Burnham council housing promises to be ‘worth £79bn a year’: CPS – Mortgage Strategy

Andy Burnham’s plan to deliver the biggest post-war council housing program could cost the taxpayer £79bn a year in England alone, says the Center for Policy Studies.

A report by a right-wing center has revealed that Burnham council’s campaign will end up costing the public purse more than saving money.

To fund the council housing programme, Burnham is reportedly planning to redirect £39bn of public spending already allocated through the government’s Affordable Housing Programme.

Last week, in his first speech since the resignation of Keir Starmer, Burnham said: “Britain has lost almost 1.5 million council homes since the 1980s and almost the same number of people are now on the housing waiting list and have been for some time.

“Because of this, the country is in a housing crisis, we are forced to chase rents from companies that are hired through the benefit system.

“When governments try to control these costs by closing the Local Housing Allowance, it makes families homeless and puts pressure on councils when they have to pay for temporary accommodation.

“Britain’s housing crisis is having a negative impact on public finances.

“So, in partnership with local areas, No 10 North will oversee the largest council housing program since the post-war period.”

However, CPS says building more council housing is not the solution and will cost taxpayers billions.

CPS head of housing and infrastructure Ben Hopkinson says £39bn over ten years would only deliver 5% of the government’s annual housing targets.

He cites the Housing Forum for recent estimates that the cost of building a three-bedroom, semi-detached house is now up to £251,700, even if the land is provided for free.

This means £3.9bn a year will cover just 15,494 homes, but Hopkinson says the numbers could drop even further.

He lays out the various ways in which social housing is funded by the taxpayer, both explicitly and implicitly.

Hopkinson says: “Firstly, public housing is being released at a cost that is less than it costs to maintain, which means the taxpayer is continually forced to cover the gap and the upfront cost of construction is not recouped.

“The average English rental house costs £5,942 a year but costs £6,280 a year in maintenance and management costs, creating a small ongoing debt.

“In London, the average rented home has a rent of £7,380 a year but costs £8,720 a year to maintain it.

“That means that each London rental house will not recover the initial investment, instead creating an ongoing debt of £1,340 a year.”

He continues: “Secondly, in 2024/25, the UK spent £36bn on housing benefit and the Universal Credit Housing Element.

“England has cost £32bn of this housing subsidy.

“The UK already spends the highest percentage of GDP on housing grants of any OECD country, double the amount in France.”

Hopkinson says that if Burnham pursues an increase in Local Housing Allowance, a policy he supported as Mayor of Manchester, that could push funding even higher.

He adds: “Thirdly, the average social home is priced at £10,250 less than the average private rented property – despite being relatively new, less occupied and, in London, larger.

“Across England’s estimated 4.2 million public homes, this was a total funding of £43bn a year by 2025.

“When you add together the implicit and explicit funding of public housing, it costs the country a staggering £79bn a year in England alone.”