Andy Burnham's ambitious pledge to inject £39 billion into new social housing could deliver only a small proportion of the homes needed, while simultaneously increasing the long-term financial burden on taxpayers, a new report from the Centre for Policy Studies (CPS) claims. Published today, the report, titled 'England’s £79bn Housing Subsidy', challenges the economic viability and effectiveness of the proposed investment.
According to Ben Hopkinson, CPS head of housing and infrastructure and author of the report, the proposed investment of £3.9 billion per year over a decade may only facilitate the construction of between 14,335 and 15,494 new homes annually. This figure, based on construction cost data from the Housing Forum which estimates the average cost of building a three-bedroom semi-detached house at £251,700 (excluding land), represents approximately 5% of the government's annual housing target. The report draws parallels with Sadiq Khan's Affordable Homes Programme, which reportedly commenced construction on a similar number of homes with comparable annual funding levels.
The CPS argues that social housing necessitates substantial ongoing public subsidy beyond initial construction. The report highlights that average social rents in England, at £5,942 per year, are often lower than the annual cost of managing and maintaining properties, which stands at £6,280. This disparity means landlords frequently rely on continued taxpayer support. In London, the gap is even more pronounced, with average rents of £7,380 against annual costs of £8,720. This ongoing financial commitment contributes to a wider picture of housing support across the country.
The report also sheds light on the broader scale of housing support in England, noting that £32 billion was allocated to housing benefit and the housing element of Universal Credit during the 2024/25 financial year. The UK reportedly spends a higher proportion of its Gross Domestic Product on housing allowances than any other OECD country. Furthermore, the CPS estimates that social rents are, on average, £10,250 a year below equivalent private sector rents. Across England’s estimated 4.2 million social homes, this constitutes an implicit annual subsidy of approximately £43 billion.
Combining direct housing support with the estimated value of below-market rents, the report concludes that social housing in England benefits from an estimated £79 billion annually in explicit and implicit taxpayer subsidy. While Burnham has advocated for increased social housing investment as a solution to chronic undersupply and affordability issues, the CPS report suggests his approach may be financially unsustainable and insufficient to address the wider housing crisis.