Andy Burnham's plan to pour £39 billion into social housing has sparked controversy over its feasibility and potential impact on the UK's chronic housing crisis. Critics argue that the ambitious proposal, which would see a significant increase in government spending on new social homes, is little more than a drop in the ocean when it comes to addressing the country's fundamental shortage of affordable housing.
Despite the proposed investment being essentially a redeployment of an existing 10-year commitment, equating to £3.9 billion per year, analysis suggests that the current social housing stock already represents a substantial financial burden for taxpayers. The estimated £69 billion annual implicit and explicit subsidies associated with social housing are dwarfed by an additional £10 billion spent on housing benefits for those in private rentals.
Concerns over the operational cost of social housing also persist, with average annual costs to maintain and operate a home in England standing at approximately £6,280 – significantly higher than the average rent charged of £5,942. In London, this disparity is even more pronounced, with running costs of £8,720 eclipsing average rents of £7,380. This underscores the reality that many social homes often function as ongoing liabilities rather than self-sustaining assets.
A similar level of funding has been allocated in the past, such as Sadiq Khan's Affordable Homes Programme, which achieved a relatively modest 14,335 new homes in London over its tenure, falling short of its 35,000-home target. This raises questions about whether Burnham's plan will yield a significantly greater number of new homes.
The UK's housing deficit is estimated to be substantial, with calculations from the Centre for Policy Studies suggesting a shortfall of approximately 6.5 million homes compared to Western European neighbours. Given that the government has committed to starting construction on 1.5 million homes by the end of the current parliament, Burnham's plan could potentially contribute to as little as five per cent of this target while also creating inherently loss-making social homes.
The UK already dedicates a significant portion of its Gross Domestic Product (GDP) to housing allowances – double that of France – with £36 billion spent on housing benefit and Universal Credit Housing Element in 2024/25. If policies advocating for increased Local Housing Allowance are pursued, this could exacerbate the situation further.