative term for much of this government - though not, to be fair, for pragmatic Tories in town and county halls - that it is no longer in its lexicon.
In a thoughtful report, Building a Road to Recovery, financial firm Tullett Prebon talks of "compelling social as well as economic reasons for addressing Britain's very real housing needs" and calls for an additional £4bn investment directed to councils and housing associations to fund a national housebuilding programme as an "economic imperative".
The reasoning, long-argued in this column, is that housebuilding is largely a domestic industry, a surefire way to promote growth - getting people into work while providing badly needed homes - because any stimulus feeds into a largely British supply chain.
The predictable response from ministers is to blame the planning system for holding up development, with councils again in the firing line - conveniently forgetting that the best town halls have pioneered more inventive measures to revive building than a moribund Department for Communities and Local Government.
There's a note of desperation in the air when ministers gleefully seize on the suggestion of a rightwing thinktank that social homes in high-value areas should be sold off to provide the cash to build affordable houses in places deemed cheaper.
Putting aside the morality and impracticality of the move - no government has managed to put cash from council house sales into a special, ringfenced pot for new homes - it conveniently ignores the fact that housing associations need expensive homes in their portfolio to bolster their balance sheets.
As David Orr, chief executive of the National Housing Federation, recalls, these associations helped turn round once rundown areas such as Notting Hill in west London - now a multimillion pound property playground - by investing in what is now expensive housing when others shied away.
To try to fill the vacuum left by the government's withdrawal from funding social housing, Orr says associations have little alternative than to build homes for renting at full market rates. These rents will cross-subsidise more affordable homes.
Housing associations in London fear that a recent report for the government from the financier Sir Adrian Montague, calling for a reduced level of social housing in new developments, will affect mayor Boris Johnson's target for 55,000 more affordable homes in the capital by 2015.
But joined-up thinking, let alone financial logic, defies ministers. After all, they promised a wave of new building by removing housing targets outside London and scrapping much of the planning system. And look what happened. Building plummeted. Now they're blaming the system for failing to deliver. What a nerve.
- Peter Hetherington writes on communities and regeneration
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